December 1, 2023 3 min

Dissecting Luxury Homes Investments in the HNI and UHNI Segments


Dynamic preferences and motivations of HNIs and UHNIs are rewriting the rules of luxury homeownership. Now, property purchases go far beyond a shelter over one’s head; it’s a way to capitalize on growth potential and tap into niche markets. And the science of investing in vacation homes and second homes is no exception to this trend.

Indeed, the game has changed, and luxury real estate developers are keenly aware of this shift. No longer content to offer run-of-the-mill homes, they are creating homes that are designed with a savvy eye for detail and an unyielding focus on what HNIs and UHNWIs desire.

Modern properties come fully loaded with features and amenities that make them perfect for investing in. From high-tech integration to abundant open-air space, these modern marvels promise the best of both worlds, namely relaxation and fun. 

Those in the market for properties that showcase an unparalleled view or state-of-the-art indoor and outdoor facilities will find what they are looking for in spades.

Investing in vacation homes and second homes in the  (HNI) and  (UHNI) segments is a realm where the glimmer of luxury converges with the lure of financial growth. 

It comes as no surprise that the real estate industry has long held the mantle as the second most sought-after investment option, right after the stock market. The wealthy have recognized the inherent benefits and potential of diversifying their portfolios by allotting nearly 23% of their income to real estate. (A study by meraqi)

Delving into the psyche of this group of individuals, there stems a fascinating bias toward investing in opulent holiday homes and sublime second homes.

A survey conducted by India Sotheby’s International Realty (ISIR)  unveils an intriguing hierarchy of preferences, with high-rise apartments claiming the top spot at 34%, closely followed by farmhouses and holiday homes commanding a notable 30% share. 

In a post-pandemic landscape, the luxury villa market has witnessed remarkable traction, with buyers eagerly embracing set sales prices; with customer confidence soaring and market sentiments at an all-time high, the notion of owning real estate assets as steadfast guardians of a secure future has finally taken center stage.

Understanding Motivations Behind Investing In Luxury Homes

Depreciation of the value of Rupee

As the rupee struggles with a weaker exchange rate against major global currencies, HNI investors see this as an opportune moment to invest in tangible assets that are not influenced by currency fluctuations. With the anticipation of appreciation in the long run, investment in luxury real estate can be perceived as a hedge against currency devaluation, while concurrently providing a sense of stability.

Diversify Investment Portfolio

Historically, HNIs and UHNIs have favored investing in instruments like gold, fixed deposits or direct stocks. However, the limited and uncertain return potential of these instruments has led affluent investors to explore alternative options, such as luxury villas. With a time horizon of 5-7 years, they believe that investing in vacation homes and second homes will offer superior returns compared to traditional financial instruments.

Strategic Pricing Advantage

This has also become a driving force behind the increasing interest in vacation homes and second homes among HNIs and UHNIs. The residential real estate market is still in a state of recovery, and many developers are eager to clear their ready yet unsold inventory. This has led to developers offering competitive pricing options to attract wealthy investors. These buyers are well-positioned to negotiate and secure good deals, ensuring that their investment potential generally remains high.

Increased Rental Yields

Unlike traditional investments that offer passive returns, luxury villas have the unique advantage of generating high rental yields. By strategically investing in vacation homes and second homes in desirable locations, HNIs can tap into the burgeoning tourism industry and reap handsome rental income. This avenue not only adds an additional stream of revenue but also bolsters the property’s overall return on investment, significantly boosting its appeal.

The luxury real estate market in India is undergoing a remarkable metamorphosis. Builders are pulling out all the stops to create homes that embody the desires and expectations of the new wave of HNIs and UHNWIs. 

With discerning tastes and purse strings to match, this clientele is at the forefront of the industry’s transformation. As the elite demand high-tech integration, personalized and lifestyle-based features, and exclusive living experiences, developers remain keenly attuned to these tastes.

 It is evident in the avant-garde luxury villas that make style, luxury, and grandeur appear effortless and accessible.

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