Track2Realty Exclusive: Is there any co-relation between luxury properties, High Net Worth Individuals (HNIs) and Akshay Tirtiya? Prime facie, it may seem to be very innocuous question but for those who are tracking the property market of