Luxury Housing Trends in India

Affluent home buyers want their home to reflect the financial and social standing. Accordingly, premium and luxury segment in India has seen unprecedented rise and growth and developers are pouring into cater to the increasing demand. Premium homes today no longer means only expensive units which are centrally located, large and comfortable, but provide you respite from the city's hustle and bustle. Demand for luxury homes in India is growing and the premium segment has grown to a whole new dimension adorned with innovative modern technologies. They have become a lifestyle statement for the desiring affluent class.

Rapidly growing high net-worth individuals (HNIs), increased aspirations and changing lifestyle are the factors behind luxury living being redefined in India. Premium homes boast of increasing demand due to rising income level and affluent lifestyle desired by young professionals. As the buyers are increasingly demanding luxury living experiences imbued in the residential units, developers are coming up with more and more premium homes. And when it comes to his dream home, super luxury is the ultimate deal clincher. Developers, on their part, are trying to outdo each other in breaking fresh ground in this exclusive segment.

Describing super luxury

So, how does one define super-luxury living? Going by what developers and architects have to say, there are a host of contributing factors, ranging from design, size and facilities to the location of the property.

Location is a key factor. Almost all luxury properties in the heart of the city claim to provide paradise like comfort and free from chaos . But, as Anuj Puri, chairman and country head, Jones Lang LaSalle India explains, the ideal location would be within the heart of the city, not on its periphery. "Customers want their homes to be located within the city, but the moment they step into the compound, they should be transported away from it. The view, the calm ambience - is the clinching factor."

Developers, on their part, are trying to outdo each other in breaking fresh ground in luxury. From a typical golf-based project to spa-based, wellness or destination-based, they are experimenting with various themes. "The trend is to focus on exclusivity - which, generally, an independent villa provides," says J C Sharma, vice chairman & managing director, Sobha Developers.

Builders are translating this exclusivity quotient into enclave format, modelled on East Asian luxury villa developments in Bali, Phuket, Koh Kood, etc. The key here is to have fewer units, in 25 to 50 range, with larger plot sizes, giving the privileged residents the much sought-after privacy and physical and visual space.

"Generously proportioned homes offering an un-obstructed and breath-taking view are a key consideration for a luxury home. Developers thereby provide large apartments and condominiums associated with luxury," states Sanjay Raj, CEO and ED, Golden Gate Properties. 

Furthermore, these residences are also seeing the influx of global luxury brands. Indian developers like Lodha Group, Oberoi Realty, Prestige Group, DLF, Rohan Lifespaces etc. are partnering with these brands offering products in the apartment and condominium space. This includes the entry of super-luxury brands like Marriot, Ritz Carlton and Four Seasons in Bangalore, Armani in Mumbai and Swarovski and Trump in Pune.

At the end of the day, however, the two most important features needed for a super luxury apartment remain a lot of space and a prestigious address.

The Target Segment:

India has over 85,000 Ultra High Net worth Individuals (UHNIs) and their numbers are fast swelling. Be it the designer clothes they wear, the swanky cars they drive or the extravagant holidays they take, the young and rich believe in the credo of instant gratification. And when it comes to their living space, they will settle for nothing but the most exclusive and expensive. However, money is not the only criteria to ensure entry into these projects. Developers are very conscious of maintaining the exclusive quotient of their clientele. So, many of these luxury homes are 'by invitation only,' one of them being Lodha Group's 'World One', touted as the World's tallest residential towers. The same exclusivity has been maintained at DLF's super plush project 'The Aralias' in Gurgaon where only a select few have been invited to become a part of this lavish lifestyle.

The dynamics of the super luxury segment are radically different from the rest of the residential market. For this segment, the higher the ticket size, the more exclusive the property becomes as it is less accessible to the masses.

According to Uzma Irfan, executive director - corporate communication, Prestige Group, "High-end homes have today evolved into a statement among the discerning consumer. Such homes are not just about pricing but the result of several qualities, starting with the aesthetics to the amenities to signature styles and so on."

"Someone looking at a Rs5 crore home is not really looking at a bank loan," claims Kruti Jain of Kumar Urban Development Ltd.. "They always buy these homes out of profits they make in their business and excess income;. And since the supply is also limited, it's in tune with the market demand", she adds.

