Tuesday, May 15, 2012: 08:49:01 PM

Insight

IN THE LAP OF LUXURY

Surinder Lal Chopra – Managing Director of SCSL Buildwell Pvt. Ltd shares his perception of the luxury home segment in India

Comfort, space and luxury are the jewels which connoisseurs seek in a house. Developers are trying their best to cater to the demands of this highend segment. Until recently, building residential apartments was a numbers game. But now, the focus has shifted from quantity to quality, from standard to opulence and luxury. The market for the ultra luxury segment is slow but the value size is bigger. Customers are becoming more demanding about the use of best finished materials, such as Italian marble, teak wood doors, and frames, spacious living rooms, bathrooms and landscaped terraces. Green homes are becoming increasingly sought after, as well.



The Market for Luxury Homes
High-end projects are differentiated by their exceptional features. Gold and silver have become unstable because of the erratic stock exchange. Hence, customers are looking at real estate as the only asset class that will deliver steady returns over a long period of time. Newage Indians not only possess a sense of urban lifestyle, but also want a status symbol.

Presently, the real estate sector is playing a significant role in the nation’s growth. The industry is close to $12 bn and is growing at the rate of about 30 percent per annum. A unit increase in expenditure in this sector has a multiplier effect and the capacity to generate income as high as five times the investment value. The Indian real estate industry ranks second in the world in terms of generating employment. Luxury real estate projects offer sumptuous living with wide open spaces, classy and stylish ranges of line fittings with nothing short of exotic Italian or imported marble.

There is no dearth of buyers for unique and exclusive luxury homes. Ten years ago, the ultraluxury home market in India accounted for less than one percent market share. It has now increased by four to five percent. Only 10–15 percent of the total value of this segment is financed by home loans; therefore, an increase in interest rates has not impacted the sales of ultra- luxury homes. Corporates, executives and businessmen, among others make use of their disposable income to buy such properties. Thus, a home as an ‘oasis of peace’, with all kinds of affordable amenities, is what buyers are seeking.



Developer’s Pride
Some of the projects with exclusive features include SCSL Buildwell’s Neptune in Gurgaon, which possesses a large lobby (11,000 sq. ft) and an extraordinary ceiling height of 18 ft. DLF’s super luxury project—Aralias, also in Gurgaon, Lodha group’s World One in Mumbai, which contains luxurious duplex world mansions with a high-end club house and a sports club, and Urbana—Kolkata’s tallest residential tower are other apt representations of India’s luxury housing scenario. Luxury homes will continue to dazzle in the wake of robust demand and key investments. By 2012–13, the demand for luxury housing shall grow by 28 percent. This demand will be driven by the senior management class, corporate houses, NRI businessmen, and high net-worth individuals.

Earlier, buyers preferred purchasing ‘shells’ and did up their homes by themselves. Now, however, their preference has shifted to more or less ‘finished’ houses. The technology that a builder can incorporate during construction in order to enable comfortable living during construction may prove to be expensive and time-consuming if done later by individuals. Technological development across various spheres has spurred consumers to demand greater comfort—what were earlier viewed as ‘comforts’ have now evolved into ‘necessities’. Increase in savings and the propensity to spend have pushed up the demand for better housing units. Hence, each new construction is sure to have something better, as technological development takes place in geometrical progression.

Developers are becoming innovative and have realised the need to stay updated with the latest technological advancements and trends in the industry. A cutting-edge home automation technology using cell phone-operated appliances to create a seamless integration with the home has led to the creation of smart homes. Complementing the fabulous residence are niche lifestyle amenities, including private swimming pools, private elevators, spacious living rooms with 5–6 bedrooms, two servant quarters, a personal spa and gym, a soccer field, and private parking, which add to the glamour of the project. The aim here is to provide a living experience, that is truly ‘king-size’. These projects add an ‘awe factor’ to a personalised luxury residence. Another element in super luxury housing today includes generously proportioned homes that offer unobstructed and breathtaking views.

In the Future
With real estate in metropolitan cities becoming increasingly restrictive, many buyers with limited budgets are turning to tier II and III cities to buy their long-cherished dream houses. City workers feel secure that they have a place that they can turn to once they retire. Additionally, growing industrialisation and rising opportunities in the service sector are driving demand for housing in tier II and III cities.

In coming budget of 2012, one can expect the deficit in budget to induce the government to increase levies, although this may be inflationary in nature. During the last couple of years, this industry has been brought under the government tax regime, which in turn has influenced the prices to a great extent. Housing is an infrastructural industry and its demand is going to be exponential. The high cost is causing levier service tax increase in the rate of electricity and communications, which has burdened the real estate sector heavily. The real estate industry is facing the twin challenges of rising cost of construction materials and a shortage of labour. The government needs to help the growth of this sector for three reasons: having a house is a priority for every Indian, a number of industries (steel, cement, stone and wood) are dependant on the real estate industry, and also this industry is one of the major employment generators.


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