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Updated March 1st, 2024 at 16:49 IST

Luxury property buyers cashing in on stable realty sector, see prices go up

Experts say real estate investment surges due to FOMO and financial motives, with investors reallocating gains before the Lok Sabha elections.

Reported by: Business Desk
Luxury real estate
Luxury real estate | Image:Pexels
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High-end realty trend: Luxury real estate is witnessing a surge in transactions as the financial year draws to a close in India. Notably, the properties being purchased range from Rs 10 crore to over Rs 100 crore, indicating a significant investment trend amongst affluent individuals, say experts.

What's behind the trend?

Experts attribute this trend to several factors. Firstly, there's a fear of missing out (FOMO) on desirable properties due to limited supply. Secondly, there are financial motives behind these investments. With investors anticipating potential market volatility during upcoming Lok Sabha elections, many are choosing to reinvest their gains from the financial markets into real estate.

Additionally, changes in tax laws, such as the introduction of a Rs 10 crore cap on long-term capital gains reinvestment under Section 54F, have influenced the ticket sizes of these deals.

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"As we analyse the current market dynamics, we notice a notable trend in the ticket size range, spanning from Rs 10 crore to well beyond Rs 100 crore. This shift can be attributed to the regulatory amendment introduced in the Budget 2023, specifically the imposition of a Rs 10 crore cap on long-term capital gains reinvestment under Section 54F. Such legislative measures inevitably influence the investment patterns observed in the luxury real estate sector," said Suren Goyal, Partner at RPS Group.

Real estate | Image credit: Freepik

Recent transactions in cities like Delhi-NCR and Mumbai reflect this trend. For instance, a 10,000 sq ft apartment at The Camellias by DLF in Gurgaon's Golf Course Road was sold for Rs 95 crore, while Bollywood actor Mrunal Thakur and her father purchased two apartments worth Rs 10 crore from Kangana Ranaut's family in Mumbai, according to media reports.

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Mumbai's residential market saw a surge in activity in January 2024, recording the highest number of property registrations in 12 years, as per a Knight Frank report. With 10,901 properties registered, there was a substantial 21 per cent increase compared to the previous year. Additionally, this boost led to an 8 per cent YoY growth in revenue, contributing Rs 746 crore to the state government.

The appetite for luxury properties is not restricted to posh areas but also extends to suburban locations, say real estate analysts.

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Surge in ultra-luxury property sales

According to data from Anarock, the year 2023 witnessed a substantial rise in ultra-luxury property sales. A total of 62 ultra-luxury homes were sold across the country's top seven cities during this period, amounting to a collective sales value of approximately Rs 4,458 crore.

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This figure starkly contrasts with the preceding year, 2022, which witnessed only 13 such transactions totalling approximately Rs 1,170 crore. Notably, the data further underscores the unprecedented nature of this surge, revealing that out of the 62 ultra-luxury homes sold in 2023, at least 12 exceeded the Rs 100 crore mark, a substantial increase from the nine homes recorded in 2022.

Moreover, 2023 witnessed a rise in sales within the price range of Rs 40 crore to Rs 100 crore, with 50 ultra-luxury homes falling within this bracket, compared to just four deals in 2022.

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Anuj Puri, chairperson, Anarock Group, highlighted the surge in sales of ultra-luxury homes, with CY2023 witnessing a 281 per cent increase in total sales value compared to the previous year. This indicates a growing demand for high-end properties in the country.

High-end property investments expected to persist

Experts predict that the trend of high-end property investments before the end of the financial year is likely to continue, driven by individuals seeking to capitalise on gains from the stock market and secure their investments in real estate amidst market uncertainties.

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Published March 1st, 2024 at 13:38 IST

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