Price tag of Luxury Homes differs across cities:

Needless to say, super luxury comes with a heavy price tag. And homes for the ultra-rich clearly reflect it. These homes are mostly priced at Rs 5 crore and may go up to Rs 25-30 crore depending on location and other specifications.

Affirming this, Mukesh Bhagtani, CEO, of Jaycee Homes says, "Pricing largely depends on the location. In addition are amenities, the type of construction and the interiors. Developer also tries to keep it unreachable from the masses by attaching a large premium to the price. Only then it becomes exclusive."

Going by the varied markets across metros super luxury housing is priced differently. In Bengaluru, anything above Rs 6000 per sq ft could be considered ultra-luxury. But it may not be the same in Mumbai where prices above Rs 15,000 per sq ft come under the super-luxury bracket. On an average, the pricing of a super luxury apartment would be from Rs 8 crore onwards. Whereas in tier-II cities houses above Rs 3 crore come under this segment while in a tier -III city anything upwards of Rs 1 crore will be considered super luxury.

Being a niche market, the demand for super-luxury housing is not volatile. The segment remains unaffected by hardening interest rate stance taken by RBI.

Major Luxury Housing Markets: Mumbai and NCR

Historically, Mumbai has not just been the financial capital of India but also the 'luxury capital' of the country. Mumbai's strong real estate market fundamentals are reflected in all segments, from office space and luxury retail, to luxury housing. Although the port city is constrained for space, it continues to dominate other property markets across India and remains the first choice for luxury brands, film stars, multinationals and global conglomerates. Across the world, luxury destinations have flourished as extended suburbs of the main city, thus supplementing the main city. For instance, in the Delhi-NCR region, Gurgaon has fared better than Delhi as a luxury destination. In contrast, a port city like Mumbai does not have that luxury. Despite this, Mumbai has witnessed the maximum number of entrants into the luxury segment in the last one year.

Devang Varma, director of Omkar Realtors & Developers, insists that Mumbai will not lose its tag of the luxury capital of India for quite some time. Poor infrastructure is an issue in Mumbai and new cities like the NCR are coming up but Mumbai is definitely not sliding on this front. In fact, a lot of redevelopment projects in Mumbai are offering luxury residential houses, he says.

Mumbai, Pune, Bangalore, Delhi, Gurgaon and to a certain extent Chennai are the most responsive markets for luxury housing today. Currently, the overall demand for luxury housing is stable.

"To a certain extent, the growth in new cities has been better than in Mumbai but even in these locations, infrastructure development has not kept pace. Consequently, these locations are also becoming congested. Although there is a perception that multinational brands now prefer emerging markets to Mumbai's saturated market, the fact is that the money is still in Mumbai, with NCR being a strong alternative," explains Varma. Bangalore, Pune, Hyderabad and Chennai are preferred, more as 'test run' destinations, he adds.

Abhay Kumar, CMD of Grih Pravesh Buildteck, also believes that it is too early to say that these new destinations can match Mumbai. Nevertheless, he agrees that the luxury real estate market is not exclusive to Mumbai any more. These other cities have various limitations, as far as super-premium projects are concerned. They still lag behind Mumbai with respect to professionalism and transparency in dealings. Political will also plays a major role, explains Kumar. "Delhi and Mumbai remain the favourite destinations for large government projects and installations and this creates demand for realty in a big way," says Kumar.

Although emerging cities have several advantages, some analysts believe that these destinations have been unable to create an image that attracts luxury brands and financial institutions. Regulatory provisions in Mumbai may be a far cry from what is desired for real estate. Yet, the city has an aura associated with luxury living. Moreover, one needs to understand the psyche of an investor. No market has given better returns on investment than Mumbai's luxury real estate segment. With several upcoming and planned infrastructure projects, the push towards redevelopment and taller buildings, Mumbai seems set to retain its top position in India's luxury realty market.

Luxury with Unique Positioning:

When it comes to providing amenities to a demanding clientele, sky is the limit. On offer are niche services that are a step-up from a lifestyle that the affluent class has already been exposed to.

Luxury segment offers a range of homes to the target buyer – apartments, penthouses, villas, row houses, bungalows, etc. They are usually laced with green spaces, parks or golf courses. 

