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Location sells ultra luxury homes in India written by Om Ahuja, published in Magicbricks.com. July 7, 2014

Many developers are trying their best to create new zones and addresses across India that can appeal to HNI property buyers. This endeavour has met with varying degrees of success on the ground when it comes to swaying the ultra-rich clientele. Barring upgrades in design concepts and the addition of some new accoutrements to amplify a luxury lifestyle, the baseline concept of luxury homes has not materially changed in many cities. Prominent addresses or ‘pin code value’ still matter, and the ultra-rich are willing to pay extra premiums to get them.

 

That said, cities like Delhi, Gurgaon, Bangalore and Pune have by now seen a high incidence of developers offering branded residences as alternatives to premium homes at the most sought-after locations within these cities. The success in swinging interest levels of the target clientele has varied markedly in tandem with the actual features being offered. While there is evidence of first-generation wealthy buyers evaluating and considering such options in these cities, the conversion rate among the historically rich has been negligible. The consensus among this segment is that branded residences offer very little value addition and the premium charged on them are based on artificial factors that do not provide true value.

 

Demand continues to be robust for options in bonafide premium locations of the key Indian cities, but newly tailored luxury addresses are also seeing their share of action as long as the projects on offer meet certain parameters. To begin with, deals conclude rapidly in sellers’ markets where demand exceeds supply. Annual returns in such pockets are in the neighbourhood of 25 per cent, and this figure will continue to see northward movement over the coming years as supply constraint further drives up prices.

 

Delhi

 

In Delhi, the preference of HNIs when it comes to established and high-value locations, is more or less inflexible. South Delhi is still the micro-market of choice for the ultra-rich clients from Delhi, Punjab and Uttar Pradesh with budgets ranging from Rs 50-300 crore. Golf Links in Delhi is a more vibrant market in terms of demand when compared to even to Lutyens Zone. Shantiniketan and Vasant Vihar are two other key HNI destinations where demand exceeds supply. Golf Links is actually the most sought-after location in South Delhi. Most other cities have similar pockets, but also show evidence of a certain degree of demand diversion to newer locations and concepts, which is not the case in Delhi.

 

Mumbai

 

In Mumbai, with the Central Business District (CBD) shifting to BKC for all practical purposes, clients who would previously not have considered any options other than Malabar Hill or Nepean Sea Road are now evaluating newer areas like Worli, Bandra-BKC and Mahalaxmi as alternatives. Considering the limited supply in the historically prized locations, HNI buyers are looking for premium options that provide 24×7 security, a gated community and premium club houses as an amplification of their experiences in stand-alone buildings in the traditional premium areas.

 

The arrival of an ultra-luxury gated community in Mahalaxmi, Mumbai has seen many wealthy South Mumbai residents accepting this as a luxury address in all respects. There are similar examples in BKC and Goregaon where new luxury housing addresses for HNI buyers have been created – rebooting the whole concept of luxury living.

 

Bangalore

 

Similarly in Bangalore, some developers have provided the city with genuine luxury projects in brand-new premium locations. These developers have been instrumental in turning Whitefield into a high-value address and their completed projects command steep premiums. The offering, product design, specifications and buyer profile are remarkable enough to make a difference.

 

What ultra-HNIs look for

 

Ultra-rich buyers look at following parameters when it comes to buying a luxury residence:

 

The profile

 

It really matters whether or not you share your neighbourhood with the tycoons, celebrities and prominent CEOs of the city, as this makes a definite status statement and is also good for business. While ultra HNIs do gravitate to creamy layer environments for reasons of prestige, it is also true that many business deals are concluded at these residential locations during social interactions over weekends and holidays. In Delhi areas like Amrita Shergill Marg and Jor Bagh come readily to mind for these reasons. In Kolkata, Ballygunge and Alipore are practically defined by such a resident profile.

 

Low density

 

The rich and famous do not like to live in crowded areas of a city, but prefer locations with lower population densities. For this reason, locations like Malabar Hill, Worli and Bandra Bandstand in Mumbai are traditionally where the rich pay very high premiums.

 

View and privacy

 

A sea view, a view of a golf course and a high level of privacy (integral to the concept of exclusiveness) matter a lot when it comes to defining luxury for India’s ultra-rich. Luxury offerings in cities like Mumbai, Delhi and Bangalore rarely generate a lot of interest from the wealthy set of buyers if they do not score high on this aspect.

 

Ready access to the city’s nerve centre

 

Apartments in Mumbai’s legendary NCPA commanded highest premiums for various reasons, which included the profile of residents. However, their USP was that NCPA is closest to the erstwhile CBD of Nariman Point. Boat Club in Chennai and Golf Course Road in Gurgaon share this important attribute of proximity to these cities’ ‘centres of gravity’. Mumbai’s BKC area has become the new luxury address of Mumbai because the CBD as well as the Diamond Bourse have now shifted there.

 

Overall luxury experience

 

The definition of luxury has been extensively abused in the Indian real estate and is being closely scrutinised by ultra-rich buyers when it comes to evaluating offerings. Luxury goes beyond club houses and the quality of fittings used in a project’s apartments. Multiple aspects of a project are evaluated to discern if the ‘luxury’ tag indeed applies. Among notable success stories, One Avigna Park in Mumbai stands out as a clear winner when it comes to offering real luxury in most respects.

 

It may seem strange that India’s ultra-rich are indeed booking into luxury projects in new locations. This trend is also catching on in cities where HNIs perceive a vacuum in terms of offerings at the traditional premium locations.

 

(Om Ahuja, CEO – Residential Services, JLL India. The views expressed here are the author’s own.)