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Unsold inventory of luxury homes sees 12% drop: Report

Bengaluru recorded 49 percent reduction in unsold luxury stock within a year; Kolkata saw a 37 percent decline and NCR and MMR each witnessed a 7 percent decline.

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Representative image

As the unsold stock in affordable housing segment increased by almost 3 percent, the overall unsold inventory of luxury homes priced at Rs 1.5 crore to Rs 2.5 crore declined by 12 percent to 42,650 units in the first quarter of 2019 from 48,300 units in the first quarter of 2018, according to a new report.

Bengaluru led from the front, recording a significant 49 percent reduction in unsold luxury stock within a year – from 6,370 units in the first quarter of 2018 to 3,260 units in the first quarter of 2019. Kolkata saw a 37 percent decline in unsold luxury stock, and NCR and MMR each witnessed a 7 percent yearly decline, it said.

ANAROCK's recent consumer sentiment survey also indicates that 28 percent NRI respondents are looking to buy luxury and ultra-luxury properties (priced Rs 1.5 crore onwards) across cities. The perennial favourite of several NRIs since long, the luxury segment saw a declining interest post the reformatory changes in Indian real estate market with many NRIs hoping for price cuts.

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The survey also indicates that 31 percent NRIs currently prefer to invest in a property in Bengaluru. MMR has also seen decent new supply in the luxury and ultra-luxury segments over the last 5-6 years.

HNIs and UHNIs are nevertheless refocusing on this segment. "The most convincing incentives for NRIs to invest in luxury and ultra-luxury properties are higher potential for capital appreciation for properties located in prime areas and higher and steady cash flow (via rental income) of properties in prime areas as against affordable housing in far-flung areas," said Shajai Jacob, CEO - GCC (Middle East) ANAROCK Property Consultants.

In NCR, Gurugram and Noida saw the launch of nearly 12,900 units in luxury category priced in the over Rs 3 crore category since 2013. Of this, Gurugram and Noida collectively comprised 87 percent share – 63 percent in Gurugram and 24 percent in Noida.

East Bengaluru localities like Whitefield has seen the highest launches in the ultra-luxury segment priced over Rs 1.5 crore, closely followed by the South and North zones.

South Central Mumbai areas (Worli, Lower Parel, Mahalaxmi, Tardeo and Prabhadevi) accounted for 81 percent of the total 27,000 new units launched in luxury category priced over Rs 4 crore in MMR since 2013 onwards.

Hyderabad city saw launches of nearly 1,920 units in the luxury segment properties priced above Rs 1.5 crore in 2018 – a 154 percent rise from 2017. Most of these launches came up in West Hyderabad.

The pricing dynamics for luxury housing vary across the top residential markets. For instance, property prices in luxury and ultra-luxury segment in MMR range between Rs 40,000 to Rs 90,000 per sq ft on carpet area while in NCR they hover between Rs 12,000-20,000 per sq ft on built-up area. In Bengaluru, prices range between Rs 7,500-14,000 per sq ft on built-up area, the report said.

ANAROCK Research states that the returns on investment for luxury and ultra-luxury homes is around 3-5 percent and 2-3 percent respectively.

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First Published on Jul 19, 2019 01:46 pm
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