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Indian developers democratise concept of luxury homes

When it comes to the good life, India's richest will no longer compromise.

There is no denying that the Indian real estate market may not be showing the kind of growth that was expected of it. However, the luxury homes segment is surpassing expectations, which were modest at best this year. A quick look at how luxury housing in India has evolved is in order.
Luxury home buyers in the India of yesteryears were content with an address to boast of, along with whatever additional facilities money could buy. However, times have changed; more Indians are now travelling abroad, and getting a taste of what the high life means in other countries.
Consequently, their expectations now extend beyond just a fancy town-side address. Though the address is still important, luxury home buyers now also expect to buy into a lifestyle that only a few in the world can afford to have.
When it comes to the good life, India's richest will no longer compromise. Apart from an enviable address, they want private gymnasiums, swimming pools and gardens, home automation, interiors based on Mediterranean or Italian architecture and advanced home security.
Whether or not half of the facilities and technological embellishments they seek are available in the country or not is immaterial - today's Indian luxury home buyers are able to pay for having them imported, and builders are happy to comply. The desire to stand out is creating demand for super-luxurious homes wherein price is not a constraint. Such homes have now earned the new moniker of 'super luxury'. They carry varying price tags across cities: Mumbai and Delhi: Rs400m to Rs1b; Bengaluru: Rs20m to Rs60m; Chennai: Rs70m to Rs100m; Pune: Rs20m to Rs60m; Hyderabad and Kolkata: Rs10m to Rs50m.
Affordable luxury
The luxury residential market in India is not solely targeted at the super-rich. India is a massive country, with a correspondingly broad bandwidth of budget-led sub-categories for luxury homes. Among these, affordable luxury is probably the most interesting - largely because though it appears to be a contradiction in terms, it works very well indeed. The affordable luxury homes segment in India is about a somewhat diluted but nevertheless real luxury experience available to middle-to-upper middle class buyers. We are still talking about swimming pools, clubhouses, gymnasiums, etc., but these come in the form of shared amenities.
The 'a class above' ethos still comes through, but the residents of such affordable luxury projects are not rubbing shoulders with the city's richest and most influential people at 'snob value' addresses. Rather, they enjoy the company of their peers from fairly high-salaried professions, in locations where their money can buy more space.
In the rarefied stratosphere of super-luxury, everything takes place at a more languid pace befitting of the 'idle rich' ethos. Super-luxury homes take longer to be built and also to be sold. This is a high investment arena wherein exclusive customisations are the norm. Both developers and buyers take their time to ensure that the deal results in complete satisfaction to all involved.
In affordable luxury, sales in this segment happen quickly thanks to the less exuberant price tags.
Price tags for such homes vary across the major cities: Mumbai: Rs150m to Rs250m; Delhi: Rs100m to Rs200m; Bengaluru: Rs6m to Rs10m; Chennai: Rs20m to Rs50m; Pune: Rs10m to Rs20m; Hyderabad: Rs8m to Rs20m; Kolkata: Rs6m to Rs10m.
Branded homes
Most large Indian developers come from a background of catering to the mass market for several decades. In other words, they have no expertise in the super-luxury homes segment because they have not done luxury before. A preferred shortcut to experience under such circumstances is partnership with a global luxury brand. Apart from the knowhow, such brands also bring with them an aspirational value that connects with the super-rich.
Buyers into 'branded' super-luxury homes get to take a shortcut too. As far as they are concerned, they are buying instant prestige with an exotic label at a special location, and an international lifestyle right here in India. Despite the fact that competition in this segment is heating up, branded luxury homes are a profitable venture for builders, as the returns are enormous when compared to 'baseline' luxury or affordable luxury housing projects.
Branded luxury homes are especially in vogue with NRIs and PIO (person of Indian origin) HNI (high-net-worth individual) investors, who prefer such properties for the simple reason that they get an assurance of the quality of services which they are used to in their adopted countries. Also, with the backing of a well-known brand, they can expect better returns on their investments.
Branded homes come with price tags befitting their ultra-exclusive nature: Mumbai: Rs150m to Rs250m; Delhi: Rs120m to Rs200m; Bengaluru: Rs20m to Rs40m; Chennai: Rs20m to Rs50m; Pune: Rs30m to Rs50m; Hyderabad: Rs20m to Rs40m; Kolkata: Rs10m to Rs30m.
The concept of luxury homes in India is becoming more democratic, and striving hard to have relevance to a wider cross-section of the population without losing its 'upper crust' appeal'. How is that working out? Not so badly at all.
What has not changed is the fact that the luxury homes segment is where everyone - developers and investors alike - can look at fat profit margins. The stakes for developers are high, but not as high as one may assume. Very few developers rely exclusively on luxury - most of them are very active in mid-segment housing as well.
For players who are into luxury housing for the long haul, very little can go wrong and a lot tends to go well, better than just right.
The writer is chief executive - residential services at JLL India. Views expressed by him are his own and do not reflect the newspaper's policy.