The Ultra Leap

Ultra Luxury is,again,relative. Truly luxury housing can allow buyers to get into every specific detail,from colour of marble flooring,silk bedsheets to size of television screen. And there are developers and interior designers that cater to this segment. So,ultra-luxury can mean different things to different people. Mostly developers offer space and the opportunity for buyers to make final decisions on what goes in to their home.

Till now,real estate majors have been facing the onslaught of the global slowdown and many of their ambitious projects reeled under its catastrophic impact,with most of them reverting to the low-cost housing sector to bankroll their projects and keep themselves moving. But things have begun to change recently with the bourses rebounding to a new high infusing a sense of confidence among the realtors to try and tap the cash-spinning ultra luxury projects. Taking a cue,leading realty firms like Saffronart,DLF,Indiabulls and Ansal API have plunged into this niche market vying for a majority share in this segment. But there are no definite numbers for upcoming luxury projects. The reason being while these projects are being touted as ultra-luxury,but no details are given about all the amenities being provided. Also,developers can change plans and scale down the 8216;luxury8217; element of a project.

Saffronart has announced launching some upmarket residential projects,spanning from Goa,to Uttaranchal and is understood to have closed the deals for most of them. In one of its projects in Goa,the price range is between Rs 2.5 crore to Rs 5 crore,apart from other luxury projects in Hardwar,Bangalore etc which implied the company8217;s bullishness on these high-end projects. The real estate consultancy firms too aren8217;t skeptical either. Taking to The Indian Express,Santhosh Kumar of Jones Lang LaSalle,a realty consultancy firm said,The prospects for this segment is of high value. There was a downturn and the high-end housing segments was hit and the focus of the developers shifted to the lower segments. But now the focus is back on high end luxury housing segment. There is a demand and the market is looking up. He said real estate firms have already begun tapping the markets with some of them already filing their draft offer documents with market regulator SEBI.

He said the demand for ultra luxury homes abound in Gurgaon,Noida,Parel Mumbai or Bangalore. He,however,said there was a lack of liquidity and most developers were approaching either the Financial Institutions or were raising funds through QIPs or going public. All of them are cautiously maintaining their cash flow so as to deliver their projects in time. Any developer has to see the price bandwith what they intend to do. Today8217;s consumers are price-conscious and seek a wider variety of choices, Kumar reasoned.

THE PRICE TAG

The price differential between such flats in big cities like Delhi and Mumbai and cities like Jaipur and Nagpur Prices are difficult to ascertain as there are no numbers on such projects launched. However,while luxury homes in Mumbai have been sold for Rs 25 crore,in Bangalore for Rs 12 crore,in Haridwar and goa from Rs 3-4.5 crore. So it is city specific. And prices for such homes are naturally lower in smaller cities,not because of difference in quality of amenities,but because of a difference in price of land.

The price of ultra-luxury homes is city-specific. Firstly,consider property prices. The cost of land in Delhi is more expensive that even Noida or Gurgaon. Similarly,Navi Mumbai is cheaper than Mumbai. Also, it is a relative term. With limited space in cities,ultra luxury homes could offer up space,for example a bungalow in Chankyapuri with massive lawn space,or a 4,000 sq ft sea facing apartment on Malabar Hill. Space would not a defining factor in Rishikesh,Haridwar or even Goa as the cost of land is cheaper. Here the amenities,like private swimming pool,marbelling,fixtures,security installations,electronic items,define the home. For example in Rishikesh,there are luxury homes that sell like hot cakes for Rs 4.5 crore. These are projects where 15-25 villas come up inside a gated community. In cities,there are more large homes that have been converted to cater to a luxury lifestlye. These homes,apart from the normal cost of the apartment/bungalow,become costly due to the additional amenities that are put into it,besides the time and effort incurred.

BUYERS ABOUND

Though cash flow of RE companies has increased,one cannot discount flucutating prices of construction materials as well as change in policies. These factors can cause changes to developers plans. Projects that had been planned in the luxury segment have changed into mid-level housing projects. The real driving force behind the ultra-luxury segment is rich business people,HNIs and NRIs who have large spending power and are looking to settle for nothing than the best.

