By Vinod Behl
The battered residential realty over the last few years had seen luxury housing hit hard by the weak demand. But post-pandemic, new dynamics of luxury housing have emerged. The pick-up in demand for luxury housing is evident from the sale and unsold inventory. According to Anarock Property Consultants, at the end of 2020, of 6,38000 unsold units in top 7 cities, the luxury segment (priced over Rs 1.5 crore) comprised just 14%. The sale of luxury and premium homes by leading luxury developer Lodha Group in FY 21 and FY 20, accounted for 85% of their overall residential sales.
Post-pandemic, home buyers are preferring larger, luxurious apartments. DLF has sold 24 flats of Rs 25-50 crore each, in its super-luxury project Camellias in Gurgaon.
According to a CII- Anarock Covid-19 Sentiment Survey, most NRIs today are preferring luxury homes – mostly in the price range of up to Rs 2.5 crore. As per the report, the sale of luxury property (Rs 1.5 crore to Rs 2.5 crore rose from 6% in the pre-Covid period to 7% in the post-Covid period, while sale of luxury homes costing more than Rs 2.5 crore, rose from 3% to 4%.
Besides range-bound price, good deals offered by developers are also behind the pick-up in sales. “It was because of demand that we launched our luxury housing project ‘High Town’ in Gurgaon amidst the pandemic and have sold 25% of our inventory during the period November to January," informs Anubhav Jain, Director, Silverglades, High Town, under its scheme: ‘Let us pay for your stay’ is offering an assured monthly rent of Rs 70,000 p.m for 4 years to customers who book a flat of Rs 5 crore.
Shalimaar-Krrish's Ibiza Town in Faridabad is offering a registration charge waiver, a maintenance charge waiver for 18 months, and 10:90 easy payment plan. Tatas in its Gateway Select premium project in Gurgaon has come up with 15:85 payment plan with zero GST as the project is nearing possession. Godrej Air in Gurgaon has a one-size one-price EMI holiday for up to 2 years, free first transfer, and an easy payment plan.
It's mostly the end-user driven market now. According to Akash Khurana, CEO, Krisumi Corporation, the pandemic has given rise to a new class of buyers who want luxury at the right price. Adds Anubhav Jain, "Developers are catering to the needs of Gen X buyers who want smart homes at the right price points." Ashwinder Singh adds that with growing interest in second homes, buyers (especially HNIs and UHNIs) are increasingly looking for picturesque properties due to the WFH scenario.
More and more buyers are opting for ready homes as there is no development risk and net saving of 5% GST (present in under-construction homes). According to Real Insight Residential Annual Round up 2020 by Proptiger, the share of ready-to-move-in homes has gone up from 7% to 20% over the last 5 years. In the year 2020, 21% ready-to-move housing units were sold against 18% in 2019. The share of such units in total sales increased the most (27%) in the NCR.
Imperial Holdings has also adopted the 'Build and Sell’ concept for the first phase of their luxury housing township project - Auramah Valley, near Simla. According to Manav Singh, Chairman, the company was able to sell ready homes without much marketing. Like DLF, the company has now adopted the hybrid model for the second phase. Silverglades Group is also selling its luxury housing project in Kasauli under the build and sell model.
Interestingly, even the under-construction luxury home projects are attracting buyers, especially the newly launched projects or projects in early stages of construction. In such projects, developers are providing wellness, health & fitness, in-house sports and recreation facilities, besides large green areas for walking, jogging, meditation, children’s play area etc. The buyers’ preference, however, is for branded developers who have a good track record and financial strength.
Technology is also playing a role in driving demand and sales. Developers deploying modern construction technology and sound project management, are able to sell better. They are also making use of technology for safe and smart homes through home automation, biometric access, voice-controlled devices, electric vehicle charging, etc.
Industry players believe that going forward, luxury housing demand will gain further traction. Luxury condominiums have seen a growth in both enquiries and closures since the festive quarter onwards, and the trend is getting better month on month as realty has bounced back to normalcy. Ashwinder Singh is of the opinion that the next few years will augment the luxury housing segment on the back of demand that will be more value-based and less price based. But before that, we will go through a period of unwinding, which will bring both learning and new opportunities.
Vinod Behl is Editor, Proptoq, a real estate magazine