Supply of luxury units in India on rise
Despite sluggishness in real estate sector, developers have not lost interest in luxury and ultra-luxury housing market as it offers high-margin profits. Owing to rapid urbanisation, influence of global lifestyle trends and changing lifestyles and aspirations among the younger generation, the luxury housing in India is getting a boost.
The current year has already witnessed several launches of luxury/ultra-luxury projects in India by renowned developers like Unitech, DLF, Supertech Group, Godrej Properties, Tata Housing, and many others. The number of luxury units coming up is higher than that of mid or the affordable segment residential units with more and more developers shifting their focus to the luxury market.
In Gurgaon, around 3,144 luxury units had been launched in 2012 in South Peripheral Road while it was only 1,344 units in 2010 and there were no launches in 2009. In comparison, the new housing units that came up in the mid-segment were 2,774 in 2009, which decreased to 1,468 in 2012.
In Malad, Mumbai, 624 luxury units were launched in 2012 while only 32 units were launched in 2009. In the mid-segment witnessed 276 new units in 2009 and mere 21 units in 2012.
The price range of luxury units mostly differ from one city to another city. But usually, prices over Rs 1 crore are referred to as the start of luxury. The price of mid-segment units ranges between Rs 40 lakh and Rs 1 crore depending on the city.
Supertech is coming up with two luxury projects in Delhi-NCR, for which it has tied up with Armani and Disney for branded theme-based residencies. Tata Housing has announced its luxury project ‘Gurgaon Gateway’ in Gurgaon while DLF is planning to launch its projects ‘The Crest’ in Gurgaon and ‘King’s Court’ in Delhi.
Unitech is coming up with The One and another project in the Millennium City. Renowned Godrej Group is also ready to launch its luxury venture in Delhi. IndiaBulls Real Estate and Lodha Group are also coming up with luxury projects in Mumbai. Puravankara Group is planning to launch such projects in Bangalore.
In the last decade, luxury and ultra-luxury projects in Mumbai, Delhi-NCR and Bangalore have observed a 10 times higher appreciation over their launch rates, which means that 100 percent returns on investment is achieved, said Santhosh Kumar, chief executive- operations, Jones Lang LaSalle (JLL) India.
The demand for luxury projects has always surpassed the supply of such projects which is the major driving factor for more and more developers foraying this sector.
In 2012, the number of luxury residential units launched in Hebbal in North Bangalore had reached 1,329 while it was 220 in 2012 and none in 2009. Similarly, in Ghansoli, Navi Mumbai, the luxury unitsâ launch stood at 258 in 2012 from none in 2009.
The price rise in luxury realty market also reflects the rush for luxury. The average price of an absorbed unit in the luxury segment in Gurgaon increased to Rs 6,345 per sq ft in 2012 from Rs 2,563 per sq ft in 2009. In Malad, the price stood at Rs 11,227 a sq ft in 2012 against Rs 7,312 in 2009.
Another new trend that is being practised nowadays is that realtors are roping in celebrities, national and global too, to endorse or to design their projects. Besides this, some developers are joining hands with international firms to develop projects.
Based on the market observations, till now, the ups and downs which affected real estate in India have not harmed the luxury segment. As the luxury market is filled with high profits, the developers are attracted towards it. In future, it is likely that a developer and his market stability may be better analysed on the basis of the luxury projects he has developed, in terms of number and value as well.
Although the profit margin is high in luxury market, the volume of sales recorded is high in affordable and mid-segment. The reason behind this is simple- only the buyers from high-income group would be investing in luxury projects due to their higher prices while the size of target buyers is huge for properties in the lower and mid-level price ranges.
With many developers foraying into the luxury sector, the upward trend of supply is likely to continue through this year, but however, the volume of sales is expected to drop down. The NCR, Mumbai and Bangalore would continue to be luxury destinations because of high net worth individuals and investors.
