The Lutyens’ zone has one of the priciest real estate in the country where construction is highly regulated as it is a designated heritage zone.
That is one pricey house to have but then the address doesn’t come cheap. The owner of a leading electronics contract manufacturer recently bought a house in New Delhi’s tony Lutyens bungalow zone for Rs 170 crore in what is believed to be the priciest residential transaction in the city after the lockdown.
Real estate experts say more such deals are in the offing over the next six months as the ultra-rich go shopping for spacious and green locations in the aftermath of the coronavirus pandemic.
Sunil Vachani, chairman and managing director of Dixon Technologies, bought a 1,250-sq yard bungalow in the leafy Golf Links for Rs 170 crore, which translates to Rs 1.5 lakh per sq ft, brokers told Moneycontrol. This is a direct deal and no broker was involved.
A similar-sized property in the area was bought for Rs 120 crore in February 2020, a month before the lockdown, brokers said.
“The Golf Links deal, which surpasses the previous price benchmark in the area, is an end-use and need-based transaction. It does not really qualify as the market rate, however, one does keep witnessing such transactions time to time, given the high aspirational value of Central Delhi locations,” said Shveta Jain, head, Residential Services, Savills India, a UK-based International property consulting firm. She was referring to the property being bought to live in and not for investment purposes.
The Lutyens’ zone is the country’s power district where the powerful politicians rub shoulders with top industrialists and bureaucrats. The area is one of the priciest real estate markets in the country, where construction is highly regulated as it is a designated heritage zone.
“Given the paucity of clear title supply, valuations of such assets are not so standard and are most times driven by the need of the purchasers and sometimes sellers, too, given the large tickets,” Jain told Moneycontrol.
Such transactions typically involve protracted negotiation as there was always a mismatch between buyers' and sellers’ expectations. “We are, however, seeing the mismatch narrowing, leading to new deals over the next 6-12 months,” she said.
Such properties are normally sold by inheritors or original allottees to meet their need for money or “joint family needs”, she said.
Real estate firms that Moneycontrol spoke to confirmed that more such properties were on the market in Delhi.
"We have closed several high-value transactions in the last four months and there's a robust pipeline of such deals priced up to Rs 150 crore and are confident of closing more than just a handful in the current and next quarter,” Amit Goyal, CEO, India Sotheby's International Realty, said.
There is a lot of interest among the ultra-wealthy to upgrade their lifestyle to spacious homes surrounded by greenery, especially after the coronavirus outbreak.
The maximum traction and demand are for the much sought-after addresses such as Sunder Nagar, Golf Links, Jor Bagh and Shanti Niketan in Delhi, Charmichael Road, Malabar Hills, Juhu and BKC in Mumbai and Alipore and Judges Court Road in Kolkata.
“At India Sotheby's International Realty, we haven't seen such swiftness in deal closures, in a long time. If you get the right product, the transaction closes fast, such is the certainty amongst ultra-high-net worth individual (UHNI) buyers of what they want," he said.
Rohit Chopra of Southdelhiprime.com said the Delhi market was looking up.
“There is momentum in the Delhi market. There are more deals in the Rs 100-crore price bracket in the market. Most of the original owners want to sell and monetise their assets during their lifetime,” he said.
“Most of the sellers in these areas are original allottees who are in their late 70s and want to sell the properties within their lifetime for succession planning. Further, being original allottees, they don't have any stress or any lien. So, they may decide to sell only if the price is motivating enough.”
While there were no major deals in Lutyens Zone in the last few months, many of the properties were up for sale at a discount ranging from 7 to 15 percent. For bungalows that were non-performing assets (NPAs) and in the possession of lenders, the discounts were steeper.
What’s so special about Lutyen’s Bungalow Zone?
Central Delhi and Lutyens Bungalow Zone are coveted addresses. The supply is spread across sizes, beginning from 375 sq yards and therefore the total count is staggering.
Amrita Shergill Marg, Prithviraj Road and Dr APJ Abdul Kalam Road, which form the core of the Lutyen’s zone, are known as billionaires’ row and is the “ultimate address” for the uber-rich.
In Central Delhi, properties include independent houses spread across 375 yards, 575 sq yards and 1,250 sq yards in Jor Bagh, independent houses in Golf Links almost of similar sizes and an independent house in Sunder Nagar on a plot of 867 yards. On Malcha Marg or Rajdoot Marg, independent house plots range from 375 yards to 720 yards.
A host of independent houses are available in areas such as SP Marg, Kautilya Marg, Tees January Marg, Prithviraj Road, Amrita Sher Gill Marg, KG Marg, Barakhamba Road and Hailey Road.
The problem is many of these properties don’t have a clear title, or an owner, as they are held by more than one person or a family and demand may not necessarily translate into a large number of closures.
The buyers for properties in the range of Rs 100 crore and more are primarily industrialists. While the buyers are always there, it's always a case of more buyers and fewer suppliers as while the price may be high, there may not be sufficient built-up area, say consultants.
Since it is a heritage zone, there are strict height, floor-area-ratio and reconstruction norms. This is primarily to protect the low skyline. While these areas certainly offer the luxury of an address, they do not provide the luxury of space The plot size may be big, the developed or built-up area could be much less. There is also little scope for redevelopment potential due to strict building norms. There are around 3,000 bungalows in the area and 500 of these are privately held.