In India, villas are perceived as a niche product among the residential real estate offerings. Due to its niche market, a majority of the developers focus on the segment to ensure product differentiation. It is hard to find 2-3 developers across the country associated only with villa developments, which signals less potential of this real estate segment.
Results of a recently-conducted poll by ConstructionBiz360 reaffirm the weaker prospects of villa developments, as 100% respondents feel that there is hardly any potential of villas in the Indian real estate space.
High prices, availability of land tracts in and around CBDs and preference for apartments in metro cities such as Mumbai are some of the major impediments for villa developments, opine industry experts.
Concept and target customers
Unlike apartments, villas offer buyers to get their own piece of land. The typical target customers of villas include high net-worth individuals (HNIs), NRIs, top management officials of major companies and secondary home buyers.
The starting range for villas is around Rs 40-50 lakh and it can extend to crores, depending on factors such as size of the plot on which they are built, their built-up areas, the amenities offered, whether or not they are gated, the location of the project, its accessibility, value-adds such as sea view and so on.
The villa business is a high margin game and offer developers with high returns and low risk perception. On the potential of villas in domestic property market, Subhankar Mitra, local director (Strategic Consulting) at Jones Lang LaSalle India said, “Developers can focus on this segment to ensure product differentiation in their offerings in a particular city. By doing so, they get to tap a demand stream, which is uniquely different from that for apartments and high rises. Developers can also strategise their villa venture as a ‘hedge’ against their other real estate businesses (typically offices/high rises) by proactively acquiring land in the farther suburbs and marketing villa projects to ensure sustained cash flows.”
In a confident tone, Sahil Narang, director (Operations) at Espace Homes, an ultra-luxury developer in Delhi, said, “There is good potential for villa developments in areas such as South Delhi, National Capital Region (NCR). Economic prosperity, the desire to own a personal space, combined with increasing interest among NRIs to own a property in their motherland would drive the prospects for villas in the near future.”
The key to future success in villa developments lies in product differentiation and innovation that would help build villas in affordable way.