What really sells luxury homes in India
New Delhi: Luxury homes in India are often offered with a very confusing set of qualifying parameters. Developers heavily promote specifications and amenities in their marketing collaterals, but fail to mention a far more critical parameter.
On analyzing the unfolding luxury homes story in India, it becomes evident that addresses and pin codes have played an important role in defining luxury in the traditional sense. This continues to be relevant even in the current times, with only a few exceptions to the rule in the country's key cities. Despite the multiple innovations, design upgradation and enhanced specifications and amenities visible in the latest crop of luxury offerings, the premium placed on signature locations still stands high.
One of the most important reasons for this is that the country's most hard-boiled luxury home buyers are extremely focused on the occupant profile of the projects they consider.
What is occupant profile?
Over and above every other consideration, the occupant profile of a luxury project is the most definitive and decisive factor for property buyers in this category. Briefly, it is the profile or the people that reside in the project. One of the definitions of luxury is ‘a cut above the rest', and this means that a luxury home buyer expects to live among people of a certain grade of professional accomplishment, prominence and social standing. It is, in fact, the desire to be part of a select peer group.
This is the social environment in which luxury home buyer wish to inhabit - the the kind of neighbors that they want to have and socialize with, and whose children they want their own children to befriend and grow up with. In short, the term ‘luxury' denotes a very definite degree of social refinement and class to them. While it is not necessary for a luxury project to have the city's most distinguished personalities residing there, buyers still aspire to live among like-minded people from within their own social bracket and intellectual bandwidth.
The occupant profile value factor, though subjective by nature, can obviously not be replaced or compensated for by glitzy amenities and specifications. In fact, its presence is more the result of elimination than of creation, and can only result from either or a combination of two functions:
1. A very selective tailoring of the occupant profile by the developer
2. Location and pricing attributes that exclude all but the desired profile of occupants
Discerning luxury home buyers will avoid purchasing units in a project which has attracted an excessively mixed profile of occupants. While lifestyle aspects such as superior amenities and specifications are definitely desirable and dovetail with the overall experience, they are not the most important criterion for the success of a luxury project. These are the dynamics that have crafted India's traditional luxury locations – areas that are defined by their residents, rather than their buildings.
Many projects on the market today have failed to excite the buyers towards whom they were originally targeted because they do not project the right kind of occupant profile. On the other hand, luxury homes projects that have, by intent or because of the right attributes, attracted the right profile of residents, tend to succeed even if they does not have the benefit of glamorous specifications and amenities, flashy brochures and staggering marketing budgets. The investment value of a luxury home is also primarily driven by this variable.
While resident profile is a key factor defining luxury at our cities' most recognizable addresses, this does not mean that luxury projects do not succeed at all. The presence of superior amenities and specification in new luxury locations beyond the traditional luxury precincts have been successfully marketed to buyers who are seeking to upgrade for their existing mid-range homes to ones that offer them a better lifestyle.
The following is an analysis of key areas and projects across the primary Indian cities wherein occupant profile continue to drive demand from first-generation wealth, as well as price appreciation:
In the country glamorous and notoriously pricey financial capital, supply in the most preferred and sought-after luxury homes locations always exceeds supply. Currently, the list of options in South Mumbai, the hunting ground for the city's richest and most discerning, includes:
* Suneeta Building in Malabar Hill, with unit prices at Rs. 35 crore upward
* Hill Park in Malabar Hill, with unit prices at Rs. 21 crore upward
* Maker Towers - A & B Wing in Cuffe Parade, with unit prices at Rs. 30 crore upward
* NCPA Apartments in Nariman Point, with unit prices from Rs. 27 crore upwards
* Sea Face Park in Breach Candy, with unit prices at Rs. 25 crore upward
* Samudra Mahal in Worli, with unit prices at Rs. 18 crore upward
Over the past few years, other locations in Mumbai have begun establishing themselves as the new destinations of preference for South Mumbai residents who are looking for new luxury housing complexes with better amenities:
* Vivarea by Rahejas in Mahalaxmi, with units priced at Rs. 18 crore upward
* Signature Island in BKC - one of the most preferred new CBD destinations for the city's C Suite, with unit prices starting at Rs. 35 crore
* Praneta, the most preferred luxury project in Juhu, with unit prices starting at Rs. 35 crore
* Parthenon, the most sought-after address in Andheri, with units priced at Rs. 13 crore and upward.
In this city, Koramangala's 3rd block is the destination most preferred by prominent industrialists, entrepreneurs and celebrities. Independent houses are in highest demand, and supply of such units is extremely constrained. The cost of an independent house in this location is Rs.18 crore and upward. This is followed by Sadashivnagar, another area where independent houses still command the highest demand and available units sell for Rs. 15 crore and upward.
Indiranagar, Epsilon Layout near the Old Airport Road and Cunningham Road are other favored destinations for independent houses within the price range of Rs. 15 crore onwards. Kingfisher Towers on Vittal Mallya Road stands out as a luxury apartment project with units priced at Rs. 25 crores upward.
In South Delhi, builder floors are one of the most sought-after luxury home configurations, where each floor is owned by one family. Most bungalows in South Delhi are now being converted into either builder floors or apartment projects to enable the land owners to capitalize on the unlocked potential.
