Will NRIs Reshape Luxury Real Estate Market In India?

There is an interesting trend that is to be seen in the real estate market of India's information technology capital Bengaluru. In a market riddled by lack of demand from buyers, developers are seen launching luxury residential projects. Resultantly, there has been a sudden emergence of interest in Bengaluru's luxury home segment which has stemmed from non-resident Indian customers and buyers with deep pockets.

Truth be told, the launch trend has not only reared its head in Bengaluru alone. A lot of realtors have joined the bandwagon in Mumbai and Pune as well. Following the implementation of the real estate Act, the market in all parts of the country was stirred up for better or for worse. While the transparency and authenticity in real estate investments became apparent, the risk of seeing the project ever reach completion with respect to compliance has a lot of residential home investors backing out. To make-up for the dismal loss, developers are looking to make the most of this micro-market.

The saving grace

The demographic for luxury projects is restricted. However, this is the segment that has kept non-corporate realtors solvent in recent times. An interesting fact about the NRI customer base is that even a risk-prone project does not turn discourage them. Prices in prime locations in Mumbai, for instance, have gone up by as much as 20 per cent when compared the period before 2016. This goes on to prove that as long as a luxury project is made debt-free, NRIs do not refrain from shelling extra to acquire the same.

Most of these luxury homes have an individual net worth that runs into hundreds of crores, because each home comes with a price-tag of a cool Rs 6-8 crore. In spite of the dry spell, real estate bigwigs such as K Raheja Corp and DLF have done booming business in Mumbai and Gurgaon. Reportedly, a surprising turnover of nearly Rs 450 crore by the third quarter of this fiscal year was revealed by DLF ─ all thanks to the two of the luxury housing projects, the company undertook in Gurgaon, Crest and Camellias.

Small segment, big growth

This goes to show that the real estate industry, in spite of weathering the storms that were thrown its way, is capable of sustaining through micro-marketing. The niche crowd of investors may be thin, but it is not absent. As substantiated by real-estate analytics and property advisory brand Cushman and Wakefield, in retaliation of the slow-burn that ensued since the implementation of the real estate law, the micro-market has sustained business. A list of real-estate developers have managed to snag end-user consumers enthusiastic about luxury residential properties.

Mumbai saw Radius Developers and Lodha Groups

make a profitable business. Radius Developers has two upcoming projects where each luxury home may fetch them approximately Rs 13 crore. The Lodha Groups have launched about four new luxurious, high-end projects at Walkeshwar, Lower Parel, and are now concentrating on Pune. Pune's own Panchshil, on the other hand, has launched a massive, 80-acre luxury housing project of nearly 170 high-end homes.

Does that indicate the uprising in the luxury real estate market in India?