Indian developers see luxury real estate demand rising

New Delhi - Problem of huge unsold inventory, noticed in mid-level properties, is not witnessed in high-end segment

India's luxury real estate segment, with a customer base of its own, did not witness a slowdown as significant as in mid-level properties in the last few years and with the latest cut in GST rate, developers say, adding that demand will pick up from here on.
The major factors for a customer of luxury apartments, they say, are location, amenities, the niche provided and others, rather than the price as buyers are mostly the affluent people.
The problem of huge unsold inventory, noticed in mid-level properties, is not witnessed in the luxury segment, which can also be attributed to the limited quantity of construction.
Developers say that although there was a slowdown of demand during the last few months for under-construction properties, including the high-end market owing to the wait and anticipating cuts in Goods and Services Tax (GST) from 12 per cent, interest is seen returning after the rate cut.
"People stopped buying for a very short term, looking for a clarification on GST and that is the only reason why the demand was low and since now the clarification has come and rates are reduced, it has been a booster to the luxury demand," said Pankaj Bansal, director at M3M, told IANS.
Abhishek Kulkarni, chairman of Pune-based Million SqFt Realty, the demand for high-end property has been steadily rising as such properties are built in the metros where multinational companies have entered and businesses have grown in the past few years, leading to a sustained demand from the well-off.
A lot of the buyers in the segment actually purchase properties to invest or park their funds with an aim to liquidate the property in future and that very trend of investing in high-end property has of late increased among Indians, market participants said. 
Bansal said: "A luxury property creates a much higher incremental value in comparison to a product in the mid-segment. For example, if price in the mid-segment grows from Rs5,000 to Rs8,000 per square foot over the period of five years, during the same period, the price of a luxury property would have risen from Rs15,000 per square foot to Rs25,000-30,000 per square foot."
In terms of investment, the domestic luxury realty market is also a favoured destination for non-resident Indians. Around 35 per cent of the investment is done by NRIs, said Paritosh Kashyap of 360 Realtors.
"Apart from NRIs, there are lot of local people, politicians, businessmen, who have bought luxury property primarily for investment purposes," he added.
Experts also noted that the transparency brought in by the Real Estate Regulatory Act and GST has helped the sector including the high-end segment.
Demand in the segment is rising currently, according to a spokesperson with DLF. "The luxury segment is growing, people are now well-travelled and aware of what is available. They have been experiencing luxury living across the world," he said.
Price in the DLF's high-end King's Court property in Delhi ranges from Rs35,000-50,000 per square foot currently.

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