The slowdown in the real estate market began from 2014-15, impacting the luxury realty segment massively. However, things have turned the corner in recent months and this is the best time to invest since prices may only venture northwards in the future. Transactions for luxurious properties priced above Rs. 10 crore have gone up handsomely for the Mumbai Metropolitan Region (MMR). According to the Business Head, Data Intelligence and Asset Management, Square Yards, Anand Moorthy, MMR registration records indicate how the number of transactions for properties priced more than Rs. 10 crore has gone up by 20% this year as compared to the last year. He also stated that a similar trend is visible in other housing markets like Bengaluru, Delhi, Pune, and Hyderabad.
Research reports have shown how the overall share of property at the premium end of the spectrum (priced higher than Rs. 1.5 crore) has increased to a decent 12% in the first three quarters of this year. This figure stood at 6% and 7% in 2020 and 2019 respectively. Real estate consultancies dealing with luxury properties have also witnessed growth in their businesses. Sotheby’s International, which enables property transactions between Rs. 13-30 crore, witnessed Indian revenues growing by 40% in the year, concluding in March, 2021.
The luxury realty segment witnessed a major turnaround in August last year. Luxury homes usually have bigger sizes, a factor which appealed to buyers throughout the pandemic. Luxury properties usually span 6,000 square feet in Indian cities while they are between 3,500-4,000 square feet in Mumbai. Prices in the segment witnessed a 15-20% correction between the beginning of 2019 and March, 2020. They have mostly remained stagnant from then according to Anand Moorthy. NRIs and HNWIs (high net-worth individuals) have realized that this is a great time to enter into the luxury segment with prices staying at lower levels and record-low rates of interest on home loans.
The Maharashtra State Government also played a part by cutting stamp duty to 2% and then to 3% from 5% earlier. The Delhi Government also brought down circle rates by 20%, leading to a stamp duty cut as well. The equity markets witnessed a bull run and with more money in the hands of several investors, luxury realty naturally saw a major boost. Several start-up promoters are also deploying money from share/stake sales into luxury housing projects. The zip code and location are key aspects influencing luxury home prices in metro cities like Delhi and Mumbai. Tax planning is also a major aspect that HNWIs, HUFs and individual buyers are taking into account. Second homes are a vital part of the luxury housing segment and demand has soared in locations in Alibaug, Goa, Mussoorie, Dehradun, and Rishikesh. In these instances, people usually desire views of the mountains or sea.
Due diligence is always essential and buyers should carefully check the title of the property. Anand Moorthy also added that there should not be any disputes and the seller or property should not be entangled in legal cases. He also stated that several NPAs or non-performing assets are entering the market and buyers should be careful to examine whether they are being sold any mortgaged unit. Check the prices at which the last transactions took place in the building where the property is situated. This will help you ensure that what you are paying stays in sync with rates in the market. The credentials of the developer should be checked carefully before investing in any luxury property that is under-construction. Consider the maintenance that you will be paying for the luxury property, especially if you are not living there in the long term.
For a detailed report on this read the articles we were featured in:
Business Standard : https://bit.ly/31On8eF
Published Date: Nov 07, 2021
