Booming Luxury Real Estate vs. Struggling Affordable Housing Market

Understanding the Shift in Real Estate: Luxury Overtaking Affordable Segment

The real estate sector has been experiencing significant demand in recent times, but the activity varies across segments. According to a recent Knight Frank report, while the luxury segment saw a 39% jump in housing sales during the July-September 2023 quarter, the affordable segment experienced a 2.6% decline.

Reasons Behind the Surge in Luxury Real Estate

Manoj Gaur, president of CREDAI-NCR and CMD of Gaurs Group, attributes the growth of the premium and luxury segments to India’s economic development, the desire for larger homes, and aspirations for a better lifestyle. Mayank Ruia, founder and CEO of Bengaluru-based MAIA Estates, further elaborates on the reasons behind the boom in luxury real estate:

• Rising Affluence: India’s growing economy has led to an increase in high networth individuals (HNIs) and non-resident Indians (NRIs) investing in luxury properties. This affluent class seeks residences offering comfort, amenities, security, privacy, and other features exclusive to high-end real estate.
• Global Exposure: Increased global exposure has made Indians more attuned to international luxury standards. Many are seeking properties that match global benchmarks, complete with world-class amenities and unique architectural designs.
• Investment Perspective: High-end real estate often provides stable and higher returns on investment, being seen as a tangible asset that appreciates over time and offers more rental income compared to affordable housing.
• Focused Developments: Recognizing the potential, many developers are concentrating on creating niche luxury projects with exclusive features, further fueling the segment’s growth.

Challenges Faced by the Affordable Housing Segment

While affordable housing remains crucial for a large section of the population, it has not experienced the same growth trajectory due to:

• Land Prices: Rising land costs in major cities make it challenging for developers to offer affordable housing in prime locations.
• Financing Issues: Securing funding for affordable housing projects can sometimes be more challenging compared to luxury real estate projects.

Real Estate Trends in Bangalore

Over the past decade, Bangalore has consistently been at the forefront of delivering higher-than-average growth and high-quality residential assets, largely attributed to the significant boost the city has received from the startup ecosystem in the IT and services sector. Ruia states that as a result of the pandemic and the gradual return to office spaces, there has been a notable absorption of surplus housing inventory from previous years, leading to a healthy and consistent increase in prices across various parts of the city, as well as within specific product segments and micro-markets.

As the real estate market continues to evolve, understanding the factors driving the growth of luxury real estate and the challenges faced by the affordable housing segment is essential for both developers and investors. By keeping an eye on these trends, real estate professionals can better cater to the needs of their clients and adapt to the ever-changing market dynamics.

For more information on real estate trends and insights, visit Jessica Fulk’s Real Estate website.

Orginal article: Link To Article – provided by Kansas City Realtors