Here’s how you should navigate the luxury real estate market

luxury real estate

Ashwin Chadha, CEO, India Sotheby’s International Realty

The luxury real estate market in India has experienced an unprecedented surge in demand, even surpassing the available supply in many cities. A few months ago, DLF Ltd had made waves with the sale of its newly launched luxury project in Gurugram.

The project comprised over 1,100 flats priced at Rs 7 crore and above, and all the units were sold within three days. Reports indicate that the listed firm received an overwhelming response for the project, The Arbour, with more than 3,000 applications from interested homebuyers. So much so, DLF is expected to launch its next project, Crest II, at a Rs 20-crore ticket size, expecting a similar response. Besides, inventory of ready homes in India’s top seven cities in this segment is at a 12-month low.

This surge in demand is not limited to the primary market; even the secondary market is witnessing a scarcity of luxury and high-end properties across Delhi, Mumbai and Bengaluru. Delhi has seen significant transactions involving land and bungalows in prestigious areas like the Lutyens' area and the southern parts of the city. The demand for luxury floors has also seen a notable increase. With limited ready-to-move-in properties entering the market, prices in many pockets have seen a substantial surge of 30-40 percent over the past three years.

In fact, buyers who were keen to buy only a ready-to-move-in apartment are now willing to consider under-construction options. Not just that, the real estate ‘investor’ seems to be back in the market, understanding the value of a hard asset in inflationary times. Discerning investors know that the real estate market goes through cycles of boom and slump lasting five to seven years and the current upswing in luxury home sales that started post-pandemic is likely to continue for several more years.

This optimism is well supported by India's expected growth rate of 6.5-7 percent, as projected by the Reserve Bank of India (RBI). Macro factors like the interest rate pause by the RBI, moderating inflation with the Consumer Price Index (CPI) for April 2023 coming in at 4.7 percent versus 7.79 percent in April 2022 and 5.66 percent in March 2023, and improvement in consumer sentiment index since May 20 are adding tailwinds to the economy and, in turn, the real estate sector.

Here’s what luxury real estate investors should keep in mind

As a luxury homebuyer, it is important to have a clear understanding of your specific needs and preferences. Determine the type of property, desired location, amenities and other essential features that align with your requirements. Creating a list of non-negotiable features and amenities can help you identify properties that closely match your wish list.

When you come across a property that fulfils your wish list and meets your expectations, prompt action is essential. In a market where desirable properties are snapped up, the adage ‘he who hesitates is lost’ applies.

Before finalising a purchase, thorough research is vital. Assess the market value of the property, review its legal status and identify any potential issues. Engaging professional services, such as property inspectors and lawyers, ensures a smooth and secure transaction.

Additionally, it is important to have your finances in order and secure necessary financing well in advance. This financial preparedness enables you to act swiftly when the right property becomes available.