BENGALURU -- Less than a decade after buying their first home, a modest two-bedroom apartment in Bengaluru that fit their shoestring budget, technology professionals Ratnesh and Neha Malviya are looking to upgrade.
The Malviyas, in their early 40s, now want a four-bedroom home. Ratnesh, who has a passion for sculpting, plans to use one of the additional rooms as a studio while reserving the other for guests.
The couple's monthly income has multiplied fivefold to about half a million rupees ($5,955) since they bought their first home. The property they are now close to buying costs 40.3 million rupees.
"The mortgage will be a bit of a stretch, but it is better to buy something that meets all our requirements, even if it is at the top end of our budget," Ratnesh said. "That's at least better than hitting the market again in a few years. We can't keep flipping homes."
Aspirational millennials like the Malviyas are fueling sales of swanky homes in India, according to Aakash Ohri, joint managing director of DLF, the country's largest real estate company.
"This is a new segment coming in and they want the best," he told Nikkei Asia in a recent interview. "Residential homes have become a priority, with people who didn't have homes now wanting one and those who have homes wanting a better one."
Sales of expensive homes are piggybacking upon torrid Indian economic growth that has been outpacing that of all other major economies. This in turn has helped boost the stock market, adding to the riches of business owners and senior executives, and lift wages, especially for white-collar workers.
Boston Consulting Group has estimated that India generated a record $588 billion in financial wealth in 2023. According to calculations by UBS, the number of dollar millionaires in India reached 868,671 last year, up 14.4% from 2019, and is on track to reach 1.06 million by 2028.
The homes wealthy Indians are buying are mostly high-rise condominiums of 185 square meters or more. Most are within sprawling gated suburban communities that come with facilities such as tennis courts, swimming pools and jogging tracks.
According to real estate services company CBRE, 11,755 homes priced at 40 million rupees or above were sold last year in metropolitan Mumbai, Delhi and Hyderabad, four times more than in 2019.
"Demand is high but supply of quality homes is limited," said Karan Khanna, a director with investment advisory Ambit in Mumbai. "The demand is generated by a mix of factors like preference for larger homes with hybrid work culture becoming prevalent, higher affordability with rising incomes and rapid urbanization."
In the fiscal year that ended in March, DLF generated 147.78 billion rupees from the presale of new condos, beating its target of 130 billion rupees and doubling the volume it did two years earlier.
Nearly half of last year's presale revenue came from a single project, the 1,113-unit Privana South development in the Delhi suburb of Gurgaon. Although most units were priced between 60 million and 80 million rupees, all found takers within three days of coming on the market. DLF repeated the feat in May, selling the 795 units in nearby Privana West at similar prices within three days again.
"If you look at it, DLF has literally developed the Gurgaon market, a hotspot for luxury homes," said Pankaj Kumar, vice president of research at Kotak Securities in Mumbai, crediting the company for its strength in constructing and marketing swanky homes.
"They have an early mover advantage and a brand value," he said. "Also, they have low-cost land parcels in Gurgaon. That helps them deliver high margins." Indeed, DLF's net profits last year rose 34% to 27.24 billion rupees while revenues for the company, which also builds offices and malls, climbed 15.7% to 69.58 billion rupees.
The company, which began operations as Delhi Land & Finance a year before India achieved independence in 1947, has largely focused its residential business in the capital area. This fiscal year, it is moving south into the coastal urban markets of Mumbai and Goa. It has told analysts it aims to market 1.2 million sq. meters worth of new units in total, 14% more than last year. Nearly all of these will be in the luxury or super luxury segments, including some priced at 500 million rupees or more.
HDFC Securities predicts this push will likely enable DLF to beat its annual presales target of 170 billion rupees to 180 billion rupees.
"In a business which is usually dominated by local players, DLF is among the few pan-India brands," said Abhishek Basumallick, founder of investment advisory Intelsense Capital. "Given that buyers veer towards big brands when it comes to homes, possibly the biggest investment in their life, DLF stands to gain."
DLF is not alone in targeting Indians looking for a modern luxury condo. Major competitors include Oberoi Realty, Godrej Properties and Lodha Group.
By CBRE's count, 15,870 new high-end homes were put on sale in India last year, about five times as many as in 2019. In the first half of 2024, it tallied 13,020 more. Anarock, a local property consultancy, says luxury homes priced above 15 million rupees accounted for a third of new housing in the July-September quarter. In 2018, luxury homes represented just 9% of new supply.
Interest rates in India have not risen since February 2023, helping sustain the brisk pace of housing sales, in contrast to markets such as Singapore and the U.S. As of Aug. 23, outstanding Indian home loans totaled 28.3 trillion rupees, 13% more than a year earlier. This growth provided a boost for the successful 65.6 billion rupee initial public offering in September of Bijaj Housing Finance, the country's largest market debut so far this year.
As a result of Indians' keenness for housing upgrades, home loans rose as a share of overall Indian personal loans by 2 percentage points to 51% between August 2022 and August 2024. Down payment requirements vary with the price of home; for those priced above 7.5 million rupees, buyers must put up 25% of the price up front, whether borrowing from a bank or other mortgage lender.
Beyond financial factors, observers say India's property boom can be partly traced to the 2016 Real Estate (Regulation and Development) Act, or RERA. This law helped give homebuyers a greater sense of security with measures such as a uniform licensing regime and a requirement that developers hold prepayments in escrow.
"The sector is now thriving, driven by strong policy measures such as RERA, which have enhanced transparency and customer focus, along with strong economic momentum and a growing desire for homeownership and upgrades," wrote HDFC analyst Parikshit Kandpal, who rates DLF as a "buy," in a recent client note.
DLF's luxury home sales are also getting a boost from the country's diaspora, known as nonresident Indians (NRIs).
"There is not only money being generated here and spent here, but there's a good amount of money which is coming in from overseas through NRI investments," said DLF's Ohri, who estimated that a quarter of the company's home sales so far this year have come from residents of the U.S., Southeast Asia, the Middle East, Africa and Australia. "They want to come back and have a proper foot in the door."
Sheelaj Sharma, who practices medicine in Abu Dhabi, bought his second DLF unit in Gurgaon last year after seeing the value of one he bought there in 2011 rise fivefold.
"Despite being an NRI, I feel it is important to have a home in India so that when I retire, I have someplace to live," said Sharma, who has also invested in properties in Abu Dhabi and London, where he was trained. "Who knows how life will shape up?"
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