Ultra-Luxury Apartments in Mumbai See Drop in Sales
While affordable housing within Mumbai has become a dream, there is no dearth of supply of ultra-luxury houses in Mumbai. Most of these flats are located in Central and South Mumbai. As such, these homes attract a specific segment of the population such as businessmen, people in the showbiz industry and high-income earning professionals. Interestingly, this segment, which is generally not affected by the economic slowdown, has also witnessed a slump in sales in recent times.
No takers for Ultra-luxury flats
Several areas in Mumbai offer super-luxury houses. There are about 1,000 plus apartments in Mumbai that offer ultra-luxury apartments with a price tag of Rs. 20-100 crore. Sales of most of these flats have witnessed a fall in the past few years. About 50-60% of the flats launched between 2006 and 2010 have remained unsold.
For example, Napean Sea Road has a 55-storey project offering 15,000 sq.ft. palatial duplexes for a cost of about Rs. 100-200 crore each. These are the costliest residences in the country. However, not even a single unit has been sold for the past six years. Similarly, there are localities that have sprung up in Mumbai offering super-luxury flats in the range of Rs. 20 crore each. Tardeo in South Mumbai has a project that has 40 out of the total 228 flats yet to be sold. The project was completed in 2010. In Prabhadevi, 35% of a 612-apartment project is yet to be sold and in Lower Parel over 40% of a 170-flat project is yet to be sold.
The total number of ultra-luxury apartments sold in the fiscal year of 2011-2012 was 100 as compared to about 400 in 2007-2008.
Exorbitant Property Prices
Property prices have significantly risen over the past three years, especially in micromarkets that offer super-luxury apartments. On the other hand, the overall economic slump that badly hit the affordable housing segment also impacted the ultra-luxury segment to some extent. Most of the projects in this segment were launched after 2009 with expectations of economic growth and growth in income levels of buyers. This didn’t happen much.
For instance, in Napean Sea Road prices rose from Rs. 59,000 per sq.ft. to Rs. 85,000 per sq.ft. while on Lower Parel prices went up from Rs. 11,090 per sq.ft. to Rs. 28,500 per sq.ft. This is a steep increase of 150% in the last three years. There are also project delays which create longer exit-duration and hence, unattractive to investors. This steep rise in property prices along with delays and regulatory uncertainties have put ultra-luxury home buyers on the back foot.
New launches see a fall
Low sales have naturally led to a huge reduction in new project launches in this segment. Out of all the projects launched in this segment since 2006, only 15% of the projects have been launched post 2010. Yet, there is a situation of oversupply and inventory pileup due to a significant fall in sales.
About 80% of South Mumbai investors are now looking at western and eastern suburbs as these areas offer higher yields in terms of return on investment (ROI).
