Investing in luxury housing requires high capital and thus it seems like an unlikely step any real estate enthusiast might take under the current scenario. So, does this mean COVID-19 will have a negative impact on this segment? “No”, says Rakesh Setia, Chief Sales Officer, Rustomjee while talking to Sruthi Kailas of Square Yards on the future of luxury housing and how the company is preparing for a post-COVID era.
Q.Firstly, your take on the future of residential real estate post COVID? What would be the immediate impact and what would be the long-term ones?
A. I think it is too early to comment upon this. I feel it will take anywhere between two-three quarters for the markets to complexly open up again. However, we have already started getting positive news from certain parts of the country, for instance, Bangalore is responding well. So, if the brand and the developer is doing their job, which is to cater to the changing demands of the new normal, the markets will bounce back. Housing will always remain a need, in fact, home ownership has become more important now. The need has just taken a back seat for a while.
Q. How do you see the luxury segment grapple with the impact of COVID?
A. So, for us the premium luxury segment is defined by a ticket size of Rs 5 crore and above, especially in a city like Mumbai. When you look at a segment like that, the sales are not really defined by the market dynamics alone. Almost two thirds of our buyer base in this segment are businessmen or self-employed professionals and one -third are corporate employees. The net-worth of these buyers have not taken a hit. Their businesses have slowed down due to interrupted cash flows. Once that is sorted, we expect demand for luxury segment.
Q. Have you started receiving enquires?
A. Yes, we have received an immense response to our online efforts. Our luxury projects have seen few transactions as well. There is a definite preference for completed projects. So, we are optimistic about the segment. Ready units will continue to see takers.
Q. Who will drive demand in this segment? Do you foresee any new ‘buyer-base’ for this segment post COVID?
A. As mentioned, we expect businessmen and self-employed individuals to drive demand. Apart from them, we also expect doctors, people working in insurance, financial companies or any sector that might actually do well post COVID, to form a buyer base for us. One specific trend has been the increased demand for premium properties from NRIs. We have always had NRI clients, however, the enquiries have gone up post the pandemic. People abroad want a home or a second home in their native cities now more than ever. This will also push sales in the luxury segment.
Q. Any new trends you expect to see in the luxury housing segment?
A. I feel the growing work from home culture is going to have a positive impact on the luxury housing segment. In fact, it will play a role in the way people buy homes in the future. Work From Home Culture has led to a growing need for spacious homes with a private corner for work. With the culture of joint families, space has become all the more important. Moreover, we already see a shift in demand towards gated communities over standalone buildings. These trends combined together are expected to drive demand for luxury projects.
Also, if Work From Home Culture is to become the norm, we might see a gradual decrease in the apprehension towards projects in peripheral locations. Due to lack of large land parcels, most luxury projects are located towards the outskirts of a city. This meant a longer commute towards work locations. This is set to change now. It will no longer be an absolute necessity to be living near your workplace.
Q. Your concluding remarks.
A. To summarise, I would like to say that, developers with an established brand name, proven track record of timely deliveries and showing a willingness to adapt to the changing demands of the sector with respect to safe and hygienic sale processes will survive. Ready luxury properties offering niche amenities will be consumed quickly. We expect to see a growth in demand for larger homes offering all amenities within the project premise.