In the overcrowded streets of Mumbai, a building under construction is set to become the world’s tallest residential tower. The World One development, designed to reach more than 460 metres when completed next year, features homes designed by Giorgio Armani, a sports arena and a five-level club and spa.
These homes, some of which are expected to fetch upwards of 1 billion rupees (Dh57 million), may be out of reach for the majority of India’s population – but developers are increasingly finding opportunities in high-end property and are vying to build ever more luxurious developments to cater to the demands of India’s elite.
“With the reviving economy having infused a renewed sense of confidence among wealthy individual home buyers, there has been a significant surge in demand for the luxury homes asset class in the metropolitan cities of India,” says Santhosh Kumar, the chief executive of operations and the international director at JLL India. “Many more developers are now venturing into the premium segment, which has resulted in a massive spurt of luxury projects. In fact, many of these properties are being touted as so exclusive that sales are by invitation only.”
The number of billionaires and millionaires in India is quickly expanding. The country’s number of super-wealthy, defined as those with a net worth of US$30 million or more, excluding their main residence, is expected to increase to 3,371 people over the next decade from 1,652, according to a wealth report by Knight Frank.
Increased exposure to luxury lifestyles abroad is also spurring demand for better-quality homes and a greater range of facilities in India.
Sumit Jain, the co-founder and chief executive of CommonFloor.com, an Indian online property portal, says that Indians are “very much in tune with the luxuries of the world”.
“They are no longer oblivious to this trend of luxury housing that has had an upwards trajectory over the past couple of years,” he says. “Changing lifestyles and rising income levels are driving the demand for luxury homes. Besides, the non-resident Indians are also driving growth in this segment. Those NRIs who wish to return to the country look for homes that include all the amenities and luxury they need. Thus, it goes without saying that the expectations of luxury buyers are also growing with changing dynamics and rising aspirations.”
There has been an increase in the number of new launches in the luxury housing category over the past year in most major metros in India, he says.
The Mumbai metropolitan region topped the list with a 30 per cent rise in new supply of luxury housing projects in the first quarter of this year compared to the same period last year, according to CommonFloor. This was followed by Chennai with about 15 per cent growth and Bangalore with about a 10 per cent increase. The new supply of luxury properties in the Delhi region remained virtually flat, however.
“Builders, on their part, are often seen reinventing themselves so as to oblige the demands of their discerning customers,” says Mr Jain. “As a result, the Indian realty market has been going through a major transformation in trends over the last few years. From theme-based homes to smart homes to state-of-art amenities to associating with ultra-luxury brands such as Armani, builders are trying their best to lure customers with extra features.”
Clubhouses, health facilities, rainwater harvesting, butlers and private jet services are among the elements that developers are adding to their properties to appeal to wealthy home buyers in India.
Ben Salmon, the chief executive of Assetz Property Group, says “the desire to own a home that matches their lavish lifestyles with state-of-the-art amenities, grander living spaces and exclusivity” is driving a boom in luxury home buying in India.
The company’s luxury residential projects in Bangalore include a golf course development, contemporary architecture and penthouses.
But there are challenges when it comes to building luxury homes in India.
“The absence of quality labour, non-availability of quality building material, low availability of construction technology, infrastructural bottlenecks and regulatory challenges” are all obstacles to luxury home development in India, he explains.
Mr Jain says the “dearth of skilled labour in the construction industry in India” means the “execution of luxury projects has become an uphill task for developers across India”.
High property costs in India’s major cities are also a factor in prompting developers to build more luxurious projects in an effort to generate more revenue. But securing land in prime locations is extremely difficult.
“One of the major features of luxury housing is its location, which has become scarce in most major metros,” says Mr Jain. “Whatever land is available is towards the outskirts. Hence, developers have to rethink their strategy on luxury homes and include several others features to attract buyers.”
The past couple of years have also been difficult for India’s property market, with sales slowing down.
“It is no hidden fact that the luxury segment in India too suffered as a result of the economic slowdown,” says Mr Jain. “The Indian real estate market has been facing turbulence and most cities across the country have been reeling under it. Interestingly, as per CommonFloor data, prices in the luxury segment have withstood the test of time, and there has been an increase year-on-year in most major metros. For instance, cities such as Mumbai, Bangalore and Gurgaon have seen decent rise in property prices in the luxury category ranging anywhere between 15 to 20 per cent. However, prices in Pune have been more or less stable.”
In the case of Lodha Group, which is building the World One tower, among other luxury developments such as the Trump Tower in Mumbai, 15 to 20 per cent of the company’s customers are NRIs.
Abhishek Lodha, the managing director of Lodha Group, explains that “there is recognition among NRIs across geographies that India today presents the availability of good quality real estate options”.
Indians are increasingly looking for projects that match up to the top global standards, he says.
“We really scout the globe on an ongoing basis to understand what is differentiated or what is higher value; what is it that customers in other places and countries are paying greater attention to or are giving greater value form” says Mr Lodha. “In this market there has been a growth of luxury buyers since 2010, but this is largely on account of a flight to quality. Developers who have displayed credibility and who have consistently delivered quality products continue to show demand in today’s market place. I think the Indian consumer is quite aspirational.”
Follow The National’s Business section on Twitter