Luxury homes in vogue again as economy shines

May 5, 2010

As the economy gets back on growth path, the demand for luxury and super luxury housing has also returned.

This was the worst- hit segment during the slowdown, with sales going down drastically, despite developers doling out promotional offers, such as a free car or a small house, to lure the buyers.

"In fact, during the recession many luxury projects were repackaged into affordable housing project. But as demand is coming back from high net worth individuals and NRIs, developers are once again going back to their earlier luxury housing profiles and resuming their luxury projects that were incomplete for a long period," said Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj (JLLM).

Developers too, are happy that sales are once again taking place in this segment. Rohtash Goel, chairman and managing director, Omaxe Ltd, said, "The sector was dull for the past one year because of slowdown but now the demand is coming back. We estimate that real estate is gearing up for the luxury project market and consumers are regaining the confidence to invest in swanky projects. We expect demand to increase more in future in this segment."

Omaxe has lined up four super luxury projects.

According to research by global realty consultancy Cushman and Wakefield, developers are planning about 9,000 homes in the luxury segment across all the major cities in India over the next two- four years.

"As there is space for affordable housing there is even space for luxury/hi-end apartments, though this segment is very niche. These luxury apartments are no more limited to metros. Tier-II cities like Lucknow and Chandigarh are also witnessing such projects being developed by builders and are in demand,"said Samir Chopra, director, RE/MAX India, a leading global real estate service provider.

Anantha Raghuvanshi, director, DLF Home Developers, added, "From October last year all luxury and super luxury projects that DLF has launched in the above Rs 1 crore segment got very good response from the buyers, not just in metros but in Tier- II cities as well."

DLF said it sold three-fourths of its upscale flats in Central Delhi at Rs 4 crore within two days of launch.

Premium developers like DLF and Unitech are not the only ones who are betting high on this segment and neither is the trend restricted to developers in north India. Seeing the upsurge in demand other big developers like Mumbai-based Lodha Developers and Bangalorebased Skyline Constructions are planning projects to target this niche segment.

Even Tata Housing, which had announced its foray in a big way into the affordable housing segment, is now concentrating on the luxury segment. Tata Housing recently launched an ultraluxury villa project, Prive, at Lonavala where prices start from Rs 3 crore and go up to Rs 7 crore.

There is reason too, for developers to be backing such projects.

Because of the high price of land, margins for the affordable housing projects are not very huge, they explained. On the contrary, in the luxury segment, margins are very good. The minimum profit margin in this segment is 50 per cent and at times it can go up to 150 per cent.

Seeing the demand Cushman and Wakefield has joined hands with Saffronart Management Corp, an online portal that sells art and jewellery, to sell luxury homes costing between Rs 2 crore to Rs 26 crore, online for both Indian and global customers, through auctions.

Source: www.indiatoday.com