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 than now 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. The falling value of the rupee against the dollar recently has presented a unique opportunity in front of investors to invest in luxury properties. As a major chunk of luxury investors is Non-resident Indians (NRIs), they are finding it cheaper to buy a high-end property due to the lower rupee value.
Decreasing returns potential: Traditionally, even the ultra-rich investor class preferred to invest in traditional investment instruments such as gold, fixed deposits (FD) and bonds. However, the COVID-19 pandemic and resultant challenges have significantly reduced the return potential of these instruments. The returns from most of the FDs in nationalised banks remain below 5% and 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 five to seven years.
Low interest rates: 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. Investors are actively considering large and palatial office spaces and hope to reap good returns once the economy is fully on track.
Competitive 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. Metro cities such as Mumbai and Delhi 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.
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 luxury property.
The writer is Managing Director, Goel Ganga Developments.
