By 2047 India's luxury consumers will drive global brands to Tier II cities; here's how

“As the economy strengthens and consumer purchasing power increases, cities like Jaipur and Ludhiana will emerge as key markets for luxury brands. We foresee the rise of more luxury destinations similar to Emporio, which may expand into Tier II cities if economic conditions are favourable,” says Pushpa Bector, Senior Executive Director and Business Head at DLF Retail. According to her, these cities have enormous potential for luxury retail due to their increasing affluence and sophisticated consumer base. DLF Retail currently operates two luxury malls, Emporio and Chanakya, in New Delhi. “The expansion into Tier II markets will not only democratise luxury but also create new avenues for growth, ensuring that luxury brands are well-positioned to cater to an increasingly diverse Indian consumer base,” Bector says.

What will the luxury space look like 23 years hence in the world’s most populous nation that also boasts of being the fastest-growing major economy? Experts believe that it will grow exponentially over the next two decades, driven by the country’s current economic growth. While specific data for 2047 isn’t available, as a starting point, experts cite the current trends. For instance, Bain & Co projects the Indian luxury goods market to reach $90 billion by 2030, from $17 billion in 2023. That said, India continues to stand out as a leading wealth-gain market, which will support the luxury landscape. In fact, India currently has 3.59 million adults with a net wealth above $1 million, also known as high-net-worth individuals (HNIs). In 2023, the number of HNIs in India grew 12.2% from the previous year, according to Capgemini’s latest World Wealth Report.

Besides the market, Bector believes that the Indian luxury consumer will also evolve. “In the decades to come, we expect Indian consumers to place even greater emphasis on exclusivity, craftsmanship, and sustainability. They will seek brands that not only offer superior products but also align with their values and aspirations.”

By then, Gen Z will be middle-aged consumers, and there is likely to be an even greater focus on sustainability, which will see a shift from conspicuous consumption to more mindful, purpose-driven purchases, where luxury is not just about owning the best but about investing in what resonates personally and culturally with them. “This transformation will create a more diverse luxury market in India, where consumers are as keen on home-grown luxury brands as they are on global icons, choosing products that reflect their individuality and the richness of their heritage. By 2047, the Indian luxury consumer will be a powerful force, setting trends and driving innovation in the global luxury landscape,” says Bector.

Rise of home-grown luxury brands

Bector seems to be spot on about home-grown luxury brands. Today, Sabyasachi has a store in New York, Manish Malhotra in Dubai, Rahul Mishra showcases regularly at Paris Fashion Week, and Beyoncé wears Gaurav Gupta on world tours. This is just the beginning. Over the next two decades, there will be many more ‘Made in India’ luxury brands going global. “Home-grown luxury brands will carve out a significant presence, offering products and experiences deeply connected to Indian heritage,” says Bector.

There will also be greater recognition for Indian artisans and their crafts. Already luxury brands such as Dior are collaborating with Indian embroiders and artisans; expect a lot more of that in the coming years.

Growth of luxury real estate

Besides home-grown luxury brands, industry watchers say the luxury real estate space should see significant growth in the coming years. Several factors will drive this growth, including the growing economy and the steady rise in the number of wealthy individuals. According to Knight Frank-Naredco’s report India Real Estate Vision 2047, the share of HNI and UHNI households in India will likely increase from the existing 3% to 9% in 2047, generating a substantial demand for luxury housing in the country.

Currently estimated at $477 billion (over `40 lakh crore), the real estate sector contributes 7.3% to the country’s total economic output. The report estimates that the sector will expand to $5.8 trillion by 2047, contributing 15.5% to India’s total economic output.

The report says that while the mid-segment housing market continues to dominate demand, there has also been an increase in preference for luxury housing (for homes priced above Rs 1 crore). In 2018, luxury housing comprised 16% of the total sales across the Top 8 cities in India. In 2022, this number rose to 27%. Going forward, factors such as the growing economy, salary growth from the high-paying services sector, and growth in the numbers of HNIs and UHNIs will continue to raise demand for luxury housing. “The luxury segment will continue to grow, as they have both the desire and the ability to commit to the product. They were only hampered by supply, which is growing significantly. In the future, we will see growth in cities like Bengaluru and Hyderabad, with new wealth creation taking place there,” says Vivek Rathi, Nation Director-Research, Knight Frank India.

Agrees Anuj Puri, Chairman of real estate consulting firm ANAROCK Group: “The growth of HNIs will eventually translate into the purchase of luxury real estate. Further, India’s per capita income is also witnessing growth, and with more people now inclined towards investing in real estate, the luxury segment may see growth.”

Luxury Hospitality

If more and more Indians appreciate the good things in life, it is only a given that they will stay at fancier places when they travel. According to a recently released Hotels Association of India report called Vision 2047: Indian Hotel Industry, the contribution of the hotel industry to the GDP was $40 billion in 2022 and is expected to reach $68 billion by 2027 and $1 trillion by 2047. Although the report doesn’t provide specific numbers, it expects the luxury hospitality sector will see significant growth alongside the lower and mid-segments.

Indian luxury travellers will become more global in their thinking. They will be keen to visit places where no one else is going and enjoy experiences that are transformational, according to Kapil Chopra, Founder of The Postcard Hotels & Resorts, a collection of boutique luxury hotels. Luxury hospitality will have to become even more customer-focussed, he says.

India’s outbound tourism market is expected to reach approximately $55.39 billion by 2034, per a FICCI-Nangia knowledge paper titled ‘Navigating Horizons: The Rise and Future of Indian Outbound Tourism’. However, there is no true Indian luxury hospitality chain with a global presence. Chopra thinks that that is an opportunity waiting to be tapped, and he expects a global luxury hospitality chain from India by 2047.

Overall, for those who truly value the luxury lifestyle, there is a lot to look forward to when Independent India turns 100.

@smitabw