Luxury homes expected to find fancy with younger buyers in 2024

Larger homes, upgrade to premium properties (of over ₹1 crore) and a young buyer-base mostly in their early to mid-thirties drove residential sales demand in India in 2023. And initial indications show that the trend is here to stay “prominently” in 2024 with developers fine tuning their launches targeting a “more aspirational” and “younger buyer profile”.

ANAROCK research maintains that the first nine months of calendar year 2023 saw housing sales of 3.49 lakh across the top 7 cities which were 96 per cent of the total sales of full-year 2022 and “the trend for Q4 (October–December) looks equally strong”.

Several developers had a healthy pipeline of new project launches during the year. In 9 months 2023 3.28 units were launched, a 24 per cent rise against 2022’s 2.65 lakh units.

“We saw an overall 8-10 per cent jump in average residential prices in 2023 as against the previous year. In 2024, we may see up to 12 per cent increase in average prices across cities, proviso the current momentum continues,” Anuj Puri Chairman, ANAROCK, said.

According to him, the fact is, rising interest rates and global headwinds notwithstanding, residential demand “remained at an all-time high”, across cities. The average property prices in the top seven cities combined increased by some 11 per cent-odd in the year, from ₹6,105 per sq ft. in Q3 2022 to nearly ₹6,800 per sq ft as on September-end in 2023.

Manoj Gaur, Chairman, CREDAI, said he does not anticipate any significant price rise. At best, it would grow linearly as supply and demand are matched. He, however, maintains that it is unlikely that there will be a slowdown in the premium housing segment.

“The premium housing segment will show no signs of slowing down,” he told businessline adding that, there continues to be a preference for larger living spaces and luxury.

Premium and Luxury offerings

Amar Sarin, CEO and MD of TARC echoes his view. “Anticipating a robust economic trajectory, particular attention is directed towards the burgeoning luxury residential sector,” he said.

The premium and luxury segment comprising units priced at ₹2 crore and above in India “maintained strong sales momentum”, registering a 70 per cent y-o-y increase in the January -September period. The trend is even more pronounced in certain cities such as Delhi-NCR and Mumbai, where the combined share of these categories in overall sales is around 20 per cent.

Data from CREDAI shows, that in the Delhi-NCR region, saw a 216 per cent surge in luxury housing sales in 2023, the highest in India.

“The premium and luxury segment emerged as a sought-after investment avenue, particularly for HNIs and NRIs seeking to safeguard their investments amid global macroeconomic uncertainties,” said Anshuman Magazine, Chairman and CEO – India, South East Asia, Middle East and Africa of CBRE.

In fact, sales of only luxury units (priced upwards of ₹4 crore) during the period grew by more than 75 per cent when compared to the same period last year.

“This demand is supported by quality supply being launched by leading developers including DLF, who are launching projects across configurations such as independent floors, villas and condominiums,” Aakash Ohri, Joint Managing Director and Chief Business Officer, DLF said.

Developers operating in this segment are not only tapping the demand for good-quality homes but are also in a position to strengthen their balance sheets via this self-liquidating, high-profit margin segment.

Changing Buyer Profiles

Amid transforming preferences, affordability is no longer be the sole decisive factor for homebuyers. The average age of the first-time home-buyer in India is now around 30-35 years, almost 10 years younger than the previous generations, where home buying was made post-45 years.

Sources say, the younger buyers are investing into homes which are priced upwards of ₹1 crore and some are especially investing in premium ones upwards of ₹3 –4crore.

“The average age of the first time buyer is down to around 30-35 years now,” said Ohri.

Real Estate Investments

The land acquisition space has been buzzing with high interest, primarily from developers in the recent past.

According to CBRE, in 2023, out of the cumulative $ 5.1 billion inflows into the Indian real estate sector, around 40 per cent of the overall investment was committed for land acquisition. On a cumulative basis, nearly 7,700 acres of land have been acquired by developers and investors during the 2018-22 period.

“Evidently, the residential sector has been at the forefront of these commitments as its garnered a share of 83 per cent out of the total $ 2 billion that was committed for land investments during Jan,” CBRE’s Magazine said.

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