Luxury housing – Back on track with NRI Investors?

August 20th, 2019

Luxury housing - Back on track with NRI Investors

Increasing interests expressed by NRIs are fuelling the growth of luxury properties. A recent survey by Anarock Property Consultants shows a rise in both end-user and investor demand for luxury real estate among NRIs. There are two broad reasons for this trend.

Firstly, NRIs who are nearing retirement age and want to return to India, will have their standard of living reflected and maintained in such apartments. Secondly, those who are planning to remain abroad, find rental incomes from such properties desirable.

What exactly is luxury housing, and how does it differ from a regular house? The price of purchase apart, below are some differences:

  • Rentals of luxury property are on the higher side
  • Luxury properties are generally found in upscale urban areas making the investment in prime localities lucrative
  • Luxury properties come with a host of amenities such as a private clubhouse, fitness facilities, swimming pool, terrace lounges, and so on
  • The security arrangements in gated luxury properties are preferable and can have guardrooms, electronic entry, increased CCTV coverage among others

Developments in the Luxury Property Market

Lately, the issue of vast unsold inventory (a recent down-trend among few mid-income housing segments) has not been reflected in luxury property. The Anarock study shows that the overall unsold inventory of luxury homes (in the price range of Rs. 1.5 crores to Rs. 2.5 crores) went down by 12%, from 48,300 units in Q1 2018 to 42,650 units in Q1 2019.

This trend was most noticeable in Bengaluru. It showed a significant reduction of 49 per cent in unsold luxury stock within a year from 6,370 units in Q1 2018 to 3,260 units in Q1 2019.

Most new launches catered to this segment. East Bengaluru localities like Whitefield saw the highest launches in the ultra-luxury segment.

The research further showed that return on investment in such real estate was around 3-5 percent. It also pointed out that the trend, however, is skewed towards personal use.

The NRIs’ increased interest in this luxury segment is also because the prices of most luxury properties are at their lowest. Many developers are offering winning deals that NRIs find attractive.

Capital appreciation, higher cash flow, and profitable opportunities are, therefore fueling growth in this case. About 28 per cent of NRIs responding to the survey revealed that they are currently looking to buy luxury and ultra-luxury properties across cities in India. And 31 per cent preferred to invest in a property in Bengaluru.

With this revelation, it appears to be an unprecedented inclination in the luxury segment sector.

For details about recent luxury villa projects by Adarsh Group, click here.

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