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FeaturesLuxury residential market recovering

Luxury residential market recovering

Published: 5th Mar 2021 11:30 pm

Hyderabad: Luxury residential rental market, which saw a setback due to Covid-19, now appears to have recovered with demand for rental luxury properties back almost to pre-Covid levels. Among the top seven cities, Hyderabad’s HITEC City saw the highest rental appreciation of 26 per cent between 2014 and 2020; while average property prices saw a 12 per cent jump in the locality. The luxury residential hotspot Jubilee Hills saw average monthly rentals appreciate by 15 per cent in 2020 over 2014, while capital prices in this period rose 10 per cent, according to Anarock.

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Hyderabad residential market has generated much interest in the recent years owing to the city’s burgeoning IT sector and its cosmopolitan living environment. With considerable attention towards the western region of the city, particularly around HITEC City and Gachibowli where a number of campus developments by IT majors are located, residential development has accelerated in the adjoining areas. Experts believe the city’s residential market is expected to witness increased traction in the forthcoming period.

Anuj Puri, chairman, Anarock Property Consultants said, “The average rentals for a house of minimum 2,000 sq ft size in the top seven cities’ key luxury hotspots rose anywhere between 17 per cent to 26 per cent in 2020, as compared to 2014. In the same period, average capital prices in these micro-markets saw a maximum rise of 15 per cent and some even saw a marginal dip.”

Anarock data also reveals that from 2014 to 2020, rental prices in the top luxury markets saw consistent y-o-y growth – averaging between 3-6 per cent annually. In contrast, capital appreciation in this period either remained range-bound or varied each year.

Pan-India, due to the pandemic, 2020 was an outlier year for Indian rental markets, with most luxury localities recording either no change in average monthly rentals (compared to the preceding year) or seeing some decline. Without a doubt, Covid-19 impacted luxury rental markets amidst the growing WFH culture. Average property prices showed little or no change in 2020 over 2019.

NRI interest

Interestingly, in the post-Covid-19 real estate landscape, Non-Resident Indians (NRIs) are once again scouting for Indian luxury homes. At least 73 per cent NRIs now prefer properties priced between Rs 90 lakh and Rs 2.5 crore. In the pre-Covid survey (H2 2019), just 41 per cent preferred properties within this price bracket as most favoured affordable and mid-segment homes.

Luxury properties have emerged as a favourite with NRIs because of the depreciating rupee value translating into greater buying power, coupled with ongoing developer discounts and offers. Hyderabad is expected to attract 12 per cent of NRI investments in the country in the luxury home segment, as shown by a recent research study by Anarock.

JLL research indicates that the market is also witnessing renewed interest from NRIs impacted by economic uncertainties in Europe and the Middle East.

The challenges faced by residential real estate in 2020 have become the catalyst in providing stimuli to the sector. With people spending more time at home, the lockdown re-established the importance of owning a house. With the economy picking up and employment witnessing stability, housing sales are expected to sustain the existing momentum for the year 2021. All segments, including luxury and premium housing will see renewed demand.

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