Proptiger Q3 Report FY16: In The Lap Of Luxury, High-End Segment Looks Promising
With more political stability and a positive momentum in India's economy, the country's real estate sector is aiming high, quite literally. This time it is being led by a usually quiet segment – the high-end or the luxury section.
A sense of slump that had been hovering around the Indian real estate sector for the last couple years may be finally be over. The sector was riddled with low demand due to high prices and interest rates, huge pile-up of inventory, especially in metros, apart from various macroeconomic and global factors.
The beginning of the New Year ushered in a turnaround. This time, it's not only the expected affordable (less than Rs 75-lakh range) but the luxury segment as well that is looking promising. With Indians getting attracted to luxury, many developers are coming up with innovative designs and world-class amenities. According to the PropTiger Realty Decoded Q3 Report for FY'16, the quarter saw luxury projects launches (Greater than Rs 1 crore) taking the total contribution of launches in the luxury segment to 25 per cent, compared with 12 per cent in the previous quarter and the highest in the previous 10 quarters. In other words, launches have doubled as compared with the previous quarter.
The possible reason for the rise in launches in luxury housing could be attributed to the increase in the number of high net worth individuals (HNI), the rapid introduction of global lifestyle trends, the fast pace of urbanisation, and the healthy growth of service industries which are pushing many middle-income group individuals into the HNIs territory. Also, with the depreciation of the rupee there is interest from NRI buyers' in investing in luxury housing and encouraged more eminent developers to launch projects with fabulous facilities at a great deal.
The absorption in the luxury segment is also showing signs of revival. The report indicates a consistent increase in sales of this segment for the last one year. In Q3, 29 per cent of the total sales were attributed to the Rs-75-lakh segment which was 23 per cent in the same period last year. Cities such as Gurgaon, Mumbai and Chennai are leading the pack when it comes to luxury residential properties, says the report. The demand for luxury homes in Gurgaon, Mumbai and Chennai stands at 83, 71 and 49 per cent, respectively. However, the caveat here is that the luxury segment also contributes the maximum to unsold inventory in Gurgaon and Mumbai at 68 and 57 per cent, respectively which implies that the phenomenon is not prevailing across all cities.
Recently, many buyers with deep pockets have been seeking quality products. To meet this demand, developers are coming up with luxury projects with global partners (Swarovski, Armani, Trump) and designers. Developers are now trying out a variety of new products in the luxury housing segment and are also increasingly adding many facilities, including top-quality interiors, kitchen decor and bathroom fittings.
Flexibility and innovative payments and pricing options offered by developers to off load their unsold inventory has also been catalytic in inducing demand for the high-end category. Customers and buyers can now negotiate better and improve unit size and segment by availing of the offers.
Here are some detailed reports related to the key findings of the Q3 FY16 report: