BackLuxury space: In demand despite the odds
Luxury space: In demand despite the odds
PremiumOne reason why the luxury housing space has always been in demand is the way it has been presented and sold to customers. Ramesh Pathania/Mint
Recently, a top executive of an IT company bought a 2,950 sq. ft four-bedroom flat in Mumbai for an astonishing Rs. 29 crore. Why did he pay so much? The location. The flat is part of an exclusive complex of 175 apartments and 10 bungalows at Cuffe Parade, each apartment and bungalow enjoying a spectacular view of the sea. For that very reason and the exclusive services that come with the deal, the apartment was sold at a rate of Rs. 1.11 lakh per sq. ft.
This is contrary to what we keep hearing about the so-called troubleridden real estate market in India. While the affordable and mid-range segments of residential space are under some stress, the country’s luxury real estate remains in high demand both in the primary and the secondary (resale) market.
The demand
According to a study by the Real Estate Intelligence Service at Jones Lang LaSalle India (REIS-JLL), an international property consultant firm, there has been a continuous demand for top-end residential spaces over the past two decades and there are several reasons behind this.
The first reason is the opening up of the Indian economy post-liberalization and the decision to allow FDI in real estate in 2005. Simultaneously, there was a steady percolation of wealth, leading to the rise of a new affluent class. This typically included chief executive officers, senior professionals, entrepreneurs in new businesses and rich non-resident Indians considering homes in India, the study said.
The second reason is the emergence of a class of Indian developers who anticipated this demand and the void being created at the top end of the housing market. Thus emerged the need for exclusive housing at the heart of our metros.
Surabhi Arora, associate director, research, Colliers International, an international property consultant firm, corroborates the trend. “Regardless of the adverse economic scenario, demand for luxury housing is growing gradually. A number of projects were launched during the first quarter of 2012, across cities. Most of the new launches are happening in the peripheral/suburban areas…"
The evolution
One reason why the luxury housing space has always been in demand is the way it has been presented and sold to customers. Projects in the segment have always been presented as unique in terms of design, innovation, services and amenities. In comparison, the affordable and midsegment projects are often comprised of similar bare-shell apartments: generic spaces with unexceptional interiors and nothing but the most basic amenities and additional services. The difference shows, first of all, in the pricing.
Kunal Banerjii, president, M3M India, says, “The concept of luxury has been evolving constantly in the Indian market. What was luxury some four-five years back has now become a common item... In the recent years, theme-based luxury projects have come into demand."
It is because of this new strategy that developers are constantly launching new projects woven around a concept. Sports and other leisurely activities have been the core theme of many recent projects, and with newer themes being unveiled every day. This might be a premium, select market, but the developer’s challenge to distinguish each project is every bit as intense as more affordable segments.
Innovation
Dhingra’s residential-cum-hotel mixed land use development project, Highway Cruise, will house a five-star hotel, studio apartments, retail outlets and facilities for entertainment and adventure sports.
This concept of destination homes and holiday homes is comparatively new, but fast picking up pace. DLF, too, has come out with a unique destination home project across three cities. Under the Sama brand, the company will develop ultraluxury housing projects in Shimla, Kasauli and Goa. DLF has tied up with Hilton Hotels and Resorts for the management and services of these dwellings.
Customization and value-added services have also become vital in this segment. This has led to the emergence of a group of developers who are focusing on serviced apartments along with their regular projects. A number of developers have announced projects offering fully furnished serviced apartments.
Changing lifestyle
Premium customers also demand world-class décor. And this has been an interesting emerging trend of focus: flats are being equipped with cutting-edge materials, gadgets and trimmings.
New-age luxury homebuyers in this segment are now spending a significant amount on the aesthetics of kitchens and bathrooms, prompting appliance makers such as Miele and Siemens, ceramics and tiles companies such Orient, and sanitaryware makers such as Hindware and Kohler to expand their luxury offerings.
Outlook
With land becoming scarce and property prices soaring, developers of luxury housing have to devise new ways to tackle the impediments. Real estate analysts have said that concerns such as oversupply and delays in delivery of projects remain among the biggest hurdles in the Indian market. Prices of up-market projects that are nearing completion are still holding on.
However, in the case of relatively new launches or those where not much work has been done on the ground, developers are feeling the pressure to reduce prices. Developers involved in huge township projects who are simultaneously doing luxury housing projects are already under pressure to reduce rates.
The last six months have seen a correction of 5-10% in some prime areas of Mumbai. Going forward, one can expect a slight correction depending on the location of the projects and their progress. It may be the right time to enter the market and negotiate a deal with your developer.
devesh@livemint.com
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Also read | DLF’s Rajeev Talwar and Unitech’s Ajay Chandra on the luxury real estate market in India
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