From film stars to 'ordinary' businessmen. A new class of buyers is transforming the luxury real estate market

In early July, when Bollywood star Ranveer Singh finalised his sea-facing quadruplex apartment, the eye-popping deal grabbed the attention of the citizenry immediately. At Rs 119 crore, the ultra-luxury apartment on Mumbai’s picturesque Bandstand is spread across the 16th to 19th floor of a renovated building that stands close to the iconic Mannat—home of Bollywood megastar Shah Rukh Khan. While the 11,266-sq. ft property, with uninterrupted views of the Arabian Sea, is surely a rarity in India’s residential property market, the country’s elites are increasingly investing in luxury properties post-Covid-19.

In spite of the deal size, Singh’s is not the only such transaction in the past one year. In Kautilya Marg, at the heart of Delhi’s Diplomatic Enclave, a Rs 137-crore bungalow easily found a buyer, while the 25,000 sq. ft family home of iconic film director-cum-producer B.R. Chopra in Mumbai’s Juhu fetched Rs 183 crore in June. Much like Singh, his contemporary, actor Rajkummar Rao, too, bagged a 3,456-sq. ft triplex apartment in the posh Juhu area at Rs 44 crore from co-actor Janhvi Kapoor. While these are just a few instances of standalone properties grabbing attention due to their sheer scale, a closer look at the property market indicates that in spite of the pandemic and the economic uncertainties in recent times, demand for luxury real estate is booming.

According to Reeza Sebastian Karimpanal, President, Residential, Embassy Group, uber-luxury villas and plots in self-sustained communities where buyers can design homes are in high demand. “Modern homebuyers have more access to information than ever before, are well-read, well-travelled, and committed to the environment. With this upsurge in awareness, consumers are more conscious of the amenities and facilities they require when looking for a home that caters to a global lifestyle,” says Karimpanal. She points out that earlier luxury homebuyers were primarily the ultra high net-worth individuals (UHNIs), high net-worth individuals (HNIs) and even non-resident Indians (NRIs). “However, in 2022, we anticipate a rise in the number of first-time homebuyers investing in luxury properties due to favourable interest rates and more disposable income,” she says.

According to her, home loan interest rates—that remain below pre-pandemic levels despite recent hikes—and the phenomenon of work from home have played a role in developing buyers’ affinity towards luxury homes. This has led realtors to offer homes that are more conducive to the ‘live-work-play’ lifestyle. Now, homebuyers are increasingly seeking larger homes with flexible layouts, designated work areas, more natural light and ventilation, outdoor spaces, and other features, such as lap pools that cater to their overall well-being. “NRI investments in Indian real estate hit an all-time high of $13.1 billion in CY21 and may rise to $14.9 billion in 2022. A substantial percentage of these NRIs make up India’s international UHNI population, and about 55 per cent of those who own real estate in India will allocate their wealth towards buying a second home here,” says Karimpanal. In India, residential properties priced above Rs 8 crore are considered luxury, except for the Mumbai market, where Rs 12 crore and above is the benchmark.

The demand for luxury homes and changing consumer preferences post-Covid-19 have also been noticed by Swaroop Anish, Executive Director at Prestige Group. After Covid-19, more homebuyers are now going for 5,000-6,000 sq. ft-homes that usually fall in the luxury category, he says. The Bengaluru-based real estate major has already launched some of the key projects in the city like Prestige Leela Residence and the Kingfisher towers, where a 4-BHK apartment may cost over Rs 30 crore. To cater to the growing demand for such properties, it has launched projects in Mumbai, the largest market for luxury real estate. After successfully completing its Prestige City in Mulund, it is now eyeing two key luxury projects in Pali Hill and Marine Lines.

As per analysis by the real estate firm JLL India, the majority of locations in South Mumbai, such as Altamount Road, Cuffe Parade, Nana Chowk, Nepean Sea Road, among others, are predominantly luxury markets, with bungalows or apartments priced upwards of Rs 12 crore. “The most preferred micro-market in the National Capital Region for high-end properties are South and Central Delhi, with traditionally upmarket areas like Golf Links, Jor Bagh and Sunder Nagar remaining high in demand, majorly due to limited availability and lush greens, along with the presence of the city’s VVIPs and political power resting here. Localities in South Delhi, like West End, Vasant Vihar and Shanti Niketan, too attract luxury buyers due to good social and physical infrastructure,” says Samantak Das, Chief Economist and Head of Research and REIS, India, JLL. Golf Course Road in Gurugram, for instance, attracts HNIs, MNC expats and corporate executives, chiefly due to its proximity to the city’s central business district, along with world-class amenities being offered by the developers in the area. Bungalows in South Delhi and Central Delhi, with plot area ranging between 5,400- and 10,800 sq. ft, are preferred, while for apartments, it ranges between 5,000- and 8,000 sq. ft.

Moreover, the recent rush for luxury homes has got significant impetus from start-up founders and stakeholders as well, those who have made big bucks, says Das. As per Amit Goyal, Chief Executive Officer-India, Sotheby’s International Realty, a US-based luxury real estate firm that deals in such properties, influx of money from VCs resulting in a large number of millionaires and billionaires in the Indian start-up landscape, has played a crucial role. “Of late, we are increasingly noticing a lot of professionals, like lawyers, architects and doctors, coming into the luxury market. Additionally, there is an influx of start-up founders, who have sold their stakes recently and made big bucks,” Goyal says.

Recently, names such as Vijay Shekhar Sharma of Paytm and the Chaudhrys of Aakash Educational Services, who made fortunes by selling their stakes, have purchased homes in locations like Golf Links and Vasant Vihar in Delhi. While Sharma of Paytm spent Rs 82 crore for a Golf Links home, Chaudhrys’ Vasant Vihar property is estimated to have cost Rs 100 crore. Zishaan Hayath, Founder of Toppr, which was acquired by edtech major BYJU’S last year, has bought a 4,000-sq. ft sea-facing apartment in Bandra for Rs 41 crore.

As per JLL’s analysis, markets like Bengaluru, Chennai and Pune, which were missing from the luxury realty landscape even a few years ago, are now making their mark. Even Hyderabad’s Banjara Hills and Jubilee Hills are witnessing deals worth up to Rs 48 crore. Data shows, across the five markets—Delhi-NCR, Mumbai, Bengaluru, Pune and Chennai—at least 50 luxury projects are being developed, with prices ranging between Rs 8 crore and Rs 49 crore. That is, however, just the beginning. According to Prestige Group’s Anish, while the luxury property market continues to remain limited, over the next five years the dynamics may change.

“In my view, the Rs 1-1.5 crore unit size market, which is the most lucrative segment currently for us, will move up to Rs 3 crore a unit. And the Rs 3-crore units segment will become a Rs 5-crore segment in the next five years,” he says.

@arndutt