By Divya Grover, Assistant Vice President – Research, Knight Frank India.
The market dynamics for the residential luxury segment are disparaged from other asset classes, primarily due to the target end-user segment and their aspirations from such assets. Owning a prime piece of residential real estate – whether a bungalow in Delhi’s diplomatic enclave or a high-end apartment near the queen’s necklace in South Mumbai or a colossal mansion in Bengaluru’s Sadashivnagar, is a matter of pride for the owners as ‘’pincode’’ matters in social circles. For top industrialists, bureaucrats, politicians, doctors, lawyers, civil servants, film fraternity etc., these locations exude an unmatched vibe which is synonymous with their unparalleled lifestyle. Since time immemorial, location has been the prime factor defining the luxury quotient attached to a property. As a result, many locations near the center of power – whether political, economic or cultural bore a significant influence on residential property prices in the vicinity elevating such boulevards to pricing brackets which defy rates prevailing in other micro-markets for comparable products.
As per Knight Frank India Research, the following locations today command the highest price on a carpet area basis across the top cities with high concentration of luxury residential products.
City | Current Primary Price on carpet area basis* | Popular Locations |
Mumbai | Upwards of INR 100,000 per sq ft
(Upwards of INR 9,290 per sq mt) |
· Tardeo
· Worli · Napean Sea Road · Bandra (West) · Khar (West) · Prabhadevi |
New Delhi | INR 50,000 – INR 85,000 per sq ft (INR 4,600 – INR 7,900 per sq mt) | · Greater Kailash I
· Greater Kailash II |
Bengaluru | INR 32,000 – 65,000 per sq ft
(INR 2,900 – INR 6,000 per sq mt) |
· Vittal Mallya Road
· Vasanth Nagar · Kasturba Road · Richmond Road |
Chennai | INR 34,000 – 48,000 per sq ft
(INR 3,100 – 4,500 per sq mt) |
· Nungambakkam
· RA Puram |
Source: Knight Frank Research
*For products in the primary market
Apart from the above locations, the following micro-markets also have a huge inventory of luxury residential real estate but due to low vacancy in these micro-markets for such assets, hardly any properties are available. Even if they do become available, often such transactions are closed privately through word of mouth or references due to which it is difficult to arrive at their ‘’actual’’ prices in secondary market. For such locations, sky is the limit as far as pricing goes.
No dearth of wealth… but times are changing
As per the findings of Knight Frank’s the Wealth Report 2019, the ultra-wealthy population (individuals worth USD 30 million) has increased by 4% between 2017 and 2018 in Asia. Over the next five years, strong growth of 39% in the ultra-wealthy population is projected for India which bodes well for the consumption of luxury residential products over the long term. The last one decade has seen a significant change in domestic family structures among the wealthy class. The traditional family structures headed by a patriarch and multiple generations living under the same roof are paving the way for nuclear families with Ivy league educated younger generations keen to chalk out their own paths. Exposure to cosmopolitan cities globally through education, travel and work has been instrumental in shaping the housing preferences of these end-users who seek modern environs, community living and vast amenities at their fingertips, yet maintaining exclusivity and privacy of their residence. Such evolving tastes for home ownership led real estate developers, as early as 2010, to come up with diverse residential formats. During the period between 2010 to 2013, a wave of new residential products took the realty scene by storm with a lot of branded residences, themed developments as well as promoted by brand ambassadors from entertainment and sports world. Villas with Spanish architecture, Disney themed apartment complexes, Swarovski or Sharapova associated residential projects were marketed extensively to lure crème de la crème of the society. In India, however, monetary and policy interventions proved challenging for residential markets. Demonetisation, the Goods and Services Act and the Real Estate (Regulation and Development) Act all left their mark in the last couple of years, with luxury prices rising by just 0.6% in Mumbai. But market confidence is now improving. The wealthy younger generations want a taste of opulence draped in contemporary “luxury” amenities.
Today, location is not the sole predefining factor of luxury real estate. Western concepts of penthouses, condominiums and contemporary residences are fast catching on in India’ luxury residential realty scene. Homes crafted with high component of automation and technology integration for home management such as mobile-app enabled switching on and off of household appliances, drapes and security are now increasingly becoming synonymous with luxury. Equally popular are exclusively designed residences from international designers. It is not uncommon to find apartments with branded gymnasiums, spas, salons and concierge services in Mumbai or Delhi which are a class apart. For the corporate head honchos and social climbers, living in a luxury apartment complex comes with additional perks as they get a chance to expand their social circle and network with people from similar strata.
Trends to watch out for:
As Indian residential market comes of age, we have noticed some interesting trends unfolding which will not merely redefine, but certainly enhance the proposition of luxury residential real estate in India. These trends are likely to act as precursors to increase the supply of such assets in the primary market and engulf new formats.
The rise of Demi-millionaire club in India, coupled with India’s own growing stature, augurs well for this product category. In times to come, we foresee further evolution of this class of real estate, with homegrown as well as international players ruling the market.
Corporate Comm India(CCI Newswire)
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