Luxury homes in India's major cities now cost 10 times more than a decade ago, as the subcontinent's wealthy elite plough investments into the sector.
"The ultra-luxury housing segment is comparatively recession-proof," Santhosh Kumar, the chief executive for operations at Jones Lang LaSalle India, wrote in a report published yesterday.
"In India's largest cities - namely Mumbai, Delhi NCR [national capital region] and Bangalore, luxury and ultra-luxury residential projects have witnessed tenfold appreciation over their launch prices over the last decade, implying more than 100 per cent annual returns on investment," the report said.
"As most of the buyers in this category are [at the top] of the corporate world - successful entrepreneurs and business tycoons - their financial appetite is not limited to or governed by the economic considerations that give the middle class sleepless nights."
Although 95 per cent of India's population has wealth of less than US$10,000, the country is home to 237,000 members of the top 1 per cent of global wealth holders, according to Credit Suisse's global wealth report.
High land and borrowing costs in the largest cities mean that developers in India often prefer to build luxury developments
"Because of the tendency of ultra-luxury projects to garner extremely good pre-sale volumes, their developers are generally able to secure significant fund flows to capitalise the completion of their projects," said Mr Kumar. "Luxury and ultra-luxury projects yield much higher returns to developers than projects geared towards the affordable and mid-income segments," he said.
"While it is equally true that the input costs for luxury housing are also much higher, the developer stands to benefit from the increased visibility of his brand among highly affluent, top-end clients."
Luxury home prices are highest in Mumbai, where land for development in prime central areas is scarce, with prices for upmarket residences ranging from 25,000 rupees (Dh1,540) per square foot to 110,000 rupees per sq ft.
Sunil Mishra, the chief executive of Karvy Private Wealth, said that property was attracting more investment from Indians living in the UAE.
Non-resident Indians (NRIs) "have a great interest and desire to invest in real estate in India," said Mr Mishra.
"In the last year, year-and-a- half, the NRIs' exposure to real estate is increasing as other asset classes sort of lose their sheen in terms of being able to claim attractive returns," he added.
Weakness in the rupee, which has fallen to record lows against the US dollar in recent weeks, has also added to the appeal for expatriates to buy property back home.