Lux­ury res­i­den­tial pro­jects fall out of favour in Mum­bai

HT Estates - - FRONT PAGE - Bidya Sa­pam bidya.s@htlive.com

MUM­BAI: Real es­tate de­vel­op­ers in Mum­bai have shifted fo­cus from sell­ing ul­tra-lux­ury pro­jects to ei­ther com­plet­ing them or build­ing mid- in­come or smaller homes. The change in strat­egy comes fol­low­ing sub­dued de­mand for lux­ury homes in the coun­try’s fi­nan­cial hub amid an over­sup­ply.

Launches of homes costing more than ₹ 10 crore have fallen in the past two years in the key ar­eas of cen­tral and south Mum­bai.

Launches in the uber-lux­ury seg­ment fell 1% to 194 units in the first half of this year, ac­cord­ing to prop­erty con­sul­tant JLL In­dia. In com­par­i­son, to­tal launches in the Mum­bai re­alty mar­ket jumped 44% dur­ing the pe­riod.

In the first half of 2016, 280 lux­ury re­alty pro­jects were launched in south Mum­bai.

Mum­bai-based Omkar Real­tors and De­vel­op­ers Ltd, which is build­ing its largest lux­ury pro­ject ‘1973’ for the past five years, has halted sales to cus­tomers. Lo­cated in the posh Worli neigh­bour­hood of south Mum­bai, the pro­ject com­prises three tow­ers with more than 300 apart­ments, of which nearly 100 are yet to be sold.

Omkar has closed book­ings for ‘1973’ for the last four to five months and will re­sume sales only by the end of this year when two tow­ers are near com­ple­tion, said Bab­u­lal Varma, man­ag­ing direc­tor.

“Peo­ple are moreen­thu­si­as­tic to buy com­pleted pro­jects now. We took a call to com­plete the pro­ject first and then open up for sale again when the mar­ket is bet­ter. We hope to fetch a good rate by then,” Varma said.

He said Omkar’s will fo­cus on build­ing smaller apart­ments. The com­pany is sell­ing homes for around ₹1 crore each at its newly launched 65 acre mixe­dused devel­op­ment Omkar In­ter­na­tional Dis­trict (OID) at And­heri.

Ac­cord­ing to real es­tate bro- kers and con­sul­tants, sales of large-sized lux­ury homes costing above ₹10 crore have been ex­tremely slow in the last three years.

While con­sumer de­mand has in­creas­ingly shifted to mid-sized and com­pact homes, the im­po­si­tion of a 12% good and ser­vices tax (GST) has also damp­ened lux­ury home­buy­ers. This has also made con­sumers pre­fer com­pleted apart­ments where GST is not levied.

“Lux­ury homes are a lesser pri­or­ity at the mo­ment. The fo­cus for most­builders right now is to build smaller homes and make it af­ford­able for home­buy­ers. Sizes have come down to the tune of 25-30% in the last five years,” said Sa­man­tak Das, chief econ­o­mist and head of re­search at JLL In­dia.

HBSReal­torsLt­d­has­de­ferred plans to sell two of its on­go­ing sea-fac­ing lux­ury pro­jects in south Mum­bai. Two years ago, the com­pany an­nounced grand plans to build ul­tra-lux­ury pro­jects aroundMarineLines, Worli and Haji Ali area with each apart­ment costing above ₹14.5 crore.

San­deep Shah, man­ag­ing direc­tor of HBS Real­tors, said the com­pany aims to raise funds to com­plete the pro­jects in­stead of ac­tively sell­ing the apart­ments.

“Peo­ple want to come in when they see much lesser risk of de­liv­ery es­pe­cially for high-end homes. Plus buy­ing com­pleted homes end up sav­ing a lot of money in terms of tax­a­tion due to the cur­rent norms of GST,” Shah said.

Some builders have blamed an over­sup­ply of pre­mium homes par­tic­u­larly in prime lo­ca­tions like Worli and Lower Parel.

The last four-to-five years have seen launches of sev­eral ul­tra- pro­jects around these ar­eas. For in­stance, Worli cur­rently houses some of the largest ul­tra-lux­ury pro­jects in Mum­bai such as Oberoi Re­alty’s 360 West, K Ra­heja Corp.’s Vi­varea and Arte­sia and Ahuja Tow­ers among oth­ers.

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