Luxury Homes – Staging A Comeback
The battered residential realty over the last few years had seen luxury housing hit hard by the weak demand. But post pandemic, new dynamics of luxury housing have emerged. Amidst end-user market, ease of purchase, increasing affordability, growing importance of spacious and safe environs of own home due to health consciousness, and the trend of home ownership over renting, have all contributed to the revival of demand for luxury housing.
The pick up in demand for luxury housing is evident from the statistics.of sale and unsold inventory. According to Anarock Property Consultants, at the end of 2020, of the total of 6,38,000 unsold units in top 7 cities, the luxury segment (priced over Rs 1.5 crore) comprised of just 14 percent. The sale of luxury and premium homes by a leading luxury developer, Lodha Group in 9MFY 21 and FY 20 , accounted for 85% of their overall residential sales. Post-pandemic, home buyers are preferring larger, luxurious apartments. DLF successfully sold 24 flats costing Rs 25-50 crore each in its super luxury project Camellias in Gurgaon. It was because of this demand that we launched our luxury housing project High Town in Gurgaon amidst Corona pandemic and successfully sold 25% of our inventory between November to January”, says Anubhav Jain, Director, Silverglades.
According to a CII-Anarock Covid-19 Sentiment Survey, most NRIs today are preferring luxury homes. Most of the demand is for homes costing up to Rs 2.5 crore. As per the report, the sale of luxury property (Rs 1.5 crore-Rs 2.5 crore rose from 6% in pre-covid period to 7% in post-covid period. The sale of luxury homes costing more than Rs 2.5 crore, rose from 3% to 4%. Besides range bound price, good deals offered by the developers are also responsible for pick up in sales. Silverglades High Town, Gurgaon under its scheme, ‘Let us pay for your stay’ is offering an assured monthly rent of Rs.70,000 pm for 4 years to customers who book flat worth Rs 5 crore. Shalimaar-Krrish’s Ibiza Town, Faridabad is offering registration charge waiver besides maintenance charge waiver for 18 months. It’s also offering 10:90 easy payment plan. Tatas in its Gateway Select premium project in Gurgaon has come up with 15: 85 payment plan with zero GST as it is a nearing possession project. Godrej Air, Gurgaon premium project has one size one price, EMI holiday for up to 2 years, free first transfer, besides easy payment plan.
Today as many as 68% NRIs prefer real estate over other asset classes. They prefer to buy property as they feel sense of security associated with this physical asset. Majority of the NRIs (86%) prefer buying from branded players. 43% of NRIs are ready to go to city peripheries for bigger, lifestyle oriented homes at more affordable prices. As per NoBroker.Com, there is an average 13% increase in home sizes and demand for 3BHK homes has risen 50%. Says Ashwinder R Singh, CEO-Residential, Bhartiya Urban Private Limited, “Besides lowest ever interest rates, NRIs are leveraging the currency advantage to secure capital gains as luxury housing investments assure considerable capital and rental ROI in the mid to long run”.
It’s mostly the end-user driven market now.” According to Akash Khurana, CEO of Krisumi Corporation, pandemic has given rise to new class of buyers who want luxury at a right price. Adds Anubhav Jain, “Developers are today catering to the needs of Gen X buyers. These set of buyers want lifestyle oriented smart homes at right price points”. Ashwinder R Singh adds that with growing interest in second homes, buyers, especially HNIs and UHNIs are increasingly looking for picturesque properties due to WFH”.
More buyers are today opting for ready homes as there is no development risk and net saving of 5% GST which is there on under-construction homes. According to Real Insight Residential Annual Round up 2020 by Proptiger, the share of ready-to-move in homes has gone up from 7% to 20% over the last 5 years. In the year 2020, 21% ready to move housing units were sold against 18% in 2019. The share of ready to move units in total sales increased the most (27%) in NCR.
A few years back, DLF started the concept of ‘Build & Sell’ in residential real estate. However today, the leading developer has adopted the hybrid model – selling both, ready inventory as well as under-construction homes. Says Akaash Ohri, Executive Director, DLF Home Developers Limited, “Today, we have Rs 6000 crore of ready residential inventory. Out of this about 70% of Rs 4000 crore comprises of super luxury residences. We have witnessed good demand across different segments (Rs 50 lakh to Rs 50 crore). In certain segments the demand is better than what it was a year before. Currently we are focusing on super luxury inventory. Instant homes are a big hit as buyers save on GST with no fear of delayed possession. On top of that they are getting deals also”. Imperial Holdings too adopted ‘Build and Sell concept for the first phase of their luxury housing township project – Auramah Valley near Simla. According to Manav Singh, Chairman, Imperial Holding, the company was able to sell ready homes without much marketing. Now the company on the lines of DLF, has adopted a hybrid model for the second phase. Silverglades Group is selling its luxury housing project in Kasauli under build and sell model.
But interestingly, even under-construction luxury home projects are attracting buyers. Especially the newly launched projects or projects in early stage of construction. In such projects developers are providing wellness, health & fitness and in-house sports and recreation facilities besides large green open areas for walking, jogging, meditation, children’s play area etc. But then the buyers preference is for branded developers who have credibility, good track record and financial strength.
Technology is also playing role in driving demand and sales. Developers deploying modern construction technology and sound project management are able to sell better. Developers are also making use of technology for safe and smart homes, through home automation, biometric access, voice controlled devices, electric vehicle charging etc.
Industry players believe that going forward, luxury housing demand will gain further traction. ” Luxury condiminiums have seen a growth in both enquiries and closures from festive quarter onwards. The trend is getting better month on month as realty has bounced back to normalcy. Ashwnder R Singh is of the opinion that next few years will bring augmentation in luxury housing on the back of demand that will be more value-based and less price based. But before that we would proceed through a period of unwinding that will bring in both learning and new opportunities. (NBM & CW)
Vinod Behl is Editor, Proptoq, a real estate magazine