Luxury Housing in India: Growing Demands

When we talk about the luxury real-estate scenario in India, it is emerging out to be a dynamic segment of real estate sector in the country. Not just limited to Indian investors, this particular segment of real estate is also attracting buyers from all across the world. Among several factors, growing demand of clients, increased aspirations, and evolving lifestyles are the ones that are contributing to the luxury estate segment in India. This real estate portfolio is attracting new as well as existing players in the economy.

The six major cities of India namely- Delhi/NCR, Mumbai, Chennai, Bengaluru, Kolkata and Pune are becoming the hot spot for companies to dig in. Large scale fast urbanization and increasing incomes are the factors contributing to the demand and requirements of a home. Developers are now eyeing new and innovative ideas to lure buyers into buying luxury property in India with entire facilities one could ever dream of. There are also other factors such as migration of families into urban areas and comfortable infrastructure that are attracting people towards   a piece of luxury real estate.

Being a basic need of human beings, housing is always going to be in demand, be it luxury or affordable. Best property websites in India, according to the new findings by Research & Markets, affordable housing demand is expected to surge at a CAGR of around 10% during 2015-2022. With these figures, it is evident that the current position of luxury properties is not far behind the affordable real estate in the country.

In the period of next 3 to 4 years, it is expected that people are going to move over the basics and demands for luxury housing is going to increase substantially. This rise could be attributed to the growth in urbanization and how quickly buyers are choosing lavishness over basics.

Forging Ahead with New Themes

A few of the builders such as Emaar MGF and DLF have come up with an innovate idea of theme based villas. Themes from different communities and societies are executed at one place where architectural and cultural elements are imbued in the residential villas. Not only this, builders are also trying to bring together a touch of ethnicity as well as urbanization through their emerging projects. For example, a new project in Gurgaon which consists of 4/5 BHK villas is being built in Spanish style. Isn’t that amazing?

Apart from these eye catchy designs, builders and developers are also vouching for homes that are actually smart. Intelligent spaces are also attracting buyers due to the fact that everyone is trying to keep their families safe under any circumstances. In order to develop these kinds of homes, systems with different sensors are being used for controlling features such as light, ambiance and temperature inside the house.

Even if buyers are not planning to stay in the luxury homes anytime soon, it is a great venture to invest money right now.  Number of projects ranging from 1 to 20 crores are being launched across different metropolitan areas. With these projections and developments, luxury homes are surely going to be one of the most influential markets in India.

Real Estate in India – A Tough Road ahead

Property in India is probably the only investment which is also based on requirement. Buying real estate in India is linked to investment as well as self-use, it has a dual purpose and therefore it becomes a complex issue.  The parameters for selecting property for self-use are different, as compared to, requirements for investment. However, when these two have to be clubbed there is requirement to balance out parameters which encompass both. From an individual investor’s perspective property or real estate market in India has never been easy to negotiate. The secondary market is predominantly driven by black money and therefore it is never easy to find out the actual cost of a property.

The primary real estate market in India is slightly more organized and is devoid of black money payments at the investor end. However, it has its own complications in terms of availability of clearances, sanctions, right of construction, time schedules etc. The real estate market in India is corruption driven and therefore is not investor friendly. The developer knows that investors are driven by personal requirements for buying property and can be exploited very easily due to this compulsion/helplessness.

The developers have their own side of the coin; they are required to grease palms for all the clearances and sanctions required, even if all documents are in order. This requires un-accounted for (black) money to be pumped in. Despite this one cannot rule out witch hunting, in case any official may want to indulge in it, due to any reason. Such practices are also exploited by certain developers/builders who are not clean and wanting to earn through mal practices, by short-circuiting the normal procedure. The real state sector in India is also plagued with a lot of red tape-ism which translates into a long unpredictable lifecycle for any property project in India.  This whole process has vitiated the real estate environment in India and needs some real sorting out, before we see any positive improvements.

The issues are clear, on one hand the developers are struggling to get time bound clearances/sanctions through the red taped administrative setup, earliest, without paying bribes and in a legitimate manner; on the other hand, individual investors are looking for surety that their investments are in safe hands. As on date, both these issues remain unresolved making property purchase in India akin to a game of gambling; where the chances of winning or losing are 50-50.

It needs to be understood that no industry in any country can survive for long with this kind of an arrangement. There is some serious introspection required at the developer’s/builders end; as well as the administrative setup needs to refine procedures, ease out process of doing business and rule out corruption.

The present slow-down in the India property website has forced some reforms to be initiated; however, it is a long road ahead.

Real Estate in India, requires a Demand Based Approach

The real estate website in India continues to reel under a slow-down despite the Indian economy showing signs of recovery. The real estate website in India unfortunately refuses to carry out introspection; and keeps looking towards the government for some kind of a relief package or for a bail out. 

The real estate sector in India used to follow the supply and demand model while initiating new projects, however over the past few years due to higher anticipated gains builders initiated construction arbitrarily, in locations where the demand was limited or saturated. The sector followed the principal ‘build whatever and wherever one can’. The real estate sector in India is still marked by developers who build depending upon their financial strength rather than using some analysis to anticipate demand and then follow the demand cycle. 

Another perspective which the developers have lacked is to establish a connect between location and the segment. Every city and localities within it have a segmental flow and can be classified into affordable, mid or luxury segment of accommodation. The real estate development in an area needs to follow that pattern so as to ensure it creates the right fit for the area.  

The real estate industry in India needs to initiate construction or planning of projects based on analysis, which looks into estimated demands, the micro market, historical patterns, economic modelling, future developments and is need based. 

Property in India remains an emotional and ego based issue for families and society at large; therefore, the process of buying a property, whether for investment purposes or self-use goes through a due diligence cycle. This implies that developers cannot build ‘anything they want and anywhere they want’, such a system is bound to fail in Indian society; this is what exactly has happened. Today, the real estate sector in India is reeling under surplus inventory, whereas there is an overall shortfall in the housing sector. This surplus inventory means lacks of funds in the market and implies non-availability of capital for real estate projects in other parts of the country where the demand exists. It is a catch 22 situation through which the real estate sector in India has to negotiate. 

The outcome of this slow-down are very clear; the real estate industry in India needs a mid-course correction and a fast one. A few smaller developers who are unable to handle the present recession, will be gobbled by the bigger players, this would enable inflow of capital in the sector and initiation of new projects as per the market demand. This cycle would ensure a resurgence of the real estate in India. The whole cycle is likely to take another 2 years.