Luxury Real Estate Investment: Capital Appreciation Drives Wealthy Buyers - ISIR Survey

New Delhi, Jan 18 (PTI) Capital appreciation will be the key motivation for 44 per cent of wealthy people to buy luxury properties over the next 24 months, according to India Sotheby's International Realty (ISIR) survey released on Thursday.

Real estate consultant ISIR released its annual 'Luxury Outlook Survey 2024' with a sample size of over 500 High Net Worth Individuals (HNIs) and Ultra High Net Worth Individuals (UHNIs).

"Despite an almost 40 per cent rise in property prices over the last 24 months and increase in mortgage rates, 71 per cent of respondents expressed an intent to buy real estate in the next 12-24 months, showcasing significant confidence in the market," ISIR said.

Capital appreciation has overtaken lifestyle upgrades, as the primary motivation for real estate investment (44 per cent), the consultant said, adding that this signals a return of investors to the market.

"Our survey findings indicate a renewed and heightened interest among investors who now view real estate as a compelling avenue for long-term wealth creation," Amit Goyal, Managing Director, India Sotheby's International Realty, said.

The rising economic momentum is reflected in record-breaking housing sales numbers in Indian real estate in 2023 and an all-time high stock market, he said.

"We believe the top end of the real estate market will benefit the most in the next 12-24 months. The affluent class is expected to nearly double to 100 million people within three years, according to Goldman Sachs Group Inc. India's ultrawealthy are growing," Goyal said.

The robust startup ecosystems and a growing number of unicorns have added to the swelling ranks of the super-rich, he added.

"We are witnessing a remarkable shift in economic sentiment, reflecting the resilience and potential of the Indian economy. We are not surprised that there has been a substantial increase in the launches of new luxury projects across the top seven cities in 2023," Ashwin Chaddha, CEO of ISIR, said.

There is also a shift in sentiments that aligns with a broader acknowledgement of real estate's enduring value and potential for sustained financial growth, he said.

"We believe investors are strategically positioning themselves for wealth accumulation and creating multi-generational wealth through real estate investments," Chaddha said.

The survey found that 56 per cent of HNIs and UHNIs believe that the Reserve Bank of India (RBI) will start reducing interest rates in 2024.

The survey also reflected that a staggering 83 per cent of affluent Indians own multiple luxury properties.

Apart from primary residences, respondents showcased a diverse array of real estate assets, with 34 per cent owning commercial real estate, 25 per cent holiday homes, 21 per cent agricultural land, and 20 per cent farmhouses.

In other notable findings, 35 per cent of holiday home buyers expressed Goa as their preferred destination. Desire to invest in overseas property remained stable at 12 per cent, with Dubai, UAE, and the US maintaining their positions as top choices.

As many as 43 per cent of UHNI and HNI respondents expressed a desire to consolidate their portfolios, focusing on better-quality properties and rent-yielding assets.