Farmhouses, not beach homes, lead second-home buying among India's wealthy

Second-Home Demand Slips as 75% of HNIs Skip Holiday Property Buys

While demand for luxury real estate from high-net-worth and ultra-high-net-worth individuals remains structurally intact, buying decisions are becoming more selective, data-driven and strategically time, shows data analysed by India Sotheby’s International Realty in its 'Luxury Residential Outlook 2026' report.

 

At least 67% of HNIs and UHNIs remain firmly bullish on India’s growth prospects over the next 12–24 months, despite global headwinds.

 

Moreover, 72% of respondents expect India’s GDP growth to stabilise in the 6–7% range in FY27, indicating moderated but steady optimism.

 

Luxury Housing: Still in Demand, But Less Frenzy

 

Luxury residential real estate continues to attract capital, though momentum is expected to cool. 56% of respondents anticipate a moderation in luxury housing strength in 2026–27, compared with the surge seen in the last two years. 

 

Even so, interest remains resilient:

 

• 57% of HNIs and UHNIs plan to continue investing in real estate over the next two years
• Buying is evenly split between capital appreciation (53%) and self-use (47%)
• 67% of wealthy investors expect annualised real estate returns of up to 15%.
• 53% of buyers invested in luxury real estate for capital appreciation, while 47% purchased for self-use, highlighting a balanced demand mix.
• City-based residential properties remain the top choice among the wealthy, with 31% prioritising primary residences and 30% focusing on investment assets.
• With quality inventory tightening and prices moving upwards, interest among HNIs and UHNIs in purchasing second homes has softened over the past year.

 

Second Homes Lose Steam as Prices Rise

 

The survey indicates a visible softening in second-home demand. While holiday homes and lifestyle assets surged post-pandemic, 75% of respondents did not buy a second home in the past 12 months.

 

Among those who did, preferences are clear:

• 46% chose farmhouses near city peripheries
• 33% opted for hill or mountain destinations
• 21% picked beach locations

 

Rising prices, tighter quality inventory and higher opportunity costs appear to be tempering discretionary purchases.

 

Real Assets Dominate Wealth Portfolios

 

Equities remain the single largest allocation, with 67% of respondents favouring stocks over the next two years. However, when combined, real assets now form the largest pool of wealth, driven by:

 

• 64% allocation to physical real estate
• Rapid adoption of financialised real estate such as AIFs, REITs and InvITs (22%)

 

Returns Expectations Are Resetting

 

While optimism persists, return expectations have cooled. A majority of respondents now expect annualised real estate returns of up to 15%, rather than above that threshold. The recalibration suggests greater realism after the sharp price appreciation of recent years.

 

Once returns overshoot portfolio requirements, investors appear more inclined to rebalance rather than chase momentum.

 

From Accumulation to Consolidation

 

Perhaps the clearest signal of maturity is how wealth is being managed. More than 53% of HNIs and UHNIs are considering consolidating their real estate portfolios, while 80% now rely on professional advisors or family offices to manage real estate decisions.

 

This marks a decisive shift away from fragmented, opportunistic buying toward institutional-style portfolio management.

 

 “ The momentum of 2025 was unmistakable, with listed developers reporting record sales and landmark transactions across Mumbai, Delhi-NCR, and lifestyle destinations such as Goa and Alibaug. Alongside established business families, a new generation of wealth creators—startup founders, next-generation entrepreneurs, and senior professionals entered the market, supported by strong equity gains and a record IPO cycle. In 2025, 103 Indian corporates raised Rs 1.76 lakh crore through IPOs," said Amit Goyal, Managing Director, India Sotheby’s International Realty.

 

“For these buyers, real estate offered permanence, blending capital efficiency, lifestyle value, and generational continuity. Demand increasingly favoured quality over scale, with privacy, design, wellness, and service-led living defining a more refined luxury market,” added Goyal.

 

Prime urban luxury homes continue to outperform due to scarcity and defensibility, while second homes are evolving into lifestyle anchors rather than purely investment assets.

 

"With over 350 billionaires controlling nearly $2 trillion in wealth, demand for bespoke residential assets remains structural, not cyclical. Momentum continues but with moderation," said Ashwin Chadha, CEO, India Sotheby’s International Realty. 

 

Chadha believes prime urban luxury homes are set to outperform on scarcity. "Proven micro-markets will continue command lasting premiums,” added Chadha.

 

While optimism remains strong, expectations have moderated. At the same time, currency volatility has emerged as a concern, with a significant share of HNIs and UHNIs concerned about the rupee’s depreciation against the dollar and actively exploring diversification into dollar-denominated assets.

 

Investment preferences continue to favour equities, closely followed by real estate in physical form. The rapid adoption of AIFs, REITs and InvITs has made real assets the largest combined investment pool for wealthy Indians. Real estate buying over the last two years has been evenly split between self-use and investment, reflecting a balanced approach to lifestyle upgrades and long-term capital appreciation.

 

Looking ahead, sentiments suggest a moderation in luxury residential price momentum in FY 2026–27, with over half of respondents expecting the market to cool slightly. Despite this, investment appetite remains resilient, with a majority indicating plans to maintain or increase their allocation to real estate—particularly city-based luxury homes that offer rental income and long-term value.