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Luxury housing witnesses strong traction!

ICICIdirect Research 23 Aug 2022 DISCLAIMER

What's Buzzing? 

Luxury housing units' sales proportion has doubled to 14% of overall residential sales in H1CY22 vs. 7% in the pre-pandemic year 2019.

Context:

As per Anarock, ~1.84 lakh units were sold in the top seven cities in H12022, with ~ 14% (25,700 units) sales in the luxury category. This implies a doubling of luxury housing share in overall units sold from pre-pandemic levels in 2019 wherein of the 2.61 lakh units sold in the whole of 2019, just 7% (~ 17,740 units) were in the luxury category. MMR and NCR have led luxury homes sales with H12022 seeing ~ 17,830 units sold in these two cities alone. In terms of overall sales share, MMR’s luxury housing sales share increased from 13% in 2019 to 25% in H1 2022. In NCR, the same rose to 12% in H1 2022, from 4% in 2019.

Our Perspective:

As per Anarock, discounts by developers made luxury properties very attractive for these buyers while NRIs have also been snapping up luxury homes in India on account of the favourable exchange rate. However, we believe the major reasons are: a) need for bigger space (accentuated during pandemic), b) wealth effect of start-ups’ led valuation driving wealth creation as well as resilient financial health of affluent class and d) relatively lower sensitivity to interest rates (given lower loan components in ultra-luxury project). Key beneficiaries of momentum during the period were premium developers such as DLF (projects like Camellias, One Mid Town in Gurgaon), Oberoi (new launches of Elysian in Goregaon), etc, which saw strong sales volumes in the luxury segment.

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