Branded luxury homes 

Innovative techniques are being introduced in luxury segment by developers. Branded residences are an important emerging concept in luxury housing, which are developed by developers in collaboration with international luxury hospitality or lifestyle brands. In some cases, developers may even tie up with celebrities for branded residences.

For the World Towers residential project in Mumbai, Lodha Group has collaborated with Italian designer Giorgio Armani’s interior design studio, Armani Casa. The project is the tallest residential tower in the world and apartments and mansions are priced around Rs 12 crore and Rs 75 crore respectively. 

Golf/ Polo courses 

High rises with well maintained golf courses in the posh localities of a city has been regarded as symbols of high living. Golf courses stand for affluent lifestyle and social status. Now developers have moved from the stereotyped golf grounds to polo grounds to give the luxury homes a posh status.

M3M India paves the path for other developers to follow as they have come up with the first polo themed project in India. M3M Polo suites offer exclusive concierge services to residents which include hiring/leasing of horses to the interested polo players. M3M India signed an agreement with Equisport, a pioneer polo sport agency, to give a unique polo living experience to the residents.

Themed villas

Theme based housing is new trend in Indian realty market. Theme based villas are the latest fads to impress potential luxury home buyers. Luxury villas are attached with a distinct snob value in congested big cities. Developers like Emaar MGF, DLF have come up with projects based on various architectural themes. Different architectural and cultural elements from different societies like Mexican, Spanish, Arabic, etc are imbued in these residential villas. Marbella, developed by Emaar MGF, is one such project which houses 4/5 BHK villas build in Spanish style. Theme based residential luxury villas in Bangalore, Delhi, Mumbai, Gurgaon, Pune and Chennai have attracted NRI buyers from West Asia, Singapore, etc.

Smart Homes

Developers are keen to incorporate technological advancement into the realty scenario. Latest technology and gadgets have been used to create intelligent living spaces inside the apartments/villas. Prominent features of luxury housing includes digital locks, electronic surveillance systems, temperature control, wireless communication for Internet, in-house entertainment, etc.

The emphasis is to create intelligent and smart home in a techno savvy era. Systems with sensors are being used for controlling light, ambiance and temperature inside the house. Technology is used to provide a galore of specialized services – from concierge services to medical consultation.

Vertical growth of luxury homes

As land is scarce in central areas of most of the big cities in India, luxury homes are being developed vertically – sometimes an apartment built over an entire floor. The luxury homes come with terraced gardens, indoor swimming pool, private lounges, etc. Bathroom fittings and kitchen interiors are of excellent quality and some of the developers have come up with ultra luxury services like exclusive lift and automatic teller machine.

Developers are even coming up with customized homes like boutique luxury homes which are set to redefine living experiences for residents.

(Sources: Realty Plus – October 2013, Moneycontrol.com 20^th August 2013, Commonfloor.com – 4^th January 2013, Track2 realty.com)

Recent Trends in PE investments in Real Estate sector in India

The PE investments in real estate was recorded at $276 million (around Rs 1,638 crore) in first half of 2013 as compared to $514 million (around Rs 3,050 crore) in the same period last year. The decline in the quantum of PERE investment was essentially due to less number deals (13 in H1 2013) as the average ticket size of deals remained same.

Consultancy firm Cushman and Wakefield attributed the drop to the volatility in the market, including slower growth of the Indian economy, political stalemates and depreciation of the rupee. While, there is a strong investment sentiment for PERE transactions in India, they display a reflection of the market sentiments, where funds are looking at only embarking on projects with strong fundamentals.

Even though private equity investment in the Indian real realty has fallen nearly 50 per cent to $276 million in the first half of 2013 due to lack of good projects and weak sentiment, foreign investors are still bullish on the sector. PE funds continue to show keen interest in the market with a number of deals in discussion.

“Investors are willing to invest in real estate; however they are exploring the market for right real estate projects. We anticipate that in the next few quarters, after some regulatory and politico-economic environment are regularised, the momentum in real estate will pick up throwing open more investible options for the investors,” said Sanjay Dutt, Executive Managing Director of South Asia operations, C&W. He added, currently, it was estimated that around $2 billion is ready to be deployed in the real estate sector of the Indian market. The fund raising environment (domestic and offshore) has consistently improved with more quality capital available for the sponsors with demonstrated track record.

