Although luxury housing has evolved at a breakneck pace in India, this sector does not still cater to the masses. On the contrary, affordable housing has boomed in India over the last 3-4 years. Additionally, Central Government’s commitment to render ‘affordable housing for all’ like interest subsidy for low and economically weaker sections, has given much-required impetus to this sector. Even, most of the real estate developers have also started catering to the affordable housing as now a higher number of young migrants moving towards urban areas every coming day.
According to a data provided by ANAROCK, “while there was a total decline of 41% in the overall new housing supply in 2017 from the preceding year, luxury properties priced over Rs. 1.5 crores saw the maximum fall of a staggering 49%.”
The percentage surely paints a murky picture for luxury housing, but it is not the death knell of this sector. Regardless of its comparatively small market size, luxury housing is still in demand and holds a vital position in Indian real estate.
Prashant Thakur, Head – Research, ANAROCK Property Consultants, sheds light on the reasons of a sharp decline in the demand of luxury property and stated that the clientele a luxury housing sector garner is entirely different. The robust Indian economy along with the rapidly growing of a few start-ups has given rise to a new breed of entrepreneurs who have not acquired ‘old wealth’ but earned it. And most of these people are millennials, who have risen above the middle-class median and preferred to live accordingly. Market sentiments and warnings signals do not sway such demand - it has its very own propulsion engine which does not run on regular fuel.
As per the report by Johannesburg-based New World Wealth, the number of millionaires in India was around 3, 30,000 in 2017 and it is predicted that the number will reach more than 9, 50,000 by 2027, that means an increase of 190 %. And, India has the fourth-largest population of millionaires within the Asia-Pacific region, while in the Forbes list of the ‘World’s Billionaires’ for 2017, India accounts for an impressive 101. So, while luxury housing is not rising spectacularly, it has not lost its lustre completely.
ANAROCK data reveals there is a notable and unexpected resilience in this sector. According to that data, “Supply is picking up, albeit slowly: Data suggested a decline in luxury housing supply (homes priced over Rs. 1.5 crores) in 2017 over the preceding year.”
However, ANAROCK data reveals that in the first three quarters of 2018, this segment's supply increased by almost 29% across the top 7 cities over the corresponding period in 2017.
So, after all these findings, it is clear that the luxury segment is now catering to only those who cannot and will not afford to compromise. And therefore, most real state builders have shifted their focus almost entirely on affordable housing. And builders who are betting on luxury homes understood that they would get success only if they give utmost importance to quality, craftsmanship, location, and service standards of their luxury offerings.