Why are the super rich snapping up luxury apartments?

The super rich are buying luxury apartments in record time as if a FOMO (the fear of missing out) stalks them. Realty developer DLF has reported Rs 7,200 crore sale from its latest luxury residential development, DLF Privana South in Gurugram, with the project getting sold out within 72 hours of the launch. This exclusive enclave will comprise 1,113 luxury residences across 7 towers, presenting 4 BHK apartments and penthouses. DLF Privana South will be part of a larger development, DLF Privana, spread over approximately 116 acres in Sectors 76 and 77.

The sale was a repeat of what had happened nearly a year ago when an image went viral on micro-blogging site X, (previously Twitter) showing a massive crowd in front of the DLF office in Gurgaon to buy the Rs 7.2 crore luxury flats. Close to five hundred flats at Arbour, DLF's first high-rise condominium after nearly a decade, on Golf Course Extension Road, were reportedly sold out within three days of launch.

It's not just Delhi-NCR. Luxury properties in all big cities are on fire. Mumbai, the country’s largest and most expensive real estate market, has been setting new benchmarks with property transactions. Several large-ticket record-setting transactions involving industrialists, CXOs, actors, and sports personalities have been taking place in the country's commercial capital since the last few quarters.


As per an Anarock research report last year, approximately 18 per cent (approx. 65,680 units) of the total 365,000 units sold in the top seven cities in 2022 fall into the luxury category. In contrast, just 7 per cent (about 17,740 units) of the total 261,000 units sold in 2019 belonged to the luxury sector.

Safer asset
A general trend of premiumisation is sweeping across the market and has come to define consumer demand in India, as India is producing more high-networth individuals due to a fast pace of wealth creation and pent-up demand from the Covid times as well as the YOLO (you have one life) factor are driving sales of luxury products.

But the high demand for luxury real estate has its own reasons too. Firstly, real estate has found its way into the portfolio of the rich. The trend has been continuing for two years.

Ultra-high-net-worth as well as high-net-worth individuals had started investing in luxury real estate in 2022 itself, the annual Luxury Outlook Survey 2023 by India Sotheby’s International Realty showed last year. 75% of these super-rich people surveyed by India Sotheby’s International Realty believed real estate would do well over the next two to three years. 61% of them were looking to buy ultra-expensive houses. Delhi-NCR, Mumbai, Goa and Bengaluru were the preferred locations.

Covid and the geopolitical disruptions such as the Russia-Ukraine war and now the war in West Asia have forced the rich to invest in real estate which is considered relatively safer from extreme volatility triggered by global disruptions.

Talking of Mumbai, Amit Goyal, MD, India Sotheby’s International Realty, had said last year, "This signifies that real estate has made a meaningful come-back into the ultra-high-net-worth individuals portfolios. With wealth creation in India growing at a fast pace, and the country’s wealthiest city Mumbai set to enter the list of top 20 cities with the most number of millionaires by 2023, we believe there's an inherent strength in Mumbai’s luxury housing market which should continue in the future."

Besides the threat of economic disruptions, inflation is another factor. "High Net Worth Individuals (HNIs) and Ultra-High Net Worth Individuals (UHNIs) see real estate as an important long-term hedge against inflation," Taral Sha, Managing Director of Ahmedabad-based developer Shivalik Group), had written last year in ET. The growth in raw material prices, such as steel and cement, indicates that property prices will climb in the near future, making this an excellent time to invest.

Limited inventory
There is a lack of luxury apartments at key locations such as Gurgaon. Also, earlier the rich used to buy bungalows which have now become ultra expensive and have limited availability due to preferences for location and neighbourhood. Moreover, a big house in a colony such as Greater Kailash isn't as attractive to an HNI as a posh apartment in Gurgaon for reasons of security, navigation and amenities as well as design, quality, sophistication and exclusivity.

Developers are building projects keeping such a segment of buyers in mind. A key category in this segment is the NRIs who prefer to buy properties that offer amenities on a par with developed countries as well as security and exclusivity. Luxury apartments in Gurgaon, for example, tick all these boxes. What drives the prices up is the fact that new projects at key locations by trusted builders such as DLF do not match the high demand.

Aspirational push
The luxury boom will run for another couple of years, Gulam Zia, senior executive director at real estate broker and consultant Knight Frank, told Bloomberg. "It is not just the top end of the pyramid but also the upper middle class buying these projects."

As the pace of wealth creation in the economy continues, more and more Indians are joining the rich category. The aspirational demand gets fulfilled in luxury apartments because bungalows and big houses within the city are too expensive even for the rich. Another aspect is the desire for luxury. The new rich class wants to experience a luxurious lifestyle which such apartments offer in plenty with lots of green spaces and recreational facilities. Buying a luxury apartment is buying an exclusive address too which can be flaunted.