According to property consulting firm Cushman and Wakefield about $2 billion (Rs 11,854 crore) is available with private equity firms ready to be deployed in real estate in the next one year, but PE funds want to put in money only in those projects with strong fundamentals. According to Sanjay Dutt, despite the slowdown in the construction market and the reduced number of investible projects in India, real estate is still the fourth most-invested sector by private equity funds.

“We anticipate that in the next few quarters, after some regulatory and politico-economic environment are regularised, the momentum in real estate will pick up throwing open more investible options for the investors,” he said.

So far in 2013, the highest value PE investment was $131.6 million in Pune, followed by $67.5 million in Mumbai, $38.8 million in the National Capital Region, and $16.9 million in Bangalore.

Even data from Venture Intelligence shows that private equity-Real Estate firms made 13 investments (amounting to $318 million across 12 deals with disclosed values) during the quarter ended June 2013. The volume of investments perked up significantly from the seven investments in the same period in the previous year (which witnessed $172 million being invested across six transactions with disclosed values) and also the eight investments (worth $569 million) during the Jan-Mar 2013 quarter.

However, there is a strong growing trend towards investments in ready office space. The growing stability of the market is reflected by the continuous growth of the core investors (number and value) with over $1.3 billion (Rs 7,705 crore) invested in ready office space during the last three years.

Some recent marquee deals/developments in PE investments:

•          Pune witnessed transactions such as the Panchshil Realty and Ireo Management Ltd SEZ by Blackstone for $75.9 million (Rs 4.5 billion).

•          Ascendas Trust’s Rs 600 crore (about $110 million) acquisition of 2 million sq. ft of office space in Hyderabad from Phoenix Group was the largest investment during the second quarter of FY13. This was followed by Xander’s Rs 280 crore ($52 million) investment in Supertech’s 125 acre township project in Gurgaon and Clearwater Capital’s (along with Ajay Piramal Group non-banking financial company PHL Finance) Rs 300 crore ($50.2 million) investment to finance VGN Developers’ acquisition of a land parcel for a gated community project in Chennai.

•          In September ‘13, Kotak Real Estate fund said it had raised $200 million (Rs 1,200 crore) from select group of investors and has firmed commitments to raise $200 million more to close its $400 million eight-year tenure fund to invest in only residential properties in India’s six metros.  The fund will invest an average of $15-20 million in each project and will put in money from the first close in 10-12 projects. It is looking to generate a return of 20 percent for investors of the new fund.

•          PE Firm, Indian Property Advisors Pvt Ltd. (IPAL) is planning two funds – a Rs 300 Cr domestic fund and $250 – 300 million offshore fund, which would be raised in the second quarter of 2014. IPAL would be investing in small redevelopment projects with a turnaround of three years and will only fund for the growth capital.

The company plans to have plain vanilla equity investment rather than a structured deal.

•          Even Tata Realty has put its 780,000 sq ft IT park in Mumbai’s Goregaon suburb on the block and aims to raise Rs 800 crore through the sale of the park, while Oman’s State General Reserve Fund and the Government of Singapore Investment Corp (GIC), investment firm Temasek committed to invest $200 million in HDFC Real Estate Fund.

•          DLF, India’s largest real estate company, had initiated talks with four buyers, including leading private equity (PE) funds, for the sale of Aman Resorts, its luxury hotels chain, said a source involved in the deal. In December 2012, DLF had announced it had sold the entire stake in Aman Resorts for $300 million to Adrian Zecha, the hotel chain’s founder. Sources said Zecha had missed two payment deadlines in March and June, adding he wasn’t able to raise funds for the deal. “Adrian is still in the fray. Being a management buy-out, it is taking time to close. In the meantime, they (DLF) are also in discussions with four other buyers, including some global PE funds that are in various stages of evaluation and diligence,” the sources said. “They are not banking on one buyer for the sale. That is why they’re talking to three-four companies.”

