For ultra luxury homes in India, location does matter
Prominent addresses or ‘pin code value’ still matter, and the ultra-rich are willing to pay those extra premiums to possess them
Many developers are trying their best to create new zones and addresses across India that can appeal to HNI (high net worth individual) property buyers. This endeavour has met with varying degrees of success on the ground when it comes to swaying the ultra-rich clientele. Barring upgrades in design concepts and the addition of some new accoutrements to amplify a luxury lifestyle, the baseline concept of luxury homes has not materially changed in many cities. Prominent addresses or ‘pin code value’ still matter, and the ultra-rich are willing to pay extra premiums to get them.
That said, cities like Delhi, Gurgaon, Bengaluru and Pune have by now seen a high incidence of developers offering branded residences as alternatives to premium homes at the most sought-after locations within these cities. The success in swinging interest levels of the target clientele has varied markedly in tandem with the actual features being offered.
While there is evidence of first-generation wealthy buyers evaluating and considering such options in these cities, the conversion rate among the historically rich has been negligible. The consensus among this segment is that branded residences offer very little value addition, and that the premiums charged on them are based on artificial factors that do not provide true value.
Demand continues t o be robust for options in bona fide premium locations of the key Indian cities, but newly tailored luxury addresses are also seeing their share of action as long as the projects on offer meet certain parameters. To begin with, deals conclude rap- idly in sellers’ markets where demand exceeds supply. Annual returns in such pockets are in the neighbourhood of 25%, and this figure will continue to see northward movement over the coming years as supply constraints drive prices up further.
In Delhi, the preference of HNIs when it comes to established and high-value locations is more or less inflexible. South Delhi is still the micro-market of choice for ultra-rich clients from Delhi, Punjab and Uttar Pradesh with budgets ranging from ₹ 50 to 300 crore. Golf Links in Delhi is a more vibrant market in terms of demand when compared even to Lutyens Zone. Shanti Niketan and Vasant Vihar are two other key HNI destinations where demand exceeds supply. Golf Links is actually the most sought-after location in south Delhi. Most other cities have similar pockets, but also show evidence of a certain degree of demand diversion to newer locations and concepts, which is not the case in Delhi.
In Mumbai, with the Central Business District (CBD) shifting to BKC for all practical purposes, clients who would previously not have considered any options other than Malabar Hill or Nepean Sea Road zone are now evaluating newer areas like Worli, Bandra-BKC and Mahalaxmi as alternatives. Considering the limited supply in the historically prized locations, HNI buyers are looking for premium options that provide 24x7 security, a gated community experience and premium club houses as an amplification on their experiences in stand-alone buildings in the traditional premium areas. The arrival of K Raheja Corp’s ultra- luxury gated community Vivarea in Mahalaxmi, Mumbai, has seen many wealthy south Mumbai residents accepting this as a luxury address in all respects.
Similarly in Bengaluru, developers such as Total Environment and Chaitanya have provided the city with genuine luxury projects in brand-new premium locations. These developers have been instrumental in turning Whitefield into a high- value address and their completed projects command steep premiums. The offering, specifications and buyer profile are remarkable enough to make a difference. Total Environment’s project in one of the best luxury offerings in India, and demand for such projects in Whitefield exceeds supply.
The author is CEO - Residential Services, JLL India