For one of the fastest growing real-estate markets in the world, luxury living is emerging as one of the most promising sectors of the industry. So much so that this sector is not just attracting the interest of the domestic investors and developers but also of the Indian diaspora. The high aspiration of good living of High Net-Worth Investors and changing lifestyle are just two common factors that are driving this sector.
According to Kotak Wealth Management’s Top of the Pyramid 2016 report, cited by 99acres, if the same conditions continue to prevail, luxury projects are likely to witness 100 percent growth over the coming five years. In the financial year 2016, there were about 1.46 lakh boutique houses launched in India, and this number is likely to climb to 2.94 lakh by 2021, according to one conservative estimate.
Why Luxury Works For Developers and Investors Alike?
As big ticket, value-driven projects, the margin for profit is unbelievably high from this segment. Experts contend that luxury projects yield much higher returns to developers than projects addressing affordable housing needs.
An entry into this lucrative segment also builds the developer’s brand with top-end customers. It straight implies that the developer has arrived on the scene. The credibility attached to superior construction work is unmatched, even when the volume of sales is low and the marketing is more strategic and one-on-one.
That said, the responsibility of reflecting high lifestyle quotient in the finish and quality of the project must be unquestionable to survive in this market. State-of-the-art infrastructure, one apartment on each floor for total privacy, a helipad, are some of the most attractive features of such condominiums.
Luxury Housing as an Investment
This segment has always proven to be recession-proof. Since the target market for this segment are High Net worth Individuals, their appetite for the bold and astounding is likely to remain un satiated, no matter what the general market conditions. Therefore recessionary trends have very little or almost no impact on this segment.
Lately, there is intensifying demand for luxury residential projects even in Tier II and Tier III cities, where labor costs are high but the aspirations for fine living high among people with disposable incomes. For developers such projects also deliver a relatively higher return on Investment (RoI).
Unfortunately, there are still a limited number of developers who have established a reputation for themselves in this market. Most Indian developers still command very little expertise or exposure in the super-luxury segment. Even when they do, it’s usually in partnership with a global luxury brand, which can be a good strategy as it boasts sales.
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