HNIs Look to Invest in Luxury Real Estate Despite Slower Growth Survey Insights
India’s luxury real estate market is witnessing a subtle shift, with High-Net-Worth Individuals (HNIs) and Ultra High-Net-Worth Individuals (UHNIs) becoming more cautious in their investment outlook. According to a recent survey conducted by India Sotheby’s International Realty (ISIR), 62% of HNIs and UHNIs are planning to invest in luxury residential properties in the next 12–24 months. This marks a decrease from 71% in 2024, signaling a moderation in sentiment as investors recalibrate their expectations for returns. Despite this, real estate remains a preferred asset class, with many seeking the stability it offers amid a volatile financial landscape.
Among those considering investment in the luxury sector, nearly half of the respondents expect returns ranging between 12% and 18%, while 38% anticipate returns below 12%. The survey findings also highlight a softening in optimism, with the number of individuals who are bullish about the market dropping from 79% last year to 71% in 2025. However, the survey participants remain optimistic about India’s long-term economic prospects, citing GDP growth projections between 6% and 6.5% and reaffirming India’s position as the world’s fastest-growing major economy.
The survey suggests that HNIs and UHNIs are primarily driven by capital appreciation, with 55% of respondents indicating that price appreciation is their main reason for investing in luxury residential properties in 2025. This figure marks a significant rise from 44% in 2024. Amit Goyal, Managing Director of India Sotheby’s International Realty, echoed these sentiments, emphasising the continued growth of India’s luxury real estate market, though with a more cautious approach. He predicted that demand for large, bespoke luxury homes—especially in hill stations and coastal regions—would remain a key trend.
India’s billionaire community has witnessed substantial growth in recent years, with wealth surging by a staggering 42%, bringing their collective wealth to over $905 billion, according to the UBS “Billionaire Ambitions Report”. The number of billionaires in India has more than doubled in the past decade, solidifying the country’s position as the third-largest base for billionaires globally, just behind the US and China. This increasing wealth among India’s ultra-wealthy continues to drive demand for luxury real estate as both a lifestyle upgrade and an investment avenue.
Second Homes and Holiday Villas: New Trends in Luxury Real Estate Investment
In line with the growing affluence of India’s wealthy, there has been a noticeable trend towards the acquisition of second homes, particularly in hill or beach destinations. The ISIR survey revealed that 54% of HNIs and UHNIs are considering properties in such locales. This trend is reflective of a shift in priorities as the ultra-wealthy look for properties that offer both an escape from urban life and potential for high returns on investment. Notably, convenience plays a crucial role in property selection, with 55% of respondents preferring homes within a four-hour drive from their primary residence. In contrast, only 20% expressed interest in international properties, with Dubai emerging as the top global destination for investment, surpassing London.
Despite real estate being a stable choice, financial assets such as equities and commodities remain dominant, with 54% of survey participants prioritising them for investment. However, the real estate sector continues to attract 36% of respondents planning to allocate surplus funds over the next two years, underlining the appeal of tangible assets that offer both capital appreciation and a sense of permanence. As interest rates are expected to ease moderately in the coming months, 71% of respondents anticipate gradual reductions, although 23% remain cautious due to concerns over inflation.
Sustainability in Luxury Real Estate: The Growing Importance
One of the key themes emerging in the luxury real estate sector is the increasing emphasis on sustainability. As the wealthy seek homes in scenic locations, there is a growing interest in properties that prioritise eco-friendly designs and low-impact living. In response to this, many developers are incorporating sustainable features into new luxury homes, such as energy-efficient systems, water conservation technologies, and the use of renewable materials. This aligns with a broader global trend towards conscious consumption, where affluent buyers are not just looking for grandeur but also for homes that are environmentally responsible.
Moreover, with the increase in the number of UHNIs in India—projected to grow by 50% by 2028—there is an opportunity for the luxury real estate market to embrace more sustainable construction practices. The incorporation of green building technologies could not only enhance the appeal of properties but also serve as a hedge against rising energy costs and stricter environmental regulations in the future. As the market matures, the role of sustainability in luxury real estate will likely become more pronounced, reflecting the growing awareness among India’s affluent about their environmental impact.
The Road Ahead: Resilience of Luxury Real Estate Amid Challenges
While the luxury real estate sector may be experiencing a moderation in sentiment, the fundamentals remain strong. With India’s economic growth expected to continue in the medium term and the number of billionaires on the rise, the luxury property market is likely to remain a strong investment choice for the ultra-wealthy. Furthermore, the increasing demand for second homes in scenic destinations, coupled with the focus on sustainability, will continue to shape the future of India’s luxury real estate market. Despite the current challenges, the market’s resilience as a long-term asset class remains undeniable.
