Are you are thinking of investing in luxury apartment in Delhi-NCR? Experts believe the slide in prices, along with discounts on offer, makes for sound investment decision. They further added that waiting for prices to come down further may not be wise.
“In the last few quarters, there is stagnation in prices with increasing discounts and incentives actually causing reduction in housing prices. Anticipating further discounts may not be a sound decision as actual unsold housing levels in few pockets of Gurgaon and Noida will not allow for further price reduction,” Santhosh Kumar, CEO – operations & international director, JLL India said.
The luxury housing segment within the realty sector has remained under pressure over the last few years. Experts predict a rebound in coming times when business confidence improves along with a revival in the economy. Investment in luxury homes in Delhi-NCR should be made for the long term. Chances of an immediate return are low looking at the delay in projects and unsold inventories in Delhi-NCR region.
According to 99acres, Gurgaon continues to house maximum share of luxury units (priced above Rs 2 crore) in Delhi NCR. The millennium city captured more than half of the supply in the luxury segment during the first quarter of 2016.
Real Estate firm Knight Frank India says Delhi and NCR region had been worst hit in 2015, with unsold inventory at 14,658.
However, pan-India, the magnitude of unsold housing units stands at 35 months of absorption, while for NCR it is around 49 months, according to JLL.
“Definitely luxury flats are good investments but these are long term investments. Market is slow and it’s going be some time before returns are realised. At the moment because there is higher inventory, developers are willing to give a good deal to buyers. In both Noida and Gurgaon the unsold inventory is quite high. Both Noida and Gurgaon can be looked at for buying luxury properties, but the expectations should be that these will give good returns in longer term, ” Mudassir Zaida, national director- residential, Knight Frank said.
Demands for luxury apartment appears to be primarily driven by investments made by the high net high net worth individuals (HNIs) and ultra high net high net worth individuals (UHNIs).
“As demand in the luxury segment is driven by high net worth individuals, who rarely depend on home loans to fund their purchase, transactions are expected to pick up soon, even if interest rates witness a hike. Moreover, price fluctuations have rarely deterred luxury buyers from making a purchase if there is a real need or interest. Thus, from an investment point of view, it makes sense to park money in luxury projects as consistent demand is a given,” Narasimha Jayakumar, chief business officer, 99acres said.
Experts believe prices of luxury housing units are expected to rise in Gurgaon, while ‘ask’ price in Noida may plateau due to incessant delays in project deliveries and legal hassles. Luxury housing in Delhi is largely confined to the resale market that offers villas and builder floors in prime areas. The hefty price tag for these properties is largely due to the location and not due to the presence of any state-of-the-art facilities, which is the case in Gurgaon and Noida.
In Delhi-NCR, high-end luxury apartments are largely coming up in Gurgaon and Noida. In Gurgoan developers like DLF, Bestech, Shweta Estates and IREO have launched their luxury projects, while in Noida, ATS, Super Tech, 3C and Shoba Developers are developing these luxury flats.
While investing in luxury apartments buyer should look at projects which are likely to be completed over the next 12-18 months to mitigate the risks related to delivery of projects. Layouts, amenities being offered, location of the property, developer’s reputation and track record should be given a thought too.