An Unpleasant ‘Realty' Check

Industry experts analyse the 12 per cent dip in the sale of ultra-luxury residences, across India, and suggest measures to reverse the downturn.

- Rajiv Dogra

While the definition of ultra-luxury housing may vary from city to city, the common denominators are an upmarket location, large unit size and high-end amenities. Over the years, the demand for premium properties, in India, has been buoyant on the back of High Net worth Individuals (HNIs) and Non-Resident Indians (NRIs). However, the sales graph has descended over the past six months. The Liases Foras Ratings & Research report titled Residential Real Estate Market Q1 2018-19 says that sales in the ultraluxury segment (above 2 crore) has decreased by 12 per cent on a quarter-on-quarter basis and by 7 per cent on a year-on year basis.

BlackBook spoke to leading players in the luxury real estate sector across Indian cities to analyse the slump. Experts point to a slew of recent developments, including a slow economy, Goods and Services Tax (GST) and a significant reduction on the returns from the luxury asset class.

Slow economy

According to Vineet Nanda, President, Sales, Marketing and Customer Experience, of Gurugram-based Central Park that has three premium projects, in the price range of 3 crore to 15 crore, the real estate sector is the most impacted by slow economic growth. Essentially, the business class makes for most buyers interested in the ultra-luxury housing units, but the declining value of the rupee and a sluggish economy has tightened the cash liquidity for many business people. “It prevents them from investing their surplus funds in the realty market,” says Nanda. Anticipating tough times ahead, the HNIs are cautious and prefer holding on to their funds rather than investing in an uncertain property market.

“Businessmen and high-income earning professionals are usually not affected by the economic slowdown, but this time, they too have been impacted. This led to the slump in the sales in recent times,” adds Nanda.