The past few months have seen the luxury home buyer making a comeback. Since COVID-19, buyers across segments have deferred their buying decisions. In the case of those eyeing luxe homes, however, the lockdown has given them time to look for one that suits their needs best.
A recent FICCI-ANAROCK report states that this particular buyer group has not been impacted much by the pandemic. In addition, lowered interest rates, reduced stamp duty and registration charges in many States, the six-month moratorium etc. have given relief to home buyers. “With all these measures being implemented and an ease in restrictions, the market has slowly improved. Sales have phenomenally increased in the last two months,” says Rajesh Gurumurthy, Senior Director, Head, Strategic Consulting, Tamil Nadu & Sri Lanka, at Jones Lang LaSalle. Many States are already claiming to have registered more properties compared to the March-June period. With buyers looking for good offers during the festive season, developers are also seeing the change in lifestyles and accommodating their requests, says Gurumurthy.
This gradual improvement in demand for luxury residences is also noted by Shveta Jain, Managing Director, Residential Services, Savills India. “It comes on the back of corrected valuations of properties both in the primary and secondary residential segments. Post-lockdown, demand is also returning slowly due to flexible payment plans, reduced interest rates, and some discounting.”
How do developers view buyer sentiment? Ram Raheja, Director, S. Raheja Realty, says that the pandemic has made people want a home of their own. “Families usually shift between cities due to work patterns, which is why they rent homes. Today, this pattern is disrupted. Buyers are looking for inbuilt amenities like a club house, yoga centre, swimming pool, gym, playground, jogging track, etc.”
In Chennai, the conversion rates have certainly improved in the last few months. “Earlier site visit to sales conversion was 10% but now the conversion is going up to 20-25%, which means we are getting serious buyers at every project,” says T. Chitty Babu, Chairman and CEO, Akshaya.
Having said that, people are more particular about choosing projects that have adapted to the post-Covid design brief. The emphasis is on property management, indoor and outdoor sanitisation systems, and air filtration systems, among others. Home automation systems with sensor-based elevators, hands-free faucets, automatic shoe-cover dispensers, and touch-free soap dispensers are now essentials, says JLL’s Gurumurthy, adding that indoor specifications such as anti-viral surface coatings and self-doctoring surface treatments are also trending.
In most projects, people have started looking for larger spaces, adds Babu. “Those who were earlier looking at 2BHK apartments have started looking for 2.5 BHK and people who were looking at 3BHK units want larger spaces. The WFH concept has aided this trend.”
What Jain is also witnessing is that buyers are not only opting for city-centric locations, but are also open to buying high-end residences in the suburbs. “We are also seeing an increase in the demand for second homes in locations that were not considered earlier. With work-from-home (WFH) fast becoming an accepted norm in the corporate world, both buyers and renters are out in the market looking for second properties,” she says, adding that the trend is expected to pick up in the coming months.
Second-home buyers are no longer considering rental income or future appreciation — the demand is mainly from end-users who want to leverage on lower property prices in such locations and stay close to the city, says Gurumurthy. “Major second home hotspots in Chennai include the city centre, and the ECR with beach-front properties. Some also purchase residences in hill stations or other tourist locations.”
Gurumurthy says the demand is fairly good for ready-to-move flats in the ₹2 crore to ₹5 crore range. Does he expect a price reduction in coming months? “Mumbai has the most active luxury market and the price corrections are expected to be higher. However, buyers are insisting on discounts up to 40%, which becomes unrealistic for developers. Understanding the other markets, the price corrections are expected between 5-10% or below,” he says.
In Chennai, 50% of 944 units (priced above ₹5 crore) have been absorbed and of the 3,867 units priced between ₹2 crore and Rs. 5 crore, 59% are sold.
Developers are recasting payment plans and other incentives to accelerate the buying decisions of consumers, says Jain. “Some builders have even initiated time-bound 10:90 and 20:80 schemes to expedite demand. This trend is visible in at least the top five cities in India.