The real estate sector has been one of the most sought-after and dependable investments in India. And when it comes to pricey and luxury investments, both the quantum of investment and returns potential remain unparalleled. No doubt, the input costs are high but the uber-rich class swears by this niche investment instrument. With economic activities back on track, rich investors are actively looking for luxury investments. Here are a few compelling reasons which indicate that there is no better time to invest in luxury properties.
Falling Rupee Value
The value of the rupee is decided more by the global economic factors and the foreign exchange reserves of India. In recent times, the falling value of the rupee against the dollar has presented a unique opportunity in front of investors to invest in luxury properties. As a major chunk of the luxury investors is Non-resident Indians (NRIs), they are finding it cheaper to buy a high-end property due to the lower rupee value.
The reduced input costs have encouraged this investor class to invest more in luxury properties in India. According to a recent survey by the Anarock-CII, 47 percent of the NRI realty investors have invested in luxury properties for investment purposes.
Decreasing Returns Potential of other Instruments
Traditionally, even the ultra-rich investor class preferred to invest in traditional investment instruments such as Gold, Fixed Deposits and bonds. However, the Coronavirus pandemic and resultant challenges have significantly reduced the return potential of these instruments. The returns from most of the FDs in nationalized banks remain below 5 percent and the same is the case with the bonds market. Amid all this, the rich investors are considering luxury properties and expect a good return in a relatively short time horizon of 5-7 years down the line.
Low Interest Rates
With the pandemic in the background, the Reserve Bank of India (RBI) has not raised the repo rate for a very long time and this is the reason behind ample credit availability at reasonable rates. Professional luxury investors are now keen on taking cheaper long term credit and are investing in luxury properties. In addition to the residential properties, the luxury segment is also witnessing a boom in the luxury office spaces segment. The investors are actively considering large and palatial office spaces and hope to reap good returns once the economy is fully on track.
Competitive and Reasonable Prices
Similar to the affordable and non-luxury residential segment, the luxury real estate market is also recuperating and prices are not sky-high. The uber-rich investors are still well-positioned to bargain and get a good deal. In metro cities such as Mumbai and Delhi, the posh areas such as South Delhi and Lutyen’s zone are registering high-end property transactions. Real estate experts believe that investors will get some of the best bargains and will save a lot on their luxury investments, at least in 2022.
Moreover, an urge to clear the ready yet unsold inventory by the real estate developers has also presented the investors with handsome luxury investment options.
High Rental Yield
Although luxury properties attract a huge input cost and a huge sum is required to acquire one, they generate excellent rental yield for the investors. If invested after a thorough analysis of the local real estate market, luxury properties are bound to prove an excellent investment instrument. As the real estate sector is looking at a full-scale revival, the luxury property market is also presenting awesome opportunities for investment in 2022.
Conclusively, while the economy is resurgent and the real estate sector is in revival mode, the luxury real estate market is bound to flourish and there can be no better time than 2022 to invest in a pricey property.
By Subhash Goel, MD, Goel Ganga Developments
