Residential real estate is getting a boost from the ultra-rich

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According to a study by real estate consultant Knight Frank, a new generation of self-made ultra-rich Indians is investing in residential real estate in the country. About 29% more of India’s ultra high net worth individuals (UHNWIs) will buy a home in 2021 compared to the previous year, Knight Frank said in a report.

Entrepreneurs are increasingly investing in second homes as the residential segment has made a strong recovery following the Covid-19 outbreak. Currently, an Indian UHNWI – a person with net worth of $30 million or more – owns, on average, two houses.

Shishir Baijal, Managing Director of Knight Frank India said: “Investment in the real estate sector in India has increased recently, particularly in the wake of the pandemic as real estate has been viewed as a safe and tangible investment option amid economic volatility. In addition, property at attractive valuations continued to drive institutional demand.”

According to real estate agents, UHNWIs are actively looking to buy a new home in 2022. These individuals prefer to invest in domestic property first, followed by the UK, UAE and US markets.

“We are seeing a 2x increase in real estate exposure across our UHNI clients’ overall investment portfolios. In the last two years, stocks have performed well and salaries in the IT sector have increased – both factors have led to a good investment flow in real estate as it is considered the most stable and safest investment option,” said Bhavesh Kothari, Founder of Property First, a luxury real estate brokerage firm.

The club of self-made UHNWIs in India has grown amid a boom in the startup sector, with many of these companies receiving funding from venture capital firms and other investors at high valuations. The number of UHNWIs in India increased by 11% yoy in 2021, the report said. Among major Indian cities, Bengaluru saw the fastest growth in the number of UHNWIs: a 17.1% increase to 352 in 2021. The southern city was followed by Delhi (12.4% and 210) and Mumbai (9% and 1,596) .

In terms of population of billionaires, India ranked 3rd in 2021, after the US and China, the report said. “There are indications that the desire to modernize homes will be a big motivator in 2022 due to the hybrid working model. We have seen strong sales momentum, particularly in the last 12 months, with almost 90% of inventory now sold,” said Ashwinder R Singh, CEO (Residential) of Bhartiya Urban, a Bengaluru-based real estate development company.

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