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.
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 Rs150-250 million 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 Nov 1, 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 Rs4.50 billion of sales in its two Gurugram projects—Camellias (homes priced at Rs280-320 million) and Crest (Rs60-80 million).
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,” he 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 Dec 31 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.
“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.