Luxury projects are slowly making a return as developers compete for a niche segment of wealthy homebuyers, even as affordable and mid-segment housing dominate the property market. Developers, particularly from southern India, are strategically launching projects in the premium category with select designs and sizes to capitalize on this opportunity.
Bengaluru-based Prestige Group is set to develop a luxury residential project in Pali Hill, Bandra, one of the most expensive locations outside south and central Mumbai, said a person familiar with the plans. It’s a small but high-value redevelopment project, the person said, requesting anonymity. A Prestige spokesperson declined to comment.
Last week, Adarsh Group launched its luxury villa project, Adarsh Sanctuary, in Bengaluru. The 172 villas across 21 acres are priced at around ₹2.4-3.5 crore.
“There is demand for such villas and we are confident. But if you are building a huge number of villas, then it’s difficult to sell. The ticket size is important and it’s critical to price the product correctly. ₹6-8 crore villas or homes may be tough to sell today," said B.M. Jayeshankar, chairman and managing director, Adarsh Group.
A prolonged real estate slowdown had its worst impact on high-end projects with homes costing ₹5 crore and more. The slowdown led developers across India to shift their focus from ultra-luxury to affordable and mid-income projects.
Projects in south and central Mumbai have reduced to a trickle and buyers of luxury homes are now inclined towards ready-to-move projects, with least delivery risk.
Bengaluru’s Puravankara Ltd recently started its WorldHome Collection of luxury apartments. The first three projects would be launched in Bengaluru, followed by Chembur, suburban Mumbai and Chennai’s Guindy. Managing director Ashish Puravankara said though the number of luxury project launches has dropped drastically in the last few years, there are customers at different price points.
“We don’t launch large projects at high value. Today, pricing is not as critical as the ticket size of apartments. We need to build more functional homes and maintain smart sizes. The good thing is the polarization of buyers has led them to move towards good brands of developers," he said.
Bengaluru-based Sobha Ltd, known for its upscale residences, plans to enter Delhi and Hyderabad in the coming quarters with a premium project in each of these markets. In the past year, Sobha launched Nesara, a super-luxury apartment project in Pune, and Verdure, a row house project in Coimbatore, a spokesperson said.
Sales in the ₹1-2 crore segment saw 8% growth in the September quarter, according to a report by Liases Foras Real Estate Rating and Research Pvt. Ltd. Mumbai Metropolitan Region had the maximum sales share of 32% in this segment.
“We are positioned as a premium player and we are looking for good land parcels in western suburbs and south Mumbai. Three things fundamental to customers matter today—quality, amenities and modern specifications, and the price and space that’s offered. Buyers don’t want to pay for wastage and extra space," said Gaurav Sawhney, president-sales and marketing at Piramal Realty.
The Mumbai-based firm had sales of ₹3,000 crore from its Mahalaxmi and Byculla projects in the last two years.
Shruti Goyal, deputy regional CEO, Lodha Group, said buyers have shown a keenness towards moving into risk-free developments, without having to pay GST, wherein they can evaluate their purchase beforehand. Lodha has several luxury projects in Mumbai, including the Trump Tower.
Liases Foras CEO Pankaj Kapoor said, however, that luxury projects “are being launched at a discount today, sold at a cheaper rate with smaller homes". “With rational size and price, some sales may happen, but, otherwise, the segment is still under distress."