ULTRA LUXE STAGNATES

If the premium luxury segment has been selling more units, the inventory across metros has also been piling up. Data collated exclusively for Business Today by Liases Foras, a residential property tracker, showed the wealthy in Mumbai snapping up 561 units priced at `10 crore or more in 2015/16 compared to just 235 in the previous year (see Flying High). In Delhi- NCR, too, the premium segment more than doubled sales to 215 units in 2015/16 from just 97 in 2014/15. However, unsold stock was much higher. In Mumbai it rose to 3,718 units from 3,072; and in Delhi it was at 838 and 758 units, respectively, for 2014/15 and 2015/16. The premium luxury segment in terms of volume represents just about 1-2 per cent of the total sale of residences across the six metros.

Interestingly, builders’ attempts to carve out an ‘ultra-luxury’ segment, pricing units at `50 crore or higher, have not been successful. None of the cities has shown any sales of units in this category. In Mumbai, too, in the past two years, data shows sales of just three units above `50 crore. Lodhas’ ‘World One’ was initially floated as mansion-in-the-sky with prices in the `60-100 crore range, but these have been cut down in size and prices as they found no takers.

“Demand has dropped off in recent years for high-end luxury homes,” says Pankaj Kapoor, CEO of Liases Foras. “The salaries and numbers of high-paid professionals have stagnated, and builders overestimated the demand from this section.”

So, why are builders still continuing to push this segment? It is a factor of the boom period, when builders bought urban land at astronomical prices. “If the land purchase is at `30,000-a-sq. ft, the builder has to build and market high-end products to get a decent return on investment. They are being forced to do luxury,” says Kapoor.