Luxury properties in India have been through
a few ups and downs since the beginning of this century. To understand what
factors drove this vital housing segment and what its future is likely to be we
have to understand how those who buy such houses came to be and how they
evolved over the past twenty or so years.
The Dot.com Era
During the dot.com era, the demand for software experts across the
globe was dire, India had legions of well-trained software engineers who were
quickly brought to the attention of large multinational companies. Young new
engineering graduates were rapidly brought to the attention of leaders of
multinational companies who retained these talented individuals even after
their initial contract had expired. The salaries commanded by these young IT
professionals was lavish by the standards of those days and the salaries of
those who managed these engineers were even more so. Hence this marked the rise
of the first phase of those who bought luxury property in India.
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NRI’s
Non-Resident Indians also play a vital role when it comes to real estate in India, many NRI’s
continuously invest their money back home into luxury property and this drives
up prices of much of the real estate in
India. Many NRI’s earn astronomical salaries and often own many luxury properties in India.
What Went Wrong
First came the dot.com crash that wiped away much of the wealth
and high-paying jobs that India’s young had banked on as sources of future
income. A few years later Lehman Brothers became insolvent and this triggered
the global financial crisis which further eroded the wealth of the wealthy
across India and of Indians in other parts of the world. Many builders who had
grown accustomed to rapidly selling property to NRI’s either via property
sites in India or to wealthy Indians face to face saw demand for
luxury houses drop significantly. It seemed clear that investors would no
longer invest in large masses into luxury property in India. Demonetization was the third blow to the luxury
real estate market in India.
There’s Yet Room for Optimism
While the story narrated above led the Indian media to announce
that robust demand for luxury property
in India was a thing of the past, what had not been considered was that
demand for luxury realestate in India is driven by the
personal wealth of individuals or families and such people are willing to pay
for luxury homes that meet or exceed their expectations. The demand for luxury properties in India is nowhere near saturation point but is rather
on the upswing.
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