Realty Sector Boom: How NRI Investments and Rising Disposable Income are Driving Growth
Get insights on the growing demand for luxury housing, NRI investments, and emerging hotspots in India's realty sector.
Real EstateNri InvestmentsLuxury HousingDisposable IncomeInfrastructure DevelopmentReal Estate MumbaiJun 28, 2024
In the first quarter of 2024, the top 7 cities saw an unprecedented 64% year-over-year growth in the launches of luxury housing units priced at over Rs 4 crore. Developers are now focusing on building luxury living spaces that are priced upwards of Rs 4 crore. Pushpamitra Das, Founder and Director of Justo Realfintech, attributes this growth to strong economic growth, policy reforms, rising disposable income, rapid urbanization, and a strong focus on infrastructure development.
Luxury housing has seen unprecedented growth, with over 4000 luxury housing units sold in the first quarter of 2024. Mumbai absorbed over 40% of the units, recording a growth of 15% from the previous year. Delhi-NCR and Hyderabad claimed 25% and 10% shares, respectively, indicating that the demand for high-valued properties is more concentrated in metro locations.
A growing aspiration and affluent population in India, an increasing number of self-employed millionaires, and the growth of NRI investment seeking premium and large living spaces with quality amenities and at strategic locations is fuelling the demand for luxury housing. Pune is witnessing a strong demand for luxury units of 4BHK configuration that are priced upwards of 2.5 crores.
NRI investment in residential real estate is expected to reach 20% of the overall residential real estate investment by 2025, from the present 15%. Post-pandemic, NRI investments have seen a shift towards larger housing units of 3 BHK configuration and holiday homes, especially those that are priced upwards of Rs 1 crore. Bangalore and Mumbai remain the top 2 destinations for NRI investments in India.
The growth of NRI investments in residential real estate can be attributed to a growing economy, stable governance, compelling affordability of high-end properties with extravagant amenities, improved infrastructure, and policy reforms like RERA that have significantly boosted investor confidence in the Indian Real Estate market. UAE, USA, and Singapore contribute the highest NRI investments in Indian real estate.
We foresee a rise in the home acquisition cost by 8 to 10% this fiscal led by high demand for residential real estate across metro locations like Mumbai, Pune, Bengaluru, and Hyderabad. Post-COVID, the demand for real estate has been robust across Tier 1 and Tier 2 cities. Homebuyers and investors are looking at real estate as a low-risk alternative to other avenues of investment.
Apart from Mumbai and Pune, new locations will soon emerge as residential, retail, and commercial hotspots supported by rail, road, air, and metro connectivity. Tier 2 and 3 locations will benefit immensely from improved connectivity due to the availability of huge land parcels and lower cost of land acquisition, compared to developed locations. Nashik, Aurangabad, Bhubaneshwar, Indore, and Goa are emerging residential locations that will see real estate growth.
Justo Realfintech, a leading real estate services company, commands nearly 80% of repeat business from existing markets and expects over 2x growth in the coming 2 years. With an expansion plan in place, the company expects an annualized GMV of Rs 8000 crore this financial year. It will expand its operation in Hyderabad and Bengaluru in India and foray into Dubai this financial year.
Frequently Asked Questions
What is driving the growth of luxury housing in India?
The growth of luxury housing in India is driven by a growing aspiration and affluent population, an increasing number of self-employed millionaires, and the growth of NRI investment seeking premium and large living spaces with quality amenities and at strategic locations.
What are the top destinations for NRI investments in India?
Bangalore and Mumbai remain the top 2 destinations for NRI investments in India, followed by Pune and other emerging locations.
What is the expected growth rate of the India Luxury Residential Real Estate Market?
The India Luxury Residential Real Estate Market is expected to grow at a CAGR of 21.81% to reach $101.92 billion by 2029 from the present size of $38.02 billion.
What are the factors contributing to the growth of NRI investments in residential real estate?
The growth of NRI investments in residential real estate can be attributed to a growing economy, stable governance, compelling affordability of high-end properties with extravagant amenities, improved infrastructure, and policy reforms like RERA that have significantly boosted investor confidence in the Indian Real Estate market.
What are the emerging residential locations that will see real estate growth?
Nashik, Aurangabad, Bhubaneshwar, Indore, and Goa are emerging residential locations that will see real estate growth driven by improved connectivity and infrastructure development.
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