Similarly the country8217;s biggest realtor DLF after receiving an overwhelming response for its upmarket housing project in Central Delhi has now announced likewise projects in Shimla,Kasauli and Goa priced at Rs 2.5 crore and above. The firm intends to invest over Rs 500 crore for these projects. When contacted a DLF spokesman told this newspaper that his company would launch its projects under brand name Sama in Shimla. The response in Shimla has been very good. In Kasauli we would entrust Hilton the responsibility of managing our hotel and villas, he added.

There are quite a few plush upmarket housing societies coming up in the vicinity of Delhi,especially in Gurgaon and NCR region. The Emmar MGF sponsored Pal Terraces is priced at over Rs 1 crore and Amrapali developers have priced their Dream Valley flat of 2900 sq feet at Rs 92 lakh in Noida. Realty firm Orbit Corporation has planned to construct four projects of nearly 50 exclusive apartments in Mumbai with an investment of Rs 200-250 crore each. Another Mumbai-based real estate company Lodha Developers,which has four premium luxury projects under its belt,has reportedly sold 80 per cent of the 100 units in South Mumbai.

The enthusiastic response to such projects imply that there is a sizeable clientele for such projects notwithstanding the cautious sentiments in the aftermath of the recent global downturn. Interestingly it is not possible to identify what category of clientele are availing these homes as no consultant or builder would readily spell out as to who are buying these luxury homes,possibly because the high value transaction that is taking place,when part of the money transacted could be unaccounted for. But people and JLL and Cushman amp;Wakefield have said that NRIs as well as businesspeople have shown interest in super-luxury housing. There is little or no speculative buying in this segment. Especially in such housing that comes up in and around cities,they are lapped up by serious buyers looking for a means to flaunt their affluence. Such homes that come up in holiday getaways or religious destinations may see some people pick up a few homes together as the prices here are relatively affordable compared to that of the metros. But there are a significant number of buys in these destinations from NRIs and businesspeople as well,besides HNIs,as the concept of a second home,a holiday home,is gaining in popularity and people are more willing now to spend on pampering themselves.

ENABLING GROWTH

What has helped the builders more is the special home loan scheme being currently doled out by the PSU banks like SBI. The country8217;s biggest public sector bank has benefited in a considerable way with its home loan book being the largest at Rs 74,669 crore and growing by more than Rs 3000 crore yearly. According to analysts,the reason why banks prefer their special home loan schemes was to give a push to the slow credit growth rate. The credit growth during the year from March has been little over 10 per cent,with sudden spurts of intermittently. Encouraged by this growth,A recent study by JLL,states that for the first time ever,the value of investment grade real estate in India for under construction projects has already crossed 100 billion dollars this year.

OUTLOOK

With the luxury housing sector projected to grow from 4.3 billion dollars last year to 13 billion dollars by 2013,the developers do have something to cheer about. More so,as the number of High Net worth Individuals HNIs have been steadily rising in the country. According to reports,the wealth generated by individuals in the Asia-Pacific region has exceeded that of Europe. The surge is by Indians where the population of HNIs rose by over 50 per cent in 2009 while HNIs increased in Asia-Pacific by 20 per cent and 30 per cent respectively. According to a report of the realty consultancy firm Cushman amp;Wakefield,about 60 per cent of total estimated pan India residential demand by 2014 is expected to be spread across India8217;s top seven cities,with Tier I metropolitan cities like NCR and Mumbai expected to account for approximately 40 per cent of total demand.

Mumbai is likely to witness the highest cumulative demand of 830,000 units as well as growth of 23 per cent as followed by NCR which is likely to witness a growth of about 20 per cent. According to news reports,approximately 9,000 homes in the ultra luxury segment are planned in major cities over the next 2-4 years. l

priyadarshi.siddhantaexpressindia.com