As India prepares to elect a new government, the real estate sector—sensitive to interest rates and pricing—is expectantly looking on, hoping for a revival of its sagging fortunes. This holds even truer for the niche luxury real estate segment, where developers are competing hard to sell sky villas and “exclusivity”. The difficulty in convincing consumers to buy into this category is self-explanatory in the current economic environment: Luxury is, after all, “something adding to pleasure or comfort but not absolutely necessary”.
In an effort to deconstruct this conundrum, Forbes India invited five experts to a roundtable to interpret the concept of luxury, the latest trends, how it is being sold and its future in a still-uncertain cycle of growth.
In a nearly two-hour-long discussion, Pranay Vakil, who founded independent property consultancy Knight Frank India, played moderator to Ramesh Jogani (managing partner, Indian Property Advisors), Joe Verghese (managing director, consultancy firm Colliers International, India), Rubi Arya (director at Milestone, a real estate private equity fund), Anubhav Gupta (executive vice-president, Godrej Properties) and Babulal Varma (managing director, Omkar Realtors). Here are some excerpts from the conversation:
Pranay Vakil: Let’s start this discussion by defining luxury housing and how many can afford it. Is it bought out of wealth or income? And, more fundamentally, what is luxury? Is it the location, the price-point, the neighbourhood, the other buyers or the hype created by the developers?
Ramesh Jogani: For me, luxury is owner’s pride, neighbour’s envy. Only a very small segment can buy luxury homes that are, basically, large houses with amenities such as club houses, swimming pools and crèches, which we had not heard of before.
I have been a developer for the last 30 years. Earlier, luxury meant a penthouse at the top of a building. But now, there are entire buildings comprising such houses, each of 5,000-10,000 sq ft floor space. True luxury is something that one vies for—it has a snob value attached to it.
Joe Verghese: I look at it in terms of exclusivity. The buyer should feel that he is getting something exclusive. I recently asked a developer what he defined as luxury and he said, “Just show a lot of space—it should look as if space is wasted.” For a person looking at luxury, the price point really does not matter to a great extent.
Vakil: You have not emphasised on location… is it irrelevant?
Verghese: For aspirational luxury, location is not important, but for actual luxury, it has to be.
Jogani: Hiranandani was the first to change that (in Powai). Nobody would go there and then he created luxury.
Vakil: Rubi, a question for you. A lot of very important people are moving away from the luxury areas of south Mumbai to [Raheja’s] Viveria (in the Saat Rasta area of south-central Mumbai). Is that luxury?
Rubi Arya: Residential address remains the key but luxury is a lifestyle statement. But it does not matter where you stay as long as you can define your social and financial standing by way of amenities—surveillance, wireless internet, clubhouses and gyms. Today’s individual is globally aware; people have the wealth and are aspiring to move into luxury homes.
Vakil: What has changed in the last 10 years?
Arya: For instance, there are developers who are creating Spanish and Mexican ambience. This is because people want to recreate that lifestyle back home. Our economy has done well even though there has been a global and local crisis. There is a lot of influx of money that has also fuelled the real estate growth. Luxury housing in India is expected to grow by 30 percent between 2013 and 2016, but it is the super luxury segment which is growing even faster.
Anubhav Gupta: I had a prominent architect who came to us and asked us, “Do you think I like doing Spanish architecture?” I told him he must like it because he makes these columns and Neo-Gothic Greek structures. He said the way to make a building aspirational is to put more glass but then it starts to look like a commercial building. However, he found a way to create the building in plaster and yet cater to the aspiration of the new buyer who is interested in luxury.
Vakil: Babulal, you are creating the luxury we are talking about. What were the triggers?
Jogani: The whole real estate business is related to capital appreciation and has never been linked to rental yields.
(This story appears in the 16 May, 2014 issue of Forbes India. To visit our Archives, click here.)
Well, the developers didnt talk much about Branding of the property. Perception of brand plays a big role in defining exclusivity or luxury of the property. You have to create a brand image. Even if the construction or amenities are too good but there is not a strong brand image, then there may be a lack of interest. On the other hand, one can sell moderately developed property with stronger brand image at higher price.
on May 15, 2014First Space or may be the wasted space and second the Exclusivity is what matters the most when buying a luxury property and LOCATION which should have been one of the indispensable parameters of Real Estate investment is ranked last or down in the luxury buyer priority list.
on May 14, 2014