Meanwhile, Lutyens Zone is the area that the most powerful and influential people in the country's capital call home. Despite the dizzyingly high prices, demand heavily outstrips supply at any point of time in this location – a factor also driving the extremely high capital appreciation in this region.
Independent houses in Aurangzeb Road, Prithvi Raj Road and Jorbagh, cost anywhere between Rs. 150-600 crore Builder Floors on Malcha Marg and in Shantiniketan cost Rs 18 crore and upwards.
The fact that an increasing number of MNC, FMCG and IT companies have chosen to locate their headquarters in Gurgaon has led to the senior management of these companies seeking out the most exclusive residential options. The demand for gated community luxury homes in Gurgaon is also fueled by diplomats from Delhi's many consulates.
Golf Course Road is one of the most sought after destination by the super-rich in this city. Options are limited to few select premium buildings by DLF like Magnolia and Aralia, where the minimum budget for apartment starts with Rs. 14 crore. Other preferred options on Golf Course Road are Verandas, with units priced at Rs. 7 crore, and Palm Springs with units priced at Rs. 5.5 crores.
Beyond Golf Course Road, Catriona by Ambiance Developers has found favor from luxury home buyers with budgets within the range of Rs. 14 crore.
Jubilee Hills and Banjara Hills together account for over 70% of the demand for luxury homes from Hyderabad's richest citizens. However, pricing for luxury units even in these locations has remained relatively affordable because of the tumultuous political climate, which has kept overall economic dynamics in check so far.
Hyderabad's elite rich are currently buying into: Independent houses in Jubilee Hills, with price tags of Rs. 12-25 crore - good options are scarce in this category
* Apartments in Landmark by Mantri Developers costing upward of Rs. 10 crore
* Apartments in Stone Valley Apartments priced at Rs. 4 crore upward
* Apartments in Brigade Banjara Hills priced upward of Rs. 4 crore.
With the emergence of Hitech City and Gachibowli as major employment hubs, these areas have also come on the radar of Hyderabad's new luxury home buyers. Some of the currently preferred projects in these areas are:
* Silicon County in Hitech City, with units priced at Rs. 1.5 crore upward
* Orange County in Gachibowli, with units priced at Rs. 1.3 crore upward
* Meadows Villas in Gachbowli, with units priced at Rs. 4 crore upward.
Chennai is a city where luxury and occupant profile work well together, even for the city's traditional rich and prominent residents. This is saying a lot for a historically conservative and sensitive market that does not accept newer destinations easily. Nevertheless, profile still holds on the upper hand in a handful of select projects:
* Patio Apartments in Nungambakkam - units priced at Rs. 10 crore
* The Summit in Shastri Nagar, Adyar – units priced at Rs. 8 crore upward
* Laurels in Alwarpet – units priced in the range of Rs. 7 crore
* Swaroop Heights in Poes Garden - units priced in the range of Rs. 6 crore upward
* Ceebros Grayshott in Bishop Garden - units priced at Rs. 4 crore upward.
Kolkata displays a luxury homes trend very similar to that of Hyderabad - Alipore and Ballygunge constitute 70% of the demand from the city's ultra-rich and famous. These locations have very limited new supply, causing considerable on the pricing of existing options.
* Bel Air, the tallest luxury apartment building in Alipore, commands prices starting at Rs. 12 crore upward
* Platinum, the next preferred option, has unit prices starting at Rs. 8 crore
* Apartments in Tirumani and Highland Sapphire in Ballygunge are priced at Rs. 8 crore upward
EM Bypass, Kolkata's latest emerging and very promising destination being favored by the city's newer generation of HNIs, is now distinguishing itself as the go-to area for stylish homes with classy amenities. In this location, the Forum Group has launched its luxury project Atmosphere with units priced at Rs. 11 crore upward. Eternia is another project by Concast-Unimark Group with units priced at Rs. 3 crore onwards. With a lavish rooftop clubhouse, it is attracting high-profile buyers.
Pune has emerged as an important luxury homes destination, with demand driven not only by the city's own HNIs but also by affluent buyers from Mumbai who are attracted by the high-end products available at prices that are significantly lower than for comparable projects in the financial capital.
Thanks to Pune's live-wire multi-faceted economic growth, capital appreciation for luxury home investments is also very promising. The projects to which they are currently beating a path to are:
* Trump Towers in Kalyaninagar, with unit prices starting at Rs. 15 crore
* Yoo Pune in Magarpatta, with unit prices starting at Rs. 7 crore
* Waterfront in Kalyaninagar, with unit prices starting at Rs. 6 crore
* Renaissance in Sopanbaug, with unit prices starting from Rs. 6 crore
* Castle Royale in Bhosle Nagar, with prices starting at Rs. 5 crore.
Indian developers have not been fazed by the challenge that the deeper socio-economic connotations of what constitutes luxury poses to their new offerings, and have come out with concepts to seek to defy the ‘premium location' logic. The success with which their efforts have been greeted varies, depending largely on how imaginatively they have been able to bring out the concept of modern luxury in new locations.
It stands to reason that the country's most prominent residential locations cannot yield many more options for those who look for the highest status value in their homes. However, these buyers will continue to seek specific social environments that developers will have to provide in every new location and project.
( Om Ahuja is the CEO – Residential Services at JLL India)