If you plan to book an apartment in a new project, stay away from luxury projects even if developers offer discounts.
According to the findings of property consultants, Jones Lang LaSalle India (JLL), in September, developers building luxury housing may face problems in execution in the near term, resulting in construction delays. Also lower sales across these projects and weakening demand may lead to execution problems.
Reduced funding to the sector would hit the execution capability of developers focusing exclusively on luxury homes.
Says Anuj Puri, chairman and country head, JLL, “Both the economy and the residential property sector are currently in a state of uncertainty. The reduction in sales has affected the capital availability of developers, and we are going to witness widespread delay in the luxury segment.”
As per the findings, there has been significant reduction in the sale of high-end homes priced Rs 1 crore and above across the country.
Incidentally, the luxury housing segment is witnessing stagnation in other countries too. The average price hike for Asia’s luxury homes has slowed during 2011, according to the fourth quarter residential research from property consultants, Knight Frank India. “Twelve months ago, the average prices for Asia’s luxury homes were rising in value by 16.3% annually. At the end of September this year, the comparable figure was closer to 2%,” the report says.
Delhi, Navi Mumbai and Bangalore have seen the launch of some prime residential projects in the recent past. Projects have also come up in Noida, Thane, Ghaziabad, Faridabad, Chennai, Hyderabad and Kolkata. “In Gurgaon and Mumbai, projects with units priced above Rs 2.5 crore are definitely going to face challenges. We are looking at a scenario wherein luxury home developers will be prevailed upon to negotiate prices,” adds Puri.
Real estate consultants caution homebuyers from putting money in this category for investment purposes. “There is short-term uncertainty in this segment. Though in such situations developers are inclined to give discounts, it is in your favour to wait till the time there is some sense of stability in the market,” says Anand Narayanan, national director-residential services, Knight Frank India.
Buy only if you are going to live in the property or you are in need of a second home.