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After starting well in 2006-07, the luxury housing sector had slowed down a bit due to economic recession. However, developers say the market has started to look positive and they are either launching or planning to launch more projects. “The market is looking good.
Even the luxury segment, we thought it will take longer to come back but within a year it came back,” says Dr Deepak Bajaj, Director, Investment & Projects, Unitech Realty Investors (India) Pvt Ltd whose company this year had launched a luxury project— Exquisite in Gurgaon. The market is waiting to see more project launches going ahead. “With Indian GDP expected to clock 7-8%+ growth in 2010-11 and probable double digit growth starting 2012, we believe India is ready for the next wave of wealth creation- especially in tier I cities.
The developer community senses this and has launched more luxury projects in the recent past,” says Abhishek Kiran Gupta, Head of Research and Real Estate Intelligence Service, Jones Lang LaSalle India.He
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Tata Housing which is currently promoting its two luxury projects– Prive, Lonavala and Louvre, Gurgaon–says the sector is growing well. “This segment is growing at a faster pace especially in the metro markets at an annual growth of more than 25%,” says Brotin Banerjee, CEO and MD, Tata Housing.He says there is an increase and evolution in the number of the discerning, well travelled and informed Indian consumers. “There is a steady percolation of wealth among this cross-section of the population, leading to the rise of a new breed of affluent class.
The main driving factors for the sector is having quality project which is exclusive, contemporary and has views of the nature,” Banerjee adds.According him, the emerging locations are those which are considered as aspirational destinations by the rich for owning private apartments, plots or villas; offer a quick escape from the congested and hectic city life to a serene and quiet getaway, yet in close proximity to all social infrastructure in the city.
A recent research report by Cushman & Wakefield (C&W) estimates approximately 9,000 homes in the luxury housing segment are planned in major cities over the next 2-4 years. A number of developers including Godrej, Unitech, DLF, Emaar MGF, Sunteck Realty, CHD Developers, Ansal API besides others are coming up with luxury housing projects this year.Sunteck Realty which recently announced strategic growth plans to explore the huge potential in the premium luxury space in Mumbai, is developing a range of landmark residential projects with apartments ranging from Rs1 crore to Rs40 crore.
The company has a saleable area of more than 30 million sq ft in Mumbai, with 27 projects in development pipeline.Kamal Khetan, CMD, Sunteck Realty, says, “Today, the country is witnessing a significant demand rise for high end luxury residential spaces owning to the growing income levels across various corporate sectors and high networth individuals.”Sunteck has already launched its high-end residential landmark projects - Signature Island at BKC with area of approx 7,000 sq ft to 11,000 sq ft. CHD Developers, a new entrant to this segment, has recently launched a premium property, Avenue 71 in Gurgaon.
The company believes in taking a cautious approach while choosing location for launching premium projects. “The problem happens when a developer misjudges a location. I think whatever FSI you may have, a developer should not go for more than 20% for premium segment,” says Ravi Saund, Head Business Development, CHD Developers Ltd.
He says NCR (Gurgaon) and Mumbai are unique markets for the segment besides other metros like Hyderabad, Pune and Bangalore which still hold some promise. “If you take the current scenario, the recession didn’t hit India and the growth was still stable, and 8% is the minimum growth that will clock for at least eight-ten years. So people who had the money have started to release the money and housing is one place where emotionally we are attached to so we go and buy it,” Saund adds.
According to C&W, the recent real estate market recovery in India has given an impetus to not only the primary housing segment, with an increased focus by developers in launching high–end projects, but also to prime residential in the secondary market. Seeing the demand, C&W have joined hand with auction house Saffronart to offer online sales and auction platform to premium housing.
As per C&W market research, the residential market witnessed marginal correction in the range of 2-10% in the high end capital values over last year. “The demand for this niche segment however is still strong; yet the segment needs a unique marketing strategy to realize its true potential,” it adds. With the economy doing well, India’s luxury housing sector is expected to see steady growth in coming years.
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