What economic crisis? Luxury homes costing anything from Rs. 1 crore to Rs. 10 crore are on the rise. ANUJ SRIVAS finds out more
When the going gets tough, the rich get going — by increasingly buying luxury housing. Despite the financial crisis, the demand for luxury housing has been gradually growing and occupancy rates have increased over the last few years.
That this should be so despite an overall sluggishness in the real estate sector might seem like a contradiction, but growing income levels, a steady influx of non-resident Indians since 2008, and the recent fall in the value of the rupee all seem to be the immediate driving factors. The World Health Report 2010 points out that there are around 1.53 lakh high net worth individuals in India, whose numbers are only growing.
“Customers can increasingly afford units in the higher segment. Today, people buy small apartments at the age of 26 or 27 and by the time they hit 40, they are looking at luxury homes. Global trends also play a big factor: the average customer has been abroad and has seen what is available and wants it here as well,” says M. Arun Kumar, founder & managing director, Casa Grande. “Combine this with double-income families. You have the segment broadening and luxury villa communities becoming popular.”
Today, the value of luxury projects launched between 2008 and 2012 has reached slightly over $30 billion, with the number of unsold units coming down to about 7 per cent, say analysts. In fact, market sources say unsold units in 2009-10 were as high as 30 per cent. The last four years have also seen Chennai grow to take a 10 per cent share of the total number of high-end projects being launched across the country. Delhi (NCR) leads the market with a 40 per cent share. (See pie chart.)
Developers are also trying sweeteners to attract buyers — for instance, expensive cars offered with high-end property deals. In Gurgaon, there is now the Michael Schumacher World Champion Tower, launched recently by the man himself, dubbed ‘The Grand Prix of Living’.
Kumar speaks of what these freebies mean to prospective buyers. “You can’t underestimate the aspirational factor. It’s the biggest investment most people make.” Other deals include pre-fitted air-conditioners, automated security systems and modular kitchens.
However, it’s like an arms race — high-end apartment sellers have to constantly upgrade to trump the competition. Swimming pools and club houses no longer excite, and even golf courses have become expected. Several other add-ons have popped up such as rock-climbing walls, Jacuzzis, integrated business centres, concierge desks and home elevators, to name a few. Add to this Singapore and US-style apartments, Spanish haciendas, and homes that look like plush hotels and you’ll know what we mean. These homes also pay a lot of attention to details like plumbing, kitchen fittings and interior décor.
“Luxury housing is all about delivering an international living experience that brings together top-notch building quality, world-class amenities, and impeccable attention to detail,” says Jittu Virwani, chairman and managing director, Embassy Group. The basic price tag, says Virwani, ranges anywhere from Rs. 1 crore to Rs. 10 crore per unit. “While in some cases it can get higher, we stick within that band. Our luxury condominiums at Hebbal start at Rs. 3 crore while the Embassy Boulevard is Rs. 5 crore upwards. High-end apartments that are slightly cheaper begin at Rs. 1.7 crore,” he adds.
The tag varies significantly between North and South India. In Mumbai, for example, a unit is called ‘luxury’ only if it costs at least Rs. 5 crore. In Chennai, however, the majority of luxury housing is in the Rs. 1-2 crore range.
Despite dismal times, this segment will continue to thrive—if only because the segment has been seriously under-serviced so far. “The fourth quarter usually sees increased activity, with NRIs coming in to take investment decisions. The supply is opening up now because developers have realised that with input costs rising, they can add more amenities and launch luxury projects instead of mid-income ones,” says Ashutosh Limaye, Head-Research and RIES, Jones Lang LaSalle India.
EARNING THE TAG
Some of the add-ons in luxury homes:
Swimming pools, sometimes individual ones per villa
Integrated business centres
Gym and sauna
Fully automated interiors