Here’s why high net worth individuals are lapping up uber luxury apartments in Mumbai

Large-size sea-facing apartments are a rarity in space-constrained Mumbai. This, along with high demand from industrialists, Bollywood stars, and high-salaried employees is causing the rush for such uber luxury real estate in India’s financial capital.

The beginning of the year saw a rush among high net worth individuals (HNIs) to register uber-luxury deals before amendments to Sections 54 and 54F took effect on March 31. It was assumed then that the number of deals in the more than Rs 50 crore bracket would eventually reduce, but that has not been the case. It has grown unabated, and the recent deal worth Rs 263 crore in Mumbai, the country’s commercial capital, only corroborates that trend.

Multi-billionaires will continue to be on the lookout for such large-sized (a rarity in Mumbai) sea-facing apartments in the Rs 1.4 lakh per square foot plus category, and supply for such units will continue to be limited, say real estate experts.

Flurry of luxury deals in Mumbai

Asha Mukul Agrawal, Director at Param Capital, a leading capital market trading and investment firm founded by Mukul Agrawal, has purchased three apartments in Lodha Malabar, Mumbai, for Rs 263 crore, documents accessed by IndexTap.com showed. These apartments are located in Lodha Malabar, Walkeshwar Road, Malabar Hill, Mumbai. These have been bought from Macrotech Developers Ltd. She has purchased two units on the 25th floor for an agreement value of around Rs 132 crore, on which she has paid a stamp duty of Rs 6.63 crore. This transaction was registered on September 27. The units are spread across an area of 9,719 sq ft and come with five car parking slots. She has also purchased one apartment on the 24th floor valued at around Rs 130.24 crore, for which a stamp duty of Rs 6.51 crore was paid. The area of the apartment is 9,535 sq. ft.

Earlier, promoters of plastics manufacturing firm Creative Group bought eight luxury apartments in Mumbai worth Rs 154.6 crore from real estate developer K Raheja Corp Homes, registration documents accessed by Zapkey showed. The sea-facing units in Raheja Modern Vivarea Tower in South Mumbai are located on the 16th to 21st floors of the building, the documents showed.

On March 10, Bajaj Auto Chairman Niraj Bajaj purchased a triplex apartment of over 18,008 sq ft on the top three floors of a 31-floor project named Lodha Malabar Palaces by the Sea. The cost of the purchase was ₹252.50 crore, making it the costliest penthouse in the city. The transaction fetched a rate of ₹1,40,277 per sq ft.

Also, the family of industrialist JP Taparia, founder of contraceptive maker Famy Care, purchased a sea-view luxury triplex apartment for over Rs 369 crore in Malabar Hill from the Lodha Group on March 29, 2023, documents shared by Zapkey showed.

In yet another large deal in Mumbai, two directors of Kandoi Fabrics, a manufacturer and exporter of packaging fabrics and bags, bought four sea-facing luxury properties worth Rs 217 crore in Mumbai, documents accessed by Zapkey showed. The four properties are spread across 18,572 sq ft net area. The size of each unit is 4,643 sq ft. The units were registered between March 23 and March 29, 2023.

Rajendra Barwale, Director, Barwale Seeds Private Limited, along with two family members bought a Rs 122-crore apartment in Mumbai’s Malabar Hill, considered to be the most expensive residential area in the country, the latest in a string of luxury home buys in the area, according to documents accessed by IndexTap. The apartment in the Malabar Palaces project is being developed by Macrotech Developers Ltd, popularly known as the Lodha Group, on Walkeshwar Road, Malabar Hill.

Deconstructing the trend

Ritesh Mehta, Senior Director at Jones Lang LaSalle, is of the view that demand for uber-luxury projects in Mumbai is here to stay because there are limited choices in the segment. “Supply will continue to remain limited in this segment,” he told Moneycontrol, adding that of the 150 real estate developers in Mumbai, only five would be developing uber luxury stock, and most of them are listed players.

Not only is the supply of such units — floor plates of 9,000 sq ft — rare in a city like Mumbai, but also demand for such luxury properties in the above Rs 80 crore segment was limited to industrialists and diamond merchants. This has now expanded to include owners of textile and pharmaceutical companies, not to mention small and medium entrepreneurs.

Having said that, demand for such units offering an unhindered view of the sea and priced between Rs 1.40 lakh per sq ft and Rs 1.50 lakh per sq ft, is expected to continue, he added.

Sales of luxury houses costing Rs 10 crore and above in Mumbai increased over 60 percent to Rs 11,400 crore in the first half of 2023 from the preceding half-year, coinciding with a boom in residential property sales, according to a report by India Sotheby’s International Realty and CRE Matrix. Sales in the previous six-month period stood at Rs 7,073 crore.

Of this, sales of luxury homes in Mumbai’s primary market — units sold for the first time — climbed to Rs 8,817 crore, the highest half-yearly sales since at least the first half (H1) of 2018, according to the report. The sales exceeded the previous record of Rs 6,724 crore in H1 of 2021 by 31 percent. The contribution of luxury home sales by value in the overall primary market was 18 percent in H1, exceeding the average of 13 percent during 2018-2022, according to the report.

Sales increased on account of higher demand from industrialists, Bollywood celebrities, and high-salaried employees, the two real estate consultants had noted. The momentum in luxury home sales continued even as interest rates on home loans increased. While Worli contributed 31 percent to luxury sales in the top 10 localities, it was Malabar Hill, at Rs 1,580 crore, that recorded the highest increase (481 percent) in the value of luxury homes sold in the first half of this year compared to the previous year.

Amit Goyal, MD, India Sotheby’s International Realty, said, "This signifies that real estate has made a meaningful comeback into the UHNI portfolios. With wealth creation in India growing at a fast pace and the country’s wealthiest city, Mumbai, set to enter the list of the top 20 cities with the most number of millionaires by 2023, we believe there’s an inherent strength in Mumbai’s luxury housing market that should continue in the future."