Decoding luxury housing in India

Market pundits never get tired of taking pot-shots at it, claiming this segment has got run out - even though Indian luxury housing is something of a newbie on the pitch and still has long innings ahead of it.

Anuj Puri, Chairman, JLL Residential, says, “Within the Asia Pacific region, India has the fourth-largest population of millionaires with around 2.36 lakh individuals who fall firmly in the high net worth category. In the Forbes list of the ‘World’s Billionaires’ for 2017, India accounts for an impressive 101.” 

These homes are found in the priciest areas of land-starved cities like Mumbai, or in serene estates sprawled across generous acres of prime land in cities like Delhi, Pune and Bengaluru. These homes are not even counted in any census of luxury housing units in the country, and are not part of any inventory that will ever hit the market and be up for grabs. 

Luxury or premium housing, as opposed to super-luxury housing, is the category of homes which caters to this demand. Puri says, “The buyers of such housing are often in their late 40s or early 50s and still quite active professionally. Often having earned their money the hard way, they may not be willing to cough up massive premiums for snob-value addresses. They do prefer locations which offer quick connectivity to their places of work.” An illustration of ‘location value’ in this context is in order here.

IT professionals are on the market for high-end homes which provide fast access to their workplaces as well as a relaxed, modern lifestyle for them and their families. Developers were quick to identify this opportunity and began churning out premium housing projects around IT hubs, giving rise to an entirely new crop of luxury locations which derived their value from performance rather than from snob value.

The segment has made giant strides in keeping pace with the rising expectations of the well-heeled and well-travelled in terms of global standards of luxury and comfort. With every passing year, more Indians are joining the ranks of the wealthy and are automatically on the market for luxury homes. Puri remarks that, “If we go by the absorption rates of luxury housing over the last three years, we can see that while the uptake of such units is not spectacular by any yardstick, it remains steady and, despite the ominous warnings, it remains steady as ever, even showing signs of definite growth.” 

The real estate market has now recovered from the demonetisation shock  and, in fact, looks primed for a rebound on the back of the transparency and regulated market practices that RERA is likely to bring in its wake.  In fact, all housing segments are geared for recovery with RERA eliminating fly-by-night developers, raising the bar on developer’s accountability and enforcing strict financial and completion timeline protocols. 

“It may appear that Indian luxury housing developers have over-estimated the demand for their offerings. However, most of these builders are seasoned longterm players with their sights trained on future demand,” explains Puri.