Backed by NRI demand, some realty firms stick to luxury projects

In 2017, most developers refrained from launching projects and focused on selling existing stock. Photo: Aniruddha Chowdhury/Mint

In 2017, most developers refrained from launching projects and focused on selling existing stock. Photo: Aniruddha Chowdhury/Mint

Bengaluru: In the middle of a real estate slowdown when most builders have turned to affordable housing projects, some continue to bet on luxury homes, backed by demand from ultra-rich buyers and non-resident Indians (NRI). 

A handful of established, well-capitalized developers in Mumbai, the National Capital Region (NCR), Bengaluru and Pune are focusing on such projects, while the majority stick to mid-income or affordable homes. 

After zero launches in 2017, Mumbai’s K. Raheja Corp. has two luxury project launches planned this year in south-central Mumbai, one of the most expensive micro-markets in the country. 

“Homes at Rs15-25 crore and above are for high-value consumers, who are risk-averse, conscious of what they are buying, believe in investing equity (not debt) and prefer homes that are closer to possession. We saw good sales even last year, with prices in Vivarea in south Mumbai up by 20% or so compared to two years back,” said Vinod Rohira, managing director, (commercial real estate and REIT), K. Raheja Corp.

India’s largest developer DLF Ltd resumed sales on 1 November,  six months after it hit pause as a measure of caution in view of the roll out of the new real estate law.

In November and December, DLF clocked around Rs450 crore of sales in its two Gurugram projects—Camellias (homes priced at Rs28-32 crore) and Crest (Rs6-8 crore).

DLF chief executive Rajeev Talwar said the November-December period was “an exceptional period of sales”. “Customers have gone around and checked out projects. Though we sell at a premium, we have seen people showing interest and conversion to hard sales. Luxury homes will be for actual users now, those who have accomplished and are buying for themselves,” Talwar said. 

In 2017, most developers refrained from launching projects and focused on selling existing stock, more so in the premium end of the market. According to 31 December data from property advisory Cushman and Wakefield, launch of luxury units was down by 70% to 331 units last year, from 1,112 units in 2016. 

“The luxury housing segment, for which demand is end-user driven, is witnessing robust growth owing to HNIs (high net-worth individuals) and increasing customer aspirations for a luxurious lifestyle. Such an increased customer appetite works well for our business which aspires to build properties that represent world-class standards of design, construction and quality,” said Anand Piramal, executive director of Piramal Group and founder, Piramal Realty.

Radius Developers, which focused on existing projects last year, has two launches coming up in Mumbai, priced at Rs12-14 crore. Pune’s Panchshil Realty will launch an 80-acre project with 168 luxury villas.   

Lodha Group plans to launch 3-4 new luxury and high-end projects in Mumbai at Walkeshwar, Lower Parel and Parel. It may also launch a new townhouse development in Pune.

“Luxury real estate is finally coming of age. Genuine luxury offerings have always found buyers who place utmost importance on aspects like quality, craftsmanship, lifestyle and service standards. Our Lodha Luxury Collection (LLC) does not just score well, it also defines the benchmark for the industry on these parameters,” said a Lodha spokesperson.  

Last year, Lodha launched the third tower in The World Towers project in Mumbai and One Grosvenor Square at Mayfair, in London’s West End. It clocked early sales at the London project at around £6,000 per sq. ft. (Rs5 lakh per sq. ft). The firm expects greater traction from its London project, with a weaker pound helping the cause of Indian buyers.

Bengaluru-based Total Environment Building Systems Pvt. Ltd, a prominent developer of luxury and high-quality homes, will launch projects in Pune and Bengaluru this year. Kamal Sagar, principal architect and chief executive, said if developers build beautifully designed homes and customers look at them as buying a home and not just an investment, it works well. “The market has been slow but our approach is customer-centric and customization in projects, which gives us a differential edge,” Sagar said. 

“Developers with the financial bandwidth and potential to build luxury projects have sustained the slowdown. Prices in this segment have also not come down, especially in prominent projects in Mumbai, NCR and Bangalore,” said Raja Seetharaman, co-founder of Propstack, a real estate data analytics and solutions firm. 

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