In July last year, as soon as the lockdown was lifted, Delhi-based publicist Priya Singh moved to her holiday home in Goa along with her family. She worked out of Goa for the next few months. Singh had always used her holiday home — a villa with its own swimming pool in Goa’s Assagao area — as a getaway for only a couple of weeks in a year. But, suddenly it became a blessing in disguise. “After being stuck in our apartment in Delhi during the lockdown, we really appreciated the space the villa provided. With all of us working from home and kids doing online classes, we would rather be in Goa than in Delhi,” says Singh.
It was exactly this thought that spurred the demand for luxury real estate in India as the lockdown was lifted last year. “If the rolling lockdowns have taught us one thing, it’s to appreciate the safety of our homes. As soon as the first lockdown curbs were eased last year, we noticed an uptick in demand for vacation homes,” says Amit Goyal, CEO, India Sotheby’s International Realty, which offers advisory services for luxury properties. Buyers are also prioritising outdoor spaces. For India Sotheby’s International Realty, the January-March 2021 quarter was the strongest both in demand and transaction closures.
With more people willing to pay a premium for open space, there has been a significant rise in real estate prices in places such as Goa. Varun Nagpal, founder of Vianaar, a Goa-based construction firm that specialises in villas, says land prices in Goa have gone up by 50% in some areas. Prices in Assagao have increased between ₹25,000 and ₹35,000 per sq. m. since the pandemic. As a result, prices of villas have gone up by ₹4,000-₹5,000 per sq. ft. in one year. Average villas are priced between ₹12,000 and ₹15,000 per sq. ft.
Nagpal is doing raging business. His company has grown 40% year-on-year in the January-March quarter this year. Since September, construction has doubled and today there are 12-14 projects under construction. “We will deliver 200 houses by December, and another 300 next year. I have not seen so much demand in the last 14 years,” says Nagpal who has been in the business since 2007. Rentals have also gone up, with 3-4BHK villas going for ₹6 lakh a month in December, up from ₹4 lakh a year before.
The increase in demand is not restricted only to Goa. Luxury housing sales in the country’s seven major markets — Delhi-NCR, Mumbai, Bengaluru, Pune, Chennai, Kolkata, and Hyderabad — went up 21% in February to 8,219 units, from 6,786 units a year ago, according to a report by real estate data analytics firm PropEquity. Delhi-NCR recorded a 54% increase in luxury housing sales while Mumbai saw a growth of 37%.
According to research by property consultants ANAROCK, H1 2021 (January-June) saw total housing sales of approximately 82,850 units across the top seven cities. Of this, more than 9% was in the luxury segment priced above ₹1.5 crore, compared with 7% a year ago.
Demand has also been very strong for holiday homes within four-five hours’ drive from metros. Shimla, Rishikesh, Mussoorie, and Dehradun top the list in the north. Prices have risen between ₹5,000 and ₹12,000 per sq. ft. in cities such as Mussoorie and Shimla due to low supply, according to ANAROCK research.
Himmat Singh, managing partner of Himmat and Rohini Singh LLP, which has entered into an affiliation with Christie’s International Real Estate for its expansion in India, says post demonetisation (Q3 2016), the luxury real estate market had been rather flat right up to the pandemic. Investors felt luxury real estate was no longer offering a return commensurate to the hefty acquisition cost. And for a lot of end users, it made more financial sense to rent a home (or to not upgrade to a larger home) and instead invest surplus funds into other higher-yielding investments.
The pandemic, however, changed all that. “There was an increase of around 25% transaction volume since the first lockdown opened up, compared with the six months leading up to the lockdown. Consequently, property values also increased by about 5%, especially for homes with access to open spaces,” says Singh. There is now a greater desire to own a home that has space for leisure and health activities, and if possible outdoor activities. In condo developments, a lot of this is taken care of but, for example, in a city like Delhi which does not have full-service condos (privately-owned individual units within a community of other units), there has been a strong shift towards wanting to own a plot of land as opposed to buying an apartment.
According to data by statistics aggregator Zapkey.com, demand for ultra-luxury properties in south Delhi and Lutyen’s neighbourhoods such as Vasant Kunj, Vasant Vihar, Golf Links, Sunder Nagar, and Shanti Niketan was high, with 1,991 deals registered in FY21, against 1,780 the previous year.
In an interesting twist to the post Covid-19 real estate story, NRIs are once again scouting for Indian luxury homes. According to a consumer survey ANAROCK conducted earlier this year, at least 73% NRIs preferred properties priced between ₹90 lakh and ₹2.5 crore. In the pre-Covid-19 survey (H2 2019), just 41% preferred properties within the same price bracket — the most favoured being affordable and mid-segment homes. Now 3- and 4-BHK options top their wish list. The Indian market also scores high with NRIs due to the depreciating rupee translating into greater buying power. “Many Indians with the financial wherewithal are also looking beyond boundaries and buying a property for investment, followed closely by the aspiration of having a second home in another country and for self-consumption,” says Anuj Puri, chairman, ANAROCK Property Consultants. Dubai, followed by London, Singapore, the U.S., and Australia are favourite destinations since Indian high networth individuals (HNIs) send their children to these places to study.
A January-March 2021 report by Sothebysrealty.com also revealed that Indians were searching for milliondollar homes abroad. India is second only to the U.S. when it comes to online property searches. Top searches by Indians were for homes in London, New York, Paris, Los Angeles, Dubai, Lake Como, Sydney, and Malibu.
So, what does the future hold for the luxury real estate market? “Millennials and the salaried class are all gunning for what we call ‘one extra room’ and this trend of buyers treating bigger as better will continue,” says Goyal. He feels that with discretionary spending being limited in the last 18 months and home loan rates at a historic low, people have enough savings to make an upgrade.