With realty prices touching 2008 levels once again, realtors are bullish about demand recovery in residential projects for the luxury segment. New projects are being planned and construction is being restarted on some projects.
?Luxury or premium housing started making its comeback from the third quarter of 2009. Delhi, Mumbai and Bangalore are the only cities witnessing action in this segment,? said Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj, India. ?However, after the slowdown, tier-1 and tier-2 cities did not see any recovery in the luxury segment,? Puri added.
?There is an increase in demand for premium housing in South Mumbai and customers do value the quality of construction and amenities provided,? said Jayesh Doshi, group CFO, DB Group.
Apart from being expensive and located in the prime areas of the city, luxury projects have an edge over other residential projects in terms of facilities that developers package these homes with. The facilities and amenities include clubhouse, gymnasium, squash and tennis courts, swimming pool, children’s play area, jogging track, coffee shop, spa and meditation centre and multi-purpose halls, amongst others.
The target market for these projects is the upper middle income segment and the price range is of Rs 10,000 and upwards per square feet. ?The luxury segment comprises 15-20% of the total residential space in India. After September 2009, this space has been witnessing significant action in terms of demand, supply and introduction of fresh capacity. This segment has been growing at a CAGR of about 25%,? said Anand Narayanan, national director, residential agency, Knight Frank, India.
Oberoi Realty, which focuses mainly on luxury segment, continued their existing projects as scheduled, during the slowdown. ?Today, the customer is well exposed to amenities being offered worldwide due to which aspirations have risen. The Indian home buyer is looking at just not getting a house, but also better amenities and a luxurious lifestyle,? said Vikas Oberoi, chairman and managing director, Oberoi Realty.
For the DB group, luxury homes contribute 45% to their residential revenue. ?During the slowdown, prices were reduced 10-15% to maintain sales volume. We have three projects under construction and five in South Mumbai are in the planning phase,? Doshi added.
The Lodha group has recently launched Lodha Golflinks, luxury villas and condominiums overlooking a 9-hole golf course at Palava and Kalyan-Shil road. ?These projects have seen great response from customers. Sales in the luxury segment are not constricted by geographies, our launch of super-premium 5,000 sq ft plus luxury sky villas at Lodha Aristo at Thane has seen over 50% inventory getting snapped up in just one month of launch,? said R Karthik, senior VP, Lodha Developers.
Smaller players like the Sanghvi Group does not miss out this ‘important’ segment. For these firms, 80% of their construction is affordable and 20% is luxury homes. ?Lot of supply is coming in Central Mumbai, to the tune of 7,000-8,000 units in the next six months. This can create a short-term oversupply in this market which will be absorbed in a year or two since there is robustness in demand,? added Narayanan.