Snob value
Super luxury housing market has been steady, notwithstanding average numbers
The super luxury to luxury residential market in the last three years has been quite unspectacular, if sales figures are anything to go by. Yet, this market in Asia’s third biggest economy, remains steady as ever and despite some ominous signals, even reveals signs of growth.
According to international property consultants, JLL Residential, 10,200 high-end luxury units were sold in 2014. In 2015, the units declined to 10,100 units. However, the pace picked up to 11,000 units in 2016, nothing to rave home about.
These high-end luxury properties are found in every major city’s ritziest locations, towering over the rooftops of older buildings in the priciest areas of land-starved cities like Mumbai, or in serene estates sprawled across generous acres of prime land in Delhi, Pune and Bangalore.
What is fueling the steady growth of this luxury sector, is the rising millionaire club across the country. For example, within the Asia Pacific region, India has the fourth-largest population of millionaires with around 2.36 lakh individuals who fall firmly in the high net worth category. In the Forbes list of the ‘World’s Billionaires’ for 2017, India accounted for an impressive 101.
This growing nouveau riche category of Indians prefers housing, which gives them a great lifestyle that reflects their success in life.
Developers have been quick to spot this opportunity, churning out premium housing projects in cities for the well heeled and well traveled, exposed to global standards of luxury and comfort.
This trend has given rise to an entirely new crop of luxury locations, which derive their value from performance rather than from snob value.
This luxury housing sector’s slow down in the last two years was hit by a double whammy with Modi’s unexpected move to demonetise high-denomination currency. A high portion of transactions in this category had large cash components.
Many developers say the real estate market has now recovered from the demonetisation shock – in fact, it looks primed for a rebound at the back of transparency and regulated market practices that the Real Estate Regulation Act (Rera) is likely to bring in its wake.
Bangalore-based Brigade Group, which has one ultra-luxury project in Hyderabad starting at Rs 4.5 crore and three projects in Bangalore beginning at Rs 3.5 crore, has sold 60 per cent of the units.
“We have sold over 60 per cent of the units in most of our ultra-luxury projects,” Om Ahuja, CEO at Residential Brigade Group told Financial Chronicle.
He believes ultra-luxury projects at the right locations would continue to command good premium and appreciation. “However, one cannot expect ultra-luxury projects getting sold over night or in high volumes, as is prevalent in budget and mid-income housing,” he points out.

Anuj Puri, chairman at JLL Residential, international property consultants, told this paper: “If we go by the absorption rates of luxury housing over the last three years, we can see that while the uptake of such units is not spectacular by any yardstick, it remains steady – and, despite the ominous warnings, is showing signs of definite growth.”
Ravindra Pai, managing director at Century Real Estate, Bangalore, which sells apartments between Rs 2 crore and Rs 13 core, says deep understanding and robust connect is required to market these high-end luxury homes.
“The market does exist if you are competitive and if you have a proper strategy in place. Since the last two years we have not experienced a slow down,” he says.
Mumbai-based Mahindra Lifespace Developers, which sells Rs 3.5 crore 3-bedroom apartment to Rs 8 crore 5-bedroom penthouses at its Luminareluxury project in Gurgaon, believes the demand for luxury homes has slowed down in the last two years.
“There is more supply than demand and people are waiting to bargain prices,” Ramesh Ranganathan, business head, north and west at Mahindra Lifespace Developers, points out.
It has sold 25 per cent of its 10-floor L’Artista luxury project in Pune with a ticket price of Rs 2.8 crore to Rs 3.5 crore.
Bangalore-based Vaishnavi Group has seen tremendous success with two of its high-end luxury projects, Vaishnavi Terraces and Vaishnavi Commune.
“Our projects have seen tremendous successes in terms of sales traction and have shown good appreciation, price-wise from launch till date. As a matter of fact, Vaishnavi Terraces is almost sold out with very few units available. Vaishnavi Commune has also seen good sales traction over the past two quarters,” Cyriac Joseph, senior VP at Vaishnavi Group told Financial Chronicle.
According to JC Sharma, managing director at Sobha, with significant increase in disposable income with `dual income, no kids’ (DINK) and `double income single kid’ (DISK) families, young professionals and entrepreneurs, there is growing demand for luxury homes.
“First time home buyers are buying luxury properties and those who already own a property are upgrading their homes, thereby increasing the demand for luxury homes,” he points out.
Sharma believes when it comes to luxury, India’s rich would no longer compromise. Apart from a posh address, they want private gymnasiums, swimming pools and gardens, complete home automation and top-of-the-line architecture.
Kaizad Hateria, brand custodian and chief customer delight officer at Rustomjee Group, says luxury housing comprises almost 4-5 per cent of the total real estate market and thus, its share is bound to increase.
The company, which sells Rs 6.40 crore to Rs 16 crore an apartment in Mumbai, points out that growing disposable income and elevated lifestyles has propelled homebuyers to look for investment options into high-end properties, which offers higher standard of living.

With the Uber rich being well traveled, having tasted the extravagance that the West and other global destinations offer, their expectation and aspirations have skyrocketed.
“The demand for this segment shall always be at robust levels, the ‘brag value’ playing a big role in such purchases,” Hateria explains. The challenge faced by the developer is to ensure that the high taste and demands of this segment are well looked after, he adds.
According to Reema Kundnani, VP, marketing and luxury residential sales at Oberoi Realty, which offers luxury homes from Rs 4.5 crore onwards, the high-end luxury residential market has seen sustained growth, independent of the volatility of the market.
The typical homebuyer in this category is aspirational, well travelled and desires the same quality of lifestyle that he or she has been exposed to globally.
“It is important to understand that luxury is no longer just a premium address, it’s a combination of a coveted address, vast space with privacy, world-class design and state-of-the-art amenities,” Kundnani points out.

Girish Shah, director at The Wadhwa Group, whose ticket price begins at Rs 11.91 crore, says the sector has been sluggish in the past few years, which has delayed decision making from individuals looking for big-ticket purchases.
However, in the last few quarters, a positive change in mood is clearly visible. “Home buyers want more than just a luxury tag and seek an enhanced living experience. The location, developer’s credibility, design, amenities, the status of property and the profile of neighbours, plays a vital role in influencing buyer behaviour, “ he explains.
Shah points to a major challenge faced by developers in this high-end segment. The cost of delay for both developers and customers is very high due to significant investments done at various stages, hence further streamlining and speeding up the approval process and clearances for high rises, are issues that need to be addressed, he points out.

michaelgonsalves@mydigitalfc.com