Why vil­las?

It’s a high-mar­gin game that de­vel­op­ers love to play

HT Estates - - Property Classifieds - Subhankar Mi­tra

Vil­las are a unique prod­uct be­cause un­like in apart­ments, the buyer gets to own the land on which the villa is built. Pric­ing of vil­las would vary with the size of the plot on which they are built, their built-up ar­eas, the ameni­ties of­fered, whether or not they are gated, the lo­ca­tion of the project, its ac­ces­si­bil­ity, value-adds such as sea view and so on.

Top man­age­ment of­fi­cials of the ma­jor of­fice oc­cu­piers in each of the re­spec­tive cities along with NRIs and HNIs are the typ­i­cal tar­get au­di­ence in the villa seg­ment. Typ­i­cal sec­ond-home buy­ers look­ing at vil­las as hol­i­day homes are also a po­ten­tial tar­get for this seg­ment.

The villa busi­ness is a high­mar­gin game. De­vel­op­ers can fo­cus on this seg­ment to en­sure prod­uct dif­fer­en­ti­a­tion in their of­fer­ings in a par­tic­u­lar city.

By do­ing so, they get to tap a de­mand stream that is uniquely dif­fer­ent from that for apart­ments and high rises. De­vel­op­ers can also strate­gise their villa ven­ture as a ‘hedge’ against their other real es­tate busi­nesses (typ­i­cally of­fices/high­rises) by proac­tively ac­quir­ing land in the far­ther sub­urbs and mar­ket­ing villa projects to en­sure sus­tained cash flows.

Mum­bai city, which is pri­mar­ily known for its tall ver­ti­cal real es­tate de­vel­op­ments, also has a size­able mar­ket for villa de­vel­op­ments. How­ever, these de­vel­op­ments are lo­cated pre­dom­i­nantly on the out­skirts of the Is­land city. While there are few note­wor­thy villa de­vel­op­ments in Greater Mum­bai (which in­cludes lo­ca­tions such as Bori­vali, Gore­gaon, Dom­bivali, and Thane, among oth­ers), most of the on­go­ing as well as new villa projects are lo­cated in the far­ther sub­urbs of Kar­jat, Khopoli, Shahapur, Mur­bad, and Bad­la­pur (among oth­ers) and in Navi Mum­bai, which in­cludes ar­eas such as Alibaug, Kharghar, Pan­vel and so on. While the buy­ers of villa projects in Mum­bai are pri­mar­ily sec­ond home buy­ers, those in cities like Delhi NCR and Ban­ga­lore buy them for their own use as pri­mary homes.

How­ever, apart from this dif­fer­ence in con­sump­tion of villa projects among the three cities, buy­ing a villa is per­ceived as a life­style pur­chase as com­pared to buy­ing an apart­ment.

Tra­di­tion­ally, the per­cep­tions of own­ing a home among buy­ers in these three cities vary sig­nif­i­cantly. Mum­bai city im­bibed the apart­ment and in­te­grated town­ship mod­els much ear­lier than the other two cities, largely be­cause of its lin­ear ex­pan­sion, which con­trasts vis­i­bly with the rounded ex­pan­sion of Delhi NCR and Ban­ga­lore.

With their own tar­get au­di­ence, villa de­vel­op­ments have al­ways been per­ceived as a niche prod­uct among the res­i­den­tial mar­ket of­fer­ings in the met­ros. The sup­ply is in tan­dem with the de­mand, pro­vided it is suit­ably priced for the ameni­ties that the projects of­fer. How­ever, a sus­tained price rise in the past few quar­ters (post re­cov­ery) among the tier I cities, along with the hard­en­ing of in­ter­est rates, has led to a short-term sta­bil­ity in the de­mand for hous­ing in the ma­jor cities of In­dia. The key to fu­ture suc­cess in the res­i­den­tial sec­tor – in­clud­ing in vil­las – lies in prod­uct dif­fer­en­ti­a­tion, which can be achieved by of­fer­ing var­ie­gated con­fig­u­ra­tions and ticket sizes of units.

Buy­ing a villa is per­ceived as life­style pur­chase

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