•          The real estate fund of Morgan Stanley has abandoned plans to invest nearly $200 million (about Rs 1,240 crore) in an upcoming commercial real estate project in Mumbai after the rupees recent plunge against the dollar made the deal unrewarding, three people familiar with the development said. Morgan Stanley Real Estate Fund was working on the structured finance deal with Mumbai based Wadhwa Group since January to invest in the latter’s 1.6 million square feet office project in Bandra-Kurla Complex. Construction on the project, called ONE BKC, is due to be completed in the next 12-15 months. The fund has invested about $780 million in Indian real estate so far and the investment in ONE BKC would have been its first in a commercial property in Mumbai. Returns that were arrived at in earlier negotiations between Morgan Stanley and Wadhwa were shrinking even before concluding the deal, one of the people quoted earlier said. The hedging cost for the entire deal would have been huge. Morgan Stanley declined to comment, but Wadhwa Groups chief financial officer Srinivasan Gopalan confirmed that the proposed deal has fallen through. Wadhwa Group is now in process of raising domestic debt of over Rs 1,100 crore from Standard Chartered Bank for the project.

(Sources: First Post 1st August 2;013, Economic Times-26-Sep-2013, Live Mint 19th Sep ’13, Business Standard 28th Sep ’13, 27th July ’13)

Gurgaon Realty Trend

New Delhi's property market may have slowed down with builders struggling to sell flats, but Gurgaon is still going strong. Cushman & Wakefield say prices in Gurgaon's luxury residential market have risen 29 percent year-on-year (YoY). So what used to cost around Rs 17,000-25,000 a square foot has appreciated to Rs 22,000-32,000 a square foot.

In the more affordable mid-end category, Cushman & Wakefield estimates an 18 percent price appreciation. So, apartments that a year ago cost Rs 6,500-9,000 a square foot now carry a price tag of Rs 6,800-11,500 a square foot. Gurgaon's Golf Course Road saw frenzied real estate activity over the last decade.

(Source: “Prime Property”-CNBC TV 18, 5^th July 2013)

A look at some of the micro-markets under Gurgaon Realty Market

Dwaraka – Gurgaon Expressway on its way to be a hot Real Estate market

Dwarka-Gurgaon Expressway is now registering huge real estate development with developers taking advantage of the planned infrastructural development in and around the developing sectors along this stretch.

Dwarka-Gurgaon Expressway, also known as NPR (Northern Peripheral Road), a project of the HUDA is expected to ease the traffic rush on the operational Delhi-Gurgaon Expressway. Out of the total 18km length, black-top work of nearly 13km-length has already been completed with balance work expected to be completed in the next six months.

With its close proximity to the IGI airport, the Delhi Aerocity Metro station, and the forthcoming Diplomatic Enclave in Dwarka the Dwarka-Gurgaon Expressway area is expected to follow the same growth curve as premium Gurgaon locations like Golf Course Extension Road and NH-8. With the increasing number of corporates operating out of Gurgaon, coupled with the limited availability of mid-segment residences in Gurgaon and Delhi, Dwarka-Gurgaon Expressway is emerging as an attractive alternative for investors and end users.

Fast connectivity and proximity to the proposed Diplomatic Enclave in Dwarka will significantly benefit Dwarka Expressway, placing it high on the investment-return scale. Projects that were quoting at Rs 2,500 per sq ft in 2010 are quoting at Rs 5,000-7,500 per sq ft now, for multistory residential units.

A number of top realty players like Chintels Group, ATS, Vatika, Puri Construction, Assotech Ltd, Godrej Properties, Adani, Tata Housing, Sobha Developers, Raheja Developers, CHD Developers, Micortek Infrasturctures Pvt Ltd, BPTP, Satya Group, Spaze, Paras, Ansal Housing, etc, are already developing projects along this stretch.

Residential property of Dwarka-Gurgaon Expressway, especially in areas like Sectors 103-106, 109 to 113, is estimated to appreciate by substantially over the next five years. Nearly 18,649 residential units were launched along here since 2007.

NRIs, too, are showing interest in this area owing to the handsome appreciation of property here, along Dwarka-Gurgaon Expressway. This area has also emerged as a prominent destinations for IT-ITeS outsourcing and off-shoring hubs with 22.3 million sq ft of new office supply expected by 2017 and about 48 million sq ft of office space stock to be added during 2012-2017.

Ajay Aggarwal, MD of Microtek Infrastructure Pvt Ltd, says: “Work on and near Dwarka Expressway is moving in the right direction. Like any other big-ticket infrastructure project, it also faced some delays, but thanks to the combined efforts of all the stakeholders, it has picked up momentum lately. In the near future, property market around Dwarka Expressway or New Gurgaon will become premium destinations.”

