Sectors such as real estate are always caught in the eternal cycle of market ups and downs. However, the markets are now touching their silver lining. Our economy is the world’s third largest to raise its head above recession, globally.
Real estate is bouncing back and for those who were prepared, there is no time like now. Karun Varma, Managing Director of Jones Lang Lasalle Mehraj, Bangalore says, “In Bangalore, as in most other locations, overall sentiments in the residential property sector have improved on the heels of increased availability of home loans at rationalised interest rates. Premium housing – the last segment to see recovery – is finally beginning to perk up, as well. This is evidenced by increased developer activity in luxury spaces.”
Uzma Irfan, Director, Corporate Communications, Prestige Group feels that even in the current recessionary market, though there has been a noticeable slump, we can still see a demand for such projects. “Prestige has been synonymous with setting highend projects in Bangalore such as Prestige Acropolis and Prestige Ozone. This has been primarily based on the growing demand for such properties. Our recent project, Prestige Neptune’s Courtyard, a luxury condominium development located at Marine Drive, Kochi, stands testimony to this,” he adds.
A step closer to home
What has remained steady through it all is the number of takers for the premium segment of residential realty. The bottomline is that the premium segment is targeted at those who have a tremendous amount of liquidity in terms of their monetary assets.
These are not people who need to take a loan to fund their home buying, nor will they ever be out of the market when it comes to premium homes. Value for money, however, does exist in the premium segment. A convincing display of value-for-money will find takers irrespective of the price.
Sushil Mantri, Chairman of Mantri Developers, agrees to an extent with the sentiment of Karun Varma when he says, “The premium housing was affected in the month of October 2008-January 2009 to a certain extent. However, we have seen 100 per cent growth in sales in our premium projects. There is enough demand at both ends of the spectrum.
Premium housing caters to the niche segment. This comprises higher disposable incomes and people from the IT industry, and there is enough demand in this segment. The projects that are likely to be completed within a few months still enjoy a high degree of demand.”
The market gets its steam from…
A look at Bangalore and you will find that areas such as Richmond Road, Lavelle Road and Cunningham Road among others are in demand. Experts feel that the demand in these premium micro markets remains steady despite an increase in prices simply because people want to have these names on their addresses.
The most important reason for the increase in demand in the high-end sector is the huge supply gap. It is actually a field day for those who plan to sell their homes in these areas. Another factor is that though the market is ruled by those who buy for themselves, highend dwelling places are now being increasingly looked at as a means of investment.
According to the World Wealth Report of Capgemini and Merrill Lynch, India has posted the fastest rate of growth in 2007, but its High Net Worth Individuals (HNWI) population shrank 31.6 per cent accounting for the second largest decline in the world.
In spite of this, the demand for premium homes has not dithered. Karun Varma’s point elucidates this further. He says, “GCorp has launched a premium apartment highrise by the name of Sky Gardens in Langford Town (CBD). With possession slated for late 2010 and a stated rate of Rs 15,000-18000/sqft, this project is already fully sold out.”
He adds, “Similarly, the Prestige Group has brought in a premium housing project called Apshot in Bangalore’s CBD area. Despite the high ticket price of Rs 20,000-Rs 25,000/sqft, this project is also completely booked. Likewise, Puravankara and the Nitesh Group have also successfully sold premium projects in Lavelle Road, (CBD).”
How do you know your home is premium?
Surendra Hiranandani, Founder and Managing Director of Hiranandani Group of Companies and Hiranandani Upscale, explains the principles behind premium homes, “A premium home has to be designed from scratch for a higher standard. One cannot spend extra on an Ambassador or Maruti and upgrade it to a Mercedes. For buildings, the specifications of the design, the concrete, the elevation, the utilities and services, the windows and the flooring - each item has to be provided with a higher specification and implemented with higher quality standards.”
In the highend realty sector, it is the penthouse in apartment complexes that is largely in demand. This is because the roof also becomes a part of your property, and there is perfect utilisation of larger spaces. Another demand that most builders are trying to take care is enabling the buyer to know who his neighbours are. In Bangalore, the trend took off with Mantri Developers and their 17-floor super premium residential project ‘Mantri Altius’ in 2006.
But then, what of premium villa projects? Is the scale of demand lesser? Surendra Hiranandani says, “The premium apartments can be made in smaller sizes while villas need to be larger as they accommodate more amenities within the project. The villa affords the extra space of the garden and terrace while the apartments provide more privacy, security and better vistas of the surrounding area. In totality, an apartment works out to be less expensive than a villa.”
But do premium homes also have a great resale value? Uzma Irfan says, “Over the years, the Indian economy has transitioned and so have the lifestyles of the Indian home buyer. High-end homes have evolved into a statement among the discerning consumers. The resale value of premium homes have always been one of the biggest draws towards such properties. Such homes have been designed by virtue of location, layout and amenities to ensure the property appreciates over a period of time. Although there could be a dip in sales during recession, the value of such homes is likely to be stable.”
Projection of Bangalore’s premium realty
Says Karun Varma, “In peripheral areas like Whitefield and Outer Ring Road, the villa-centric residential communities have seen successful stock additions by the Prestige and Adarsh Groups, who are the two most active developers in the premium villa segment there.
None of these units cost anything below Rs 2.5 crore, and the demand for them is very high because supply in these areas is extremely limited. In areas of Old Bangalore such as Malleshwaram and Jayanagar, the Bysani Group, Sobha Developers and Raheja Corp are selling apartments in the price range of Rs. 5000-6000/sqft. These projects and their rates are considered premium for the stated areas.”
Surendra Hiranandani feels that the concept of premium housing will boom in parts of the city which have a good social infrastructure, hospitality, retail and other facilities.
Within a neighbourhood also a particular location would be more suited than other spots for premium housing because of the views and the quality of the surrounding environment.
Uzma Irfan summarises by saying, “I believe this segment is largely resilient to the global economic slowdown as it is a question of individuals investing their own equity. Cities in India are fast expanding and so is the demand for prime property. As a result of this burgeoning demand, prices have skyrocketed so much so that real estate in cities like Mumbai is on par with leading global cities such as Tokyo and New York. As a result, builders are looking at suburbs and satellite cities for expansion. Needless to say, prime downtown locations in cities are now generally in limited supply and commanding a high premium.”
What we consider premium housing is quite the standard in other major international cities.
For those who desire a better of quality of life and living there are substantial benefits in investing in premium housing.