Luxury housing staging a comeback on the realty market

Spurred by new product offerings, greater influx of end-user demand and an increasing upwardly-mobile segment, luxury and ultraluxury housing projects, with prices ranging between Rs 1 crore and Rs 15 crore, again seem to be making a comeback. Mahagun Marvella, Raheja Revanta, Lodha Fiorenza, Lodha Aurum Grande, Oberoi Exquisite, Unitech's Nirvana Country2 Espace Premiere and Orris Aster Court are some of the premium projects, some ready, others under construction. In fact, dozens of luxury projects are coming up in the NCR alone, with Gurgaon and Noida being the hub of such projects. So, what goes? Is affordable housing out and luxury housing in again? Industry experts say that while this may not be the case, affordable housing projects are certainly having a slowdown for some time now. "The rise in affordable housing projects, owing to the 2008 economic downturn, and the oversupply in the premium housing market is currently going through market lethargy. Exponentially increasing interest rates, rise in cost of building materials and increasing labour charges have put developers in a fix with regard to profitable execution of such projects," says Chintan Patel, director (real estate and hospitality practice), at Ernst & Young. Luxury housing, on the other hand, is experimenting with a variety of new product offerings ranging from Singapore-style apartments to branded luxury residences . "This has managed to attract the interest of buyers in the luxury market, who previously had to look outside the country for such options," he says. This explains why even with the hardening interest rate stand taken by the RBI, "the developers in the NCR region, apart from some other regions like Bangalore, increased the supply of luxury housing projects in the latest third quarter, for instance, compared to the previous year's third quarter, as demand for this segment continued to remain healthy," says Samir Jasuja, founder and chief executive officer at PropEquity, a real estate data, intelligence and analytics firm. As expected, the pricing for the luxury housing continued to appreciate in these regions year-onyear (YoY), as end users for these projects were only slightly impacted by the prevailing macroeconomic trends. This was, however, not the case with affordable housing whose supply fell by over 50% in these regions as price-sensitive end users of this segment were severely impacted by the multiple interest rate hikes by the RBI, as well as the rising cost of such projects, as developers were reluctant to reduce prices to maintain their margins. Whatever be the case, demand for luxury housing is again increasing and not without reasons. Today, at a growth rate of more than 20%, India has the fastest growing number of high net worth individuals in the world and real estate comprises approximately 40% of their investment portfolio. Demand is also rising from NRIs, fuelled by the depreciation of the rupee value. "The luxury housing market is currently seeing a greater influx of end-user demand, in contrast to the previous trend of the investment-driven purchases. This has further been helped by the construction-linked payment plans on offer by most developers," says Chintan Patel of E&Y . Dinesh Gupta, the chairman of Prabhatam Group, says: "With the rapid pace of urbanization, the new urban families are craving for luxury homes that are fully loaded with global amenities enjoyed by the NRIs and citizens worldwide. Luxury housing is primarily catering to the high-end investors and consumers and is gaining a huge momentum as luxury has become a necessity for the urban households today." Source: http://economictimes.indiatimes.com/markets/real-estate/Luxury-housing-staging-a-comeback-on-the-realty-market/articleshow/11660975.cms