Cyber city of Gurgaon rules the realty roost

Gurgaon and Manesar continue to be the hub of real estate activities in the NCR region. Despite the slowdown in the economy, demand for residential and commercial real estate in these sub-cities has not been affected appreciably. Now, developments in these parts are extending all the way till Dharuhera along NH-8, Sohna along Sohna Road, and Pataudi along Pataudi Road. A number of large players like Godrej, Tata Housing, Mahindra Realtors, and Sobha Developers have entered the market here. Apart from them, a number of realty majors like DLF, Unitech, Emaar, Raheja, Ireo, Vipul, Vatika, M3M, Puri Construction, ATS, Supertech, Assotech, Orris, Ramprastha, etc, have already launched projects in the area.

A large number of Fortune 500 companies, BPO and ITeS companies, too, have opened offices in the millennium city. Thus, the demand for commercial real estate space and the demand for residential units feed upon each other. Interestingly, despite the slowdown in the economy in the; last couple of year, there is no visible slowdown in the demand for commercial space in the sub-city, which has further kept the demand for residential units alive.

However, along with signs of sluggishness in the economy, the commercial sector is facing challenges like lack of funding for building more projects, inflated prices, excess inventory across large cities, and delays in obtaining building approvals.

Market boom on Gurgaon – Faridabad Road

Real estate development along Gurgaon-Faridabad Road, which further connects to Ballabhgarh-Sohna Road, is in a boom phase.

This stretch connects the economic centres of neighbouring states like Haryana, Rajasthan, ;Delhi, and Uttar Pradesh. This road also connects tourist spots like Surajkund, Damdama Lake, the Tourist Complex in Sohna, the Bird Sanctuary in Sultanpur, Agra, Jaipur and other historical places of Rajasthan and Uttar Pradesh. Tourists coming from T3 airport or from Jaipur will also find Gurgaon-Faridabad Road highly convenient and time-saving for reaching tourist spots like Agra, Mathura, Vrindavan, etc.

Gurgaon-Faridabad Road is shaping up as a prime location for real estate development with fast connectivity and improving infrastructure. This developing realty region is proving to be a good residential location owing to its excellent connectivity with Noida, Ghaziabad, Gurgaon, and South Delhi. The master plan of the area envisages a future Metro line, provision for wider roads, parks, along with a ;good combination of commercial and residential mix of projects.

Future Market Gurgaon Extension: Next residential hub

A new developing zone – Gurgaon Extension (the area extending from Sohna Road and directly connected to the main Gurgaon-Sohna Road) – is being considered by realty experts as a good place for affordable-range housing.

According to the recently approved Master Plan-2031 of Sohna, the population of Gurgaon Extension (Sohna) is expected to grow tenfold by 2031. The developing area will have 5,000 acres of residential and commercial development and 2,600 acres of green and open space development in over 20 sectors. Close on the heels of its new Master Plan-2031, a slew of group-housing projects, townships, plotted developments, and luxury projects have been announced by leading developers like Raheja Developers, IREO, Parsvnath, Avlon, Gold Souk, etc, for this area. The Delhi-Mumbai dedicated freight corridor is located close by and all the mega industrial estates and infrastructure coming up along with the KMP corridor will add more value to the investments here.

Connectivity and accessibility is the biggest USP of Gurgaon Extension (Sohna). Proposed KMP bypass would take care of the heavy vehicle movement, reducing the traffic flow on the existing Gurgaon-Sohna-Alwar Highway and the new 90metre to 150metre roads. Also, the area will have excellent connectivity with the NCR through the proposed Metro line.

Gurgaon Extension has emerged as a prime residential destination for end users and is currently registering a healthy demand. It is a good example of mixed-use development with great scope for further growth. Planned urbanization with IT parks, malls, residential apartments, villas and new ;residential projects under construction on both sides of this road make the area a sought-after location among first-time homebuyers and those looking for a property for investment. 

(Sources: Prime Property-CNBC – TV 18-5^th July 2013, Magic bricks Website 14^th August 2013, 16^th August 2013, 16^th August 2013, Business Standard, and 17^th August 2013)