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)

Chennai Real Estate Market Scenario

In contrast to what was been witnessed in many of the more volatile cities over the last couple of years, Chennai's residential property market saw steady growth in terms of pricing, demand and supply. Chennai's residential property market is predominantly end user driven. The absence of overt speculation has also ensured that developer has move pricing of homes in a stable and gradual manner. Unnatural spiking has therefore been successfully kept at bay.

Demand scenario

Chennai is known for its conservative mind-set, which reflects visibly on its residential property market trends, as well. For instance, home buyers in Chennai have historically been driven by location over and above most other considerations, and this had put definite limits on the demand and potential for community living in the city.

Chennai is still a predominantly end user-driven market, with 60-65% of the buyers being people purchasing for self-use. Residential space investors in Chennai tend to take a long term view, the modus operandi being to look at off-loading their holdings within an average time-span of 5-7 years. This attribute further strengthens the market's end-user behaviour.

Increased job security in the city has definitely helped the market to maintain buoyancy and a positive outlook. It’s becoming increasingly evident that Chennai's residential real estate market is significantly dependent on the IT/ITES sector. With employment stability in this sector looking good, demand for homes has now reached a comfortable and dependable growth trajectory from which developers are taking their market cues.

Pricing Trends

Chennai is a stable market wherein residential property prices move in accordance with actual sales. Price volatility due to other factors has been completely excluded. As a result, prices have not dropped in most projects over the last few years.

Also, residential property in Chennai is driven more by locations than by specifications and amenities. The scarcity of land parcels and also the cost of premium FSI within the city have create relentless upward pressure on residential product pricing. This has resulted in the available options in these locations shooting way past the budgets of even the upper middle class. Prices for standard apartments with minimum or no amenities within Chennai city can range from Rs. 1.5-5 crore.

Chennai's residential market is witnessing considerable demand in the affordable segment - specifically for units in the price range of Rs. 35-60 lakh - in locations which offer an acceptable degree of social infrastructure.

Residential developer who want to keep the cost of units in their projects affordable need to look at suburban locations with limited infrastructure. The only other option available to such developers is to cut the unit sizes so that they can include some degree of decent infrastructure. Lack of locations with good infrastructure has hindered the supply of land, which has resulted in pricing going upwards whereas the pricing remains stable or stagnant in locations which lack good social infrastructure.

The need of the hour in Chennai's residential real estate market is a good supply of land so that new locations can be opened up and the requisite social infrastructure and other utilities can be put in place. If this happens, we will see more innovation in residential products, because developers will need to set themselves apart with uniqueness and differentiation in their products.

Upcoming residential areas to watch

I.                North Chennai:

North Chennai is a real estate market that is waiting to happen. For now it is the preserve of the local residents who drive the demand for housing unlike elsewhere in Chennai – the West and the South, which are the focus of attention of home buyers. This part of Chennai comprising Kolathur, Korattur, Madhavaram, Perambur, Puzhal, Thiruvottriyur, Tondiarpet and Villivakkam is predominantly a middle income group market. Projects offering houses under Rs 50 lakh are in demand with houses in the 700-1,200 sq.ft range, according to a report by the property portal, IndiaProperty.com.

North Chennai accounts for about one-sixth of the total property development in the city. With the implementation of major infrastructure projects including that on the Outer Ring Road, Chennai-Ennore Port Connectivity project, and the metro rail project connectivity will improve and catalyse real estate development and demand. Perambur, Tondiarpet and Kolathur and major residential areas and Madhavaram is a fast growing residential hub that has attracted the attention of developers, said the report.

The north Chennai skyline is beginning to change with a number of large-scale properties setting up base there. More builders are coming to north Chennai as several of these areas have been merged with the Chennai Corporation.

The population here is also dependent on public sector and large industrial enterprises for employment. This is also one reason that North Chennai does not see significant office space development, most of which is concentrated in the South.

The price of land is cheaper by 20 per cent in the north prompting several builders to develop properties in far flung areas such as Red Hills. Residents do not mind the distance for the sake of affordable housing, said Mr. P. Manishankar, president of Federation of Flats and Housing Promoters Association.

R. Kumar, managing director of Navin Housing and Properties, said the trend of luxury apartments was catching up in areas such as Sembium and Tondiarpet. Better connectivity and improved infrastructure are attracting more people to the northern suburbs. “In north Chennai, people can buy flats at two-third of the rates prevailing in south Chennai,” he said.

The price of an apartment ranges from Rs. 3,500 per sq. ft. to Rs. 6,500 per sq. ft. depending on the location. A majority of the customers are first-time buyers, said S. Senthil Kumar, former president of North Chennai Flat Promoters Association.

M. R. Nazeerudeen, immediate past president of Chennai Real Estate Agents Association, said: “One of the most popular areas for builders now is Kolathur. Though the number of high-rise apartments is much lesser, budget homes are available.”

Proximity of Kolathur and Madhavaram to Inner Ring Road, easy access to areas like Anna Nagar and infrastructure development such as new bus terminus and grade separators have acted in favour of these areas.

D. Viswanathan, a builder, who has two ongoing projects, entered Madhavaram five years ago because the area had quality groundwater and was close to areas such as Parry’s Corner and Perambur.

II.               Madhya Kailash ' Sholinagnallur

This stretch is witnessing a clear supply-demand mismatch, with demand outstripping supply. With new employment being generated in this corridor and corresponding absorption of IT space, this area and its peripheries are witnessing extremely healthy demand for residential property. Its proximity to the city adds to the appeal of this area, which will see good appreciation over the coming years. Encouragingly (and in contrast to other parts of OMR) all completed projects here are fully occupied.

III.             Velachery

Velachery is seeing consistent growth, because it is one of the few areas which are seeing holistic and self-sustaining development. With malls and other social infrastructure improving, Velachery is definitely next in line for good appreciation. In fact, near-lying areas such as Medavakkam, Pallikarnai, Pallavaram, Thoriapakkam, the 200 ft. MMRD Road and Rajakilpakkam are already experiencing the positive fallout effect of Velachery's growth as a residential property destination. These areas are also witnessing good absorption and capital appreciation. There is also significant demand for homes in Porur along the NH4 corridor up to Urapakkam on the GST Road.

New Trends in the market

There has, so far, been no scope for the growth of large-sized township projects within the city. Chennaites had been showing an unyielding preference towards living within the CBD because of the dearth of good schools, convenience stores, entertainment and restaurants in other areas. Developers had been more than happy to construct projects of 12-30 units with limited or no amenities, little or no green cover and extremely restricted open spaces.

In the coming months, Chennai will see a major change in this aspect, with a string of township projects by developers of national stature under execution and nearing completion. These township projects have minimal plot coverage, which paves the way for large green cover and ‘lung space' within the project. This is an added incentive to opt for community living, which was largely unheard-of until as late as 2006.

The new game changers in the Chennai residential real estate space are generous landscaping, serene environment, schools within the campus, big club houses, health club facilities for both indoor and outdoor sports, multiplexes in the vicinity, health care, restaurants and large swimming pools.

As a result, community living in the true sense is finally going to emerge in Chennai. Once these large projects are fully executed, we will see a decisive forward momentum in the concept of large, well-equipped residential communities in Chennai.

(Sources: Times of India: Sep 9, Oct 11, 2013, Business Line: July 26, August 10, 2013, Moneycontrol.com: Aug 2013)