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Luxe home sales rise as NRIs return to market

NRIs typically invest in their home markets first, followed by key markets.

, ET Bureau|
Last Updated: Jul 20, 2019, 12.57 PM IST
BENGALURU: Non-resident and wealthy Indians are slowly making a return to the real estate market, helping to prop up sales of luxury and ultra-luxury homes, a study has suggested. The uptick could be ascribed to a host of systematic reforms that the sector has witnessed over the past couple of years, such as the introduction of the Real Estate (Regulation and Development) Act and GST, as well as expectation of healthy returns as prices have bottomed out in the luxury segment.

As per the research by ANAROCK Property Consultants, the unsold inventory of luxury and ultra-luxury homes across the top three markets — Bengaluru, Delhi-NCR and Mumbai — fell in the first half of 2019 from a year earlier.

“NRIs typically bought luxury homes either for good RoI (return on investment) or for their self-use. After a prolonged wait-and-watch period post the recent reformatory changes in the Indian real estate market, the trend is now decidedly skewed towards personal use,” said Anuj Puri, the chairman of ANAROCK.

Bengaluru has been on top of the list in shedding its unsold stock in both luxury (Rs 1.5-2.5 crore) and ultra-luxury (more than Rs 2.5 crore) segments. Inventory in the first six months fell 25% and 14%, respectively, from a year earlier in the two segments. In the Mumbai Metropolitan Region, the stock declined by 8% in the luxury segment and 3% in ultra-luxury. The decline was around 2% in both segments in Delhi-NCR, said ANAROCK.

However, the trend was not similar across markets, as unsold luxury stock in Pune, Hyderabad, Chennai and Kolkata piled up in the April-June quarter by 29%, 36%, 76% and 5%, respectively.

“We believe the demand is predominantly led by end users,” said Sanjay Dutt, MD at Tata Realty and Tata Housing. “NRIs have already benefited from currency depreciation and have also been participative but not as much as in the past. Focus from the government and attractive projects from reputed developers… may help the luxury market pick up sales,” Dutt said.

NRIs typically invest in their home markets first, followed by key markets where reputed developers, particularly corporate developers, are active. The key markets include NCR, Mumbai, Pune, Bengaluru and some tier-II and tier-III cities.

The largest base of such investors is the US and Canada, followed by the UK, Dubai and Singapore, Dutt said.

Demand had been tepid in the luxury property market since 2017, as buyers, primarily NRIs, expected the reform measures to result in lower prices.

Those who were still buying high-priced property were very choosy. “There is demand for the right product at the right pricing. Also, the prices of luxury homes haven’t really moved up in the last one year,” said Kamal Sagar, MD at Total Environment Building Systems.

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