Poised for a Leap

The expanding luxury and ultra-luxury real estate market is driving the growth of Indian real estate sector in the current market scenario. Construction Times explores the trends emerging and the market outlook.

India’s real estate market has made rapid strides in the recent past with many developers taking up land parcels to build new projects. Redevelopment projects are also gaining momentum in cities such as Mumbai and Delhi NCR. While the affordable and medium segments are showing a steady demand in cities, the luxury and ultra-luxury markets have seen huge demand growth in metro cities as well as tier-2 and tier-3 cities.

A growing market

A recent CBRE report highlights that India’s luxury housing segment (units priced at Rs 4 crore and above) witnessed significant growth in sales, showing an approximate 37.8% Y-o-Y increase during the Jan-Sep ’24 period. Total sales of luxury units during the Jan-Sep ’24 period stood at ~12,625 compared to ~ 9,160 units during the same period last year. Delhi-NCR, Mumbai, and Hyderabad emerged as prominent markets, accounting for nearly 90% of the total luxury housing sales across the top seven cities. The Jul-Sep’24 quarter in the luxury housing segment across the top cities, registering an 82% Y-o-Y increase in sales. This shows a continuously growing demand for luxury housing properties. 

The apex body of real estate developers, CREDAI-MCHI has unveiled its latest research analysis, spotlighting a transformative shift in India's urban housing markets towards luxury and premium properties. The study reveals significant growth in average ticket sizes and total sales values across India’s top seven metropolitan cities during H1 FY2025 (April-September 2024).

The data highlights 18% increase in total sales value, which surged to Rs 279,309 crore, compared to Rs 235,800 crore in the same period of FY2024. Despite a modest 3% decline in total units sold, the average price of homes rose sharply to Rs 1.23 crore in H1 FY2025, compared to Rs 1 crore in H1 FY2024, underscoring the growing preference for premium homes.

In city-wise performance, NCR emerged as a leader, with the average ticket size growing by an impressive 56% to Rs 1.45 crore and sales value rising by 55% to Rs 46,611 crore. MMR demonstrated its consistency, with an average ticket size stable at Rs 1.47 crore and sales value increasing by 2% to Rs 114,529 crore. Bengaluru showcased robust growth, with the average ticket size rising by 44% to Rs 1.21 crore and sales value increasing by 44% to Rs 37,863 crore.

Hyderabad followed suit, with its average ticket size growing by 37% to Rs 1.15 crore and sales value increasing by 28% to Rs 31,993 crore. Chennai saw a 31% increase in the average ticket size to Rs 95 lakh, with sales value rising by 20% to Rs 9,015 crore. Pune’s market reflected strong growth in the affordable luxury segment, as its average ticket size rose by 29% to Rs 85 lakh and sales value jumped by 19% to Rs 34,033 crore. Kolkata experienced moderate growth, with the average ticket size increasing by 16% to Rs 61 lakh.

A comprehensive analysis by ANAROCK Research reveals robust activity in India's luxury residential market, with over 314,200 luxury housing units launched across the country's top 7 cities from 2019 through the third quarter of 2024. The luxury segment, comprising units priced between Rs 1.5 crore and Rs 2.5 crore, saw approximately 177,500 new launches, while the ultra-luxury category, featuring properties valued above Rs 2.5 crore, contributed 136,700 units to the total. The Mumbai Metropolitan Region (MMR) emerged as the dominant market with the highest number of new launches in both segments. While Hyderabad claimed the second position in luxury segment launches, the National Capital Region (NCR) established itself as the second-most active market in the ultra-luxury category.

Demand trends

According to the CREDAI-MCHI report, buyers are prioritizing larger, well-equipped homes in prime locations, signaling a shift towards premium living. The consistent rise in sales value across cities underscores resilient demand for high-end properties, even in regions where unit sales saw a modest decline. Cities like NCR and Bengaluru stood out with significant growth in high-value property transactions, reflecting their appeal among affluent buyers.

According to CBRE, the surge in demand for luxury housing has been primarily attributable to a growing preference among affluent buyers for enhanced amenities and more spacious living areas that complement their multifaceted lifestyles. Moreover, the increasing aspirational class has significantly contributed to the increased demand for luxury properties. Furthermore, the rise in NRI and astute domestic investors in the Indian real estate market has considerably fueled the heightened demand for luxury residences.

This trend aligns with the shift in buyer preferences towards high-end units launched by leading developers, as evidenced by the substantial market share of tier-I developers. This shift is anticipated to persist, reflecting the evolving expectations of contemporary homebuyers who are now more discerning and informed regarding developer reputation, execution capability, and financial stability.

The luxury real estate market growth is not limited to tier-1 cities anymore. “Luxury real estate in tier-2 and tier-3 cities is witnessing a gradual but notable uptick, driven by improved infrastructure, and relatively lower property prices. Cities like Chandigarh, Kochi, Indore, and Ahmedabad are seeing increased development of luxury projects, albeit at a different price point compared to metro cities,” says Anuj Puri, Chairman, ANAROCK Group.

The hospitality sector is also reshaping the luxury market significantly. “The burgeoning population of ultra-high-net-worth-individuals (UHNIs) and high-net-worth-individuals (HNIs) in India presents a compelling opportunity for luxury hotel chains to expand their branded residence portfolio. This aligns with a growing domestic demand for residences that mirror the world-class amenities and personalized services characteristic of luxury hotels,” says Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE.

Builders’ views

Major builders and developers are bullish on the growth trend of India’s luxury and ultra-luxury real estate market. Here are the views of the builders on the luxury real estate market.

“The luxury and ultra-luxury real estate markets in India are witnessing significant growth not only in traditional hubs but also in emerging cities that cater to a growing class of affluent buyers. While metros like Hyderabad, Bengaluru, and Mumbai remain dominant, several tier-2 and tier-3 cities like Amaravati are rapidly becoming hotspots for high-end projects,” says Rakesh Reddy, Director, Aparna Constructions.

“India's luxury real estate market is experiencing a notable shift, as developers cater to clients who value exclusivity and personalized living. This trend brings forth residences defined by innovative design and meticulous craftsmanship, setting a new standard for luxury homes while also supporting environmental sustainability,” says Ashish Dhami, Chief of Sales, Marketing and Product Design, K Raheja Corp Homes.

“The luxury real estate market in India is undergoing a transformative phase, and we remain optimistic about its continued growth in 2024 and beyond. As more individuals enter the affluent segment due to rising disposable incomes and rapid urbanization, there is a noticeable shift towards properties that reflect success and an elevated standard of living,” Jitendra Singh, CSO, Runwal Realty. 

“Mumbai's luxury real estate market is on a strong growth trajectory, and we foresee an ongoing rise in demand for premium properties that offer exceptional quality and refined living experiences,”Chintan Sheth, Chairman and Managing Director, Sheth Realty.

“With Mumbai's skyline evolving and new infrastructure projects enhancing connectivity, we expect the demand for ultra-luxury properties to remain robust. The market is also seeing a preference for sustainable luxury, with buyers valuing eco-friendly designs and energy-efficient solutions,” says,Rahul Thomas, Whole Time Director, Suraj Estate Developers.

“We anticipate a steady rise in demand for spacious, technology-enabled homes that meet the functional and aspirational needs of homebuyers. The luxury segment is set to register more demand as it fit well with the modern-day buyer's pursuit of quality, exclusivity, and enhanced living standards,” concludes Bhavesh Shah, Joint Managing Director, Today Global Developers.