The real estate market for luxury homes in India has seen a phenomenal increase in demand during the last few years.
Developers and builders have launched an array of luxury housing projects that suit almost every budget, and consequently the demand for luxury homes has risen in metros and other major cities as a result of the changing demographics and the rising aspirations of buyers.
Mumbai for instance witnessed an overall increase of 30% in its luxury homes sales during the past year, with new projects being launched in areas like Mahalaxmi, Lower Patel, Worli, Juhu, Lokhandwala and Bandra.
The World One residential project, an upcoming residential project in Worli has seen the Lodha Group and Giorgio Armani coming together. The entire design aspect of the project is being developed by Armani Casa, the fashion designer’s studio for interior design.
Lodha Fiorenza is another collaboration project of the Lodha group, but this time with Jade Jagger for Yoo. All this activity has attracted Donald Trump who has entered the Indian Market with the announcement of the Trump Towers in Pune.
Bangalore is another city where supply in the luxury housing segment has exceeded demand. Bangalore has seen a rise of 35% in the last three quarters alone. Luxury apartments are offered in places like the Outer Ring Road, Doddaballapur and Whitefield, where the demand for residential projects is highest.
The Purvankara Group of Bangalore has currently received approvals for the launch of its luxury housing segment in Bangalore costing Rs 2.5 Crores and above. Many other projects in this segment are being launched in all other cities in India as a result of the increasing demand.
Price of Luxury
Several factors influence the price structure of these luxury homes. The most important is the location of the project. Amenities that are offered, the developer and the basic design of the house are some factors that decide the final amount that you pay.
Prices range between Rs 5 crores to Rs. 30 Crores. The projected growth rate in this sector, according to developers, is anywhere between 30-35%. However, this does not mean that prices are the same PAN India. For example there is a huge disparity in prices between Bangalore and Mumbai.
While a house that costs more than Rs. 6000 per sq ft is considered a luxury home in Bangalore, the benchmark for Mumbai is Rs. 15,000 per sq ft.
According to an Indian Housing Sector Analysis Report, the increase in demand is attributed to an increase in purchasing power and the standard of living across the country.
Is the increase in demand due to the affluent class?
This sudden increase in demand can also be attributed to the increasing number of High Network Individuals (HNI). A survey points out that India tops the list in the HNI growth rate. Another reason is the rapid pace of urbanization that the country has witnessed in the past decade. Luxury homes cater to the needs of high end consumers and at present are considered by NRIs as a potential investment option.
In addition, HNIs have become skeptical of the capital market due to economic instabilities across the globe, and this in turn has forced them to turn towards the real estate sector whose growth is demand driven and not based on speculation.
Commercial market for luxury projects
Aside from the demand for residential projects in Tier II and Tier III cities, there seems to be an equivalent demand for commercial property in these areas. Commercial real estate developers are witnessing higher investments as compared to Tier I cities where markets are a little unsafe and labor charges are high. End users in turn are of the opinion that Tier II and Tier III cities offer a relatively higher ROI.
Increase in Foreign Investment
Investment in India, which was earlier considered a real asset, has slowly changed and has gradually become an element of lifestyle. This has attracted potential buyers from overseas. With the upsurge that the Indian real estate market is witnessing, people from around the globe have considered relocating here.
Top locations in the luxury segment include:
Mumbai tops the list in the luxury housing market with 29 percent of under construction units priced above 1 crore, as against 11 percent and 5 percent in the National Capital Region (NCR) and Bangalore.
Area: Prabhadevi, Lower Parel and Bandra Kurla Complex.
Prices: INR 25,000/sq.ft. to INR 110,000/sq.ft.
South and Central Delhi’s luxury homes range from INR 15,000/sq.ft. to INR 65,000/sq.ft.
In the prime areas of Gurgaon, luxury homes range from INR 7500/sq.ft. to INR 30,000/sq.ft.
Bangalore has the most affordable housing market with 77 percent of under construction units priced below 5 million.
Luxury housing in the prime areas of Bangalore range from INR 20,000/sq.ft. to 30,000/sq.ft.