Mumbai: Home sales, especially of luxury apartments, have been tepid in most large Indian cities, but that hasn’t deterred a clutch of Mumbai developers from launching apartments priced at about Rs.100 crore each, or a little more than $16 million.
That’s about $300 per square foot for an apartment. To put that in perspective, the median price of a luxury apartment in Manhattan was $4.2 million, Bloomberg reported in July.
With conventionally expensive south Mumbai localities such as Malabar Hill and Altamount Road becoming saturated, areas such as Worli and Lower Parel are emerging as the new tony neighbourhoods in the country’s financial capital.
Forthcoming projects in these areas, many of which are replacing dilapidated housing societies and slums, may not offer the quiet and privacy of an Altamount Road address, but make up for that in terms of size, a view of the sea and a promise of exclusivity.
It’s not that demand for luxury residences has suddenly revived, but several of these projects are coming up in prime neighbourhoods where real estate firms can’t price the homes any lower than a few crore rupees. To maximize profit, the builders are adding larger residences at far more exorbitant prices that only the seriously rich can afford.
In the last week of July, Omkar Realtors and Developers Pvt. Ltd, a mid-sized developer that focuses on slum redevelopment projects in Mumbai, launched Omkar 1973 Worli. The 400 apartments here are being marketed as so-called bespoke sky bungalows (made to the customers’ specifications) of 2,500-18,200 sq. ft. and priced at Rs.15-100 crore.
In the Rs.100 crore category are 25 apartments, one per floor, that will offer a 360-degree view of the city.
Omkar Realtors’ officials said the pre-launch reception for the project was positive and all the apartments in one of the three towers had been sold.
“We hope to sell off the entire stock in three-four years,” said Bharat Dhuppar, chief marketing officer at Omkar and chief project officer of 1973 Worli.
Another four acre project in Worli, being developed by K Raheja Corp., claims to be more exclusive, with 80-90 homes of 5,000-20,000 sq. ft. While the apartments at Omkar are priced at Rs.38,000-40,000 per square foot, at K Raheja Corp.’s 42-storey single tower project, the rate is about Rs.50,000 a square foot; the larger apartments here cost Rs.90-100 crore or more.
“It’s a niche project and will not have a proper launch because it doesn’t require any marketing or publicity. Work has already started and sales will happen to a select group of buyers by word of mouth,” said a company official, declining to be named.
Mumbai was ranked the 16th most expensive residential location in the world in the last quarter of 2012, according to the Wealth Report released in March by property advisory firm Knight Frank. Monaco, Hong Kong and London topped the list. Mumbai was the only Indian city in the top 20.
For wealthy individuals with net worth upwards of Rs.25 crore and annual income of Rs.3.5-4 crore, the key factors in buying a luxury home are: location (25%), interiors (18%), size (16%), exclusivity (15%), architecture (13%), automation (8%) and price (5%), Kotak Wealth Management and Crisil Research said in their Top of the Pyramid 2013 report released this week.
Developers have selectively and cautiously launched luxury projects in large property markets such as the national capital region centred on New Delhi, Bangalore and Chennai in the recent past, wary of the demand these would generate.
According to Om Ahuja, chief executive of residential services at real estate consultant Jones Lang LaSalle (India), there is good demand for residential apartments priced at about Rs.10 crore from interested, but choosy customers who haven’t been hurt by the economic slowdown.
“Density, reputation of the developer, location, neighbours are some of the criteria they look at before buying, and when you consider all these they have limited choice,” said Ahuja. “Worli continues to be a hot spot among buyers.”
But sales of luxury residences have dropped in most cities, said Pankaj Kapoor, managing director of Liases Foras Real Estate Rating and Research Pvt. Ltd.
“The luxury segment grew the most between 2006-08, after which it didn’t revive fully. However, in the last two-three years, there has been a huge supply of luxury residences in Mumbai in newer areas such as Lower Parel, which don’t match the standard of south Mumbai,” Kapoor said.
“In Mumbai, because of the many redevelopment incentives that are given to developers for projects in south and central Mumbai, there is a lot of supply coming in,” he said. “But where are the buyers?”
Developers aren’t unaware of the risks. To attract a wider range of buyers, many builders of luxury residences are selling smaller homes at lower prices than the larger, costlier homes.
At the World Towers project in Upper Worli of Lodha Developers Ltd, homes are priced between Rs.12 crore and upwards of Rs.100 crore in three towers, World One being the most expensive.
The most expensive homes in the World One tower—duplex flats—occupy two entire floors and offer 360-degree views of the city, set at a height of about 1,000 ft. above the city. The residences have double-height living rooms, private pools and private gyms, said chief marketing officer R. Karthik.
A Lodha Developers spokesperson said around 60% of the project had been sold so far. It was announced in 2010.
Property analysts said Lodha’s proposed project in Altamount Road, a property it acquired from the US Consulate last year, will be in a similar price category. Lodha hasn’t disclosed its plans yet.
At Sunteck Realty Ltd’s Signature Island project in Bandra-Kurla Complex, a business district in Mumbai, two levels comprising 16 residences have been reserved to be sold later. The developer is looking for tie-ups to make these more exclusive than those in the rest of the project. For the other units, the sale price is Rs.50,000 per square foot.
“For the right location, the ultra HNIs (high networth individuals) are sometimes willing to pay staggeringly high prices, irrespective of the general state of city’s property market,” the Kotak-Crisil report said.
However, even these individuals are beginning to postpone big-ticket purchases. “The supply of luxury houses is high, but the UHNIs have become very cautious. There is a double-digit drop in the demand,” said Manoj Mohta, director (customized research) at Crisil Ltd.