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Amidst India's tech hub, Bengaluru, a surge in luxury real estate interest, primarily driven by high-net-worth individuals and start-up founders, is reshaping the property landscape. Prestigious addresses such as Adarsh Palm Retreat and Radical Rhapsody are commanding escalating property prices, while the resale luxury market gains momentum as ESOP recipients enter the fold. As the Indian government introduces a capital gains deduction limit, affluent investors flock to secure opulent properties, paving the way for a bright future as the country's population of wealthy individuals is predicted to soar.
Bengaluru, India's Silicon Valley, is in the midst of a real estate revolution, as high-net-worth individuals, particularly start-up founders, seek super luxury residences to optimise tax savings and bask in the opulence of exclusive living. This trend is not just about owning property; it's a symbol of success and accomplishment, and it's evolving in fascinating ways.
Property brokers in the city have highlighted the scarcity of available properties in this luxury segment, creating a unique challenge for prospective buyers
Luxury homes in Bengaluru, including projects like Adarsh Palm Retreat, Radical Rhapsody, Windmills of Your Mind, and Embassy Boulevard, have become the crown jewels of the city's real estate market. These high-end properties continue to draw high-net-worth individuals, especially company founders and promoters. Their motivation is deeply rooted in the promise of significant tax savings following stock cash outs or stake sales.
As the demand for luxury homes soars, property prices in certain prominent areas have experienced a substantial escalation. For instance, areas like Koramangala 3rd block now command a staggering rate of Rs 60,000 per square foot, while Lavella Road is priced at Rs 40,000 per square foot. Neighbourhoods like Magrath Road witness prices ranging from Rs 40,000 to Rs 45,000 per square foot, and Whitfield is currently valued at Rs 30,000 per square foot.
In recent years, the use of Employee Stock Ownership Plans (ESOPs) within the Indian start-up ecosystem has witnessed significant growth. Indian start-ups, including Swiggy, Razorpay, PineLabs, RebelFoods, and Flipkart, have adopted ESOP buybacks as a powerful tool to reward and incentives their employees during periods of rapid expansion and funding rounds.
The introduction of a capital gains deduction limit for investments in residential property, effective from April 1, 2024, has prompted High Net Worth Individuals (HNIs) to invest in extremely luxurious residential properties in the fiscal year 2023-24. This strategy allows them to maximise their deductions, in contrast to the reduced deductions in the fiscal year 2024-25.
A report by Knight Frank India predicts a remarkable 58.4% rise in the number of Indians with a net worth exceeding $30 million over the next five years, reaching 19,119 individuals in 2027, up from 12,069 in 2022. Furthermore, the number of Indian billionaires is expected to grow to 195 individuals by 2027, compared to 161 individuals in 2022.
Bengaluru's luxury real estate market is witnessing an unprecedented surge in demand, driven by tax-saving opportunities and the desire for exclusive living. The evolving landscape is characterised by scarcity, prestigious addresses, rising prices, a growing resale market, ESOPs as a game-changer, and strategic tax planning. The future looks promising as the city continues to redefine luxury living for high-net-worth individuals and entrepreneurs.
This story was earlier published by the Times Group
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