The world has come to terms with the pandemic now. The disruptions and ill-effects of unwanted but unavoidable lockdowns are slowly subsiding. With the markets reopening, the economy is also regaining its lost steam. The real estate sector, in particular, has benefitted from the upheavals of the Covid-19, and the trend will continue in 2022. While all the real estate segments have received an uptick, reports suggest that the Holiday and Vacation Home segment would receive a phenomenal push in 2022. HNI homebuyers are upbeat about investing in luxury and premium properties.
Last year, the real estate market started on a high note, but the emergence of the second wave robbed it of momentum. The real estate market was momentarily impacted while the country was dealing with a significantly more severe spread of Covid-19 cases. However, the sector bounced back almost immediately with a revived surge in demand. The sales velocity continued through the year and has helped the segment reduce its burden of unsold inventory.
Early this year, the Omicron threat emerged as a threat to the economy, and experts believed it would significantly impact the country and cast its shadow on the real estate sector. However, it is raring to maintain its growth acceleration. The reduction in cases and the learnings from the past waves had prepared the segment, and it has applied them to retain the buyer’s confidence.
The luxury real estate segment witnessed an uptick last year, and it is expected that the trend will continue in 2022. The Luxury and Leisure Housing Outlook report by an international realtor suggests that 67 per cent of HNIs are looking at making investments in luxury homes. Out of the 76 per cent of respondents of the survey who affirmed their interest to buy property, 89 per cent were eager to invest in real estate, while 11 per cent wanted to purchase commercial properties.
Lifestyle Upgrade: A major factor
Upgrading lifestyle amid the pandemic is a major factor that has propelled HNIs to opt for homes with better amenities. Luxury homes are closer to nature and provide a resort-like feel to the residents. 46 per cent of respondents feel luxury homes are a necessity in the prevailing circumstances. The health benefits of living in spacious and green surroundings are prominent factors attracting buyers to luxury homes.
Widely travelled HNIs and Millennials who have experienced luxury closely wish to live in accommodations that provide them uber-rich ambience. They are willing to spend on luxury real estate for it promises an upgraded lifestyle in the city of their choice.
WFH and Hybrid work model considerations
Work from home and the Hybrid work model has predominantly altered the way we work. Homes have doubled up as work-stations, and residents need spacious homes which can accommodate their work-stations as and when required. Surveys suggest that most progressive organisations have already adopted hybrid or productivity anywhere model. Employees can continue from the sanctuary of their homes, and thus luxury homes are becoming a necessity.
Investment: An underlying motivation
HNIs are buying second homes with investment as an underlying motivation. Around 31 per cent of HNIs believe it is an opportune moment to invest in the residential real estate segment as the sector is expected to resume price escalation by the second half of the year. While prices have remained stagnant in the last 18 months, improving market sentiments amid growing demand will affect the pricing soon. Investing in luxury residential properties appears to be a prudent decision.
The price escalation phenomenon in the country is contrary to the developed nations where prices have almost frozen. Thriving Holiday destinations like Goa, Kasauli , Lonavla would be an investor’s paradise. These regions have given bountiful returns to investors in the past. With the growing interest of consumers, they can again become revenue generators.
Other contributing factors
Several other contributing factors are augmenting the growth of the real estate segment in general and the luxury realty in particular. A report by a leading financial institution suggests that the unexpected rise in disposable income, low-interest rates, reduced stamp duties and such other considerations have worked in the favour of the real estate segment.
The rapid demand for digitisation gave an unexpected boom to tech workers. With increased demand, techies-mostly Millennials got out of turn promotions, higher salary offers and appraisals, which increased their disposable income and thus provided them with an opportunity to invest in real estate. Since the widely-travelled Millennials have a first-hand experience of luxury they prefer to invest in luxury real estate projects that can help them lead an opulent lifestyle.
The unlocking of wealth in the startup ecosystem is another propelling factor that has pushed the demand for luxury real estate. ESOP monetisation is at an all-time high in the startup ecosystem. Employees are diverting the monetised amount to purchase homes as it helps them make better utilisation of the funds with huge tax arbitrage.
The luxury housing segment will witness a surge in the top seven real estate markets and travel destinations. While buyers would be more inclined to opt for high-rise apartments in tier I cities, they would prefer low rise apartments and independent villas in other cities, thus giving a complete boost to the luxury real estate market.
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