India's Wealthy Demonstrate Strong Confidence in Real Estate Market
High-net-worth individuals (HNIs) and ultra-high-net-worth individuals (UHNWIs) in India are exceedingly optimistic about the nation's economic prospects, according to the India Sotheby’s International Realty (ISIR) annual Luxury Outlook Survey 2024. A remarkable 79% expressed confidence in positive economic growth for 2023-24, a significant increase from 59% in the previous year.
This bullish sentiment extends to the real estate sector, with 71% of respondents planning to acquire properties within the next 12 to 24 months. This demonstrates robust confidence in the market, even considering the nearly 40% surge in property prices over the past two years and rising mortgage rates.
Investment Focus Shifts to Capital Appreciation
The primary motivation for real estate investment has shifted towards capital appreciation (44%), overtaking lifestyle upgrades. This shift signifies a renewed focus on long-term value growth among investors.
India's Economic Momentum Fuels Real Estate Optimism
India's economic outlook is brighter than ever. The International Monetary Fund projects India will become the world's third-largest economy by 2027, currently holding the fifth position. The Reserve Bank of India (RBI) forecasts 7% GDP growth in 2024. These projections, coupled with record-high stock market performance and home sales in 2023, underscore the accelerating economic momentum, particularly benefiting the high-end real estate segment. Goldman Sachs Group Inc. anticipates a near doubling of India's affluent class to 100 million over the next three years, driven by the strength of start-up ecosystems and growth in unicorn companies. Amit Goyal, MD of India Sotheby’s International Realty, stated, “Our Luxury Outlook survey results show a renewed and heightened interest among investors who now view real estate as a compelling avenue for long-term wealth creation.”
Long-Term Wealth Creation Through Real Estate
"The resilience and potential of the Indian economy are reflected in the remarkable shift in economic sentiment we are witnessing," observes Ashwin Chaddha, CEO of India Sotheby’s International Realty. Chaddha highlights the significant increase in new luxury project launches across India's top seven cities in 2023, alongside the growing recognition of real estate’s inherent value and potential for long-term financial growth. "We think investors are strategically positioning themselves for wealth accumulation and creating multi-generational wealth through real estate investments," he added.
Anticipation of Lower Interest Rates
Regarding financing, 56% of HNIs and UHNIs surveyed anticipate the RBI will commence lowering interest rates in 2024, signaling a positive outlook for mortgages and real estate lending.
Diversified Real Estate Portfolios
A noteworthy 83% of affluent Indians participating in the survey reported owning multiple luxury homes, underscoring a growing trend of real estate portfolio diversification among the wealthy.
Investment Preferences Beyond Primary Residences
Beyond primary residences, other prominent investment interests among respondents include commercial real estate (34%), vacation homes (25%), agricultural land (21%), and farmhouses (20%). Goa remains an attractive destination for holiday home buyers, preferred by 35% of respondents.
International Real Estate and Digital Adoption
Interest in overseas real estate investment remains constant at 12%, primarily focused on the USA and Dubai, United Arab Emirates. Furthermore, 43% of HNI and UHNI respondents expressed an intention to consolidate their portfolios, prioritizing higher-quality, income-generating assets. The survey also revealed increasing digital adoption, with 34% of UHNIs and HNIs utilizing digital tools like virtual walkthroughs and 3D virtual reality for property research, reflecting the digital transformation's impact even within the luxury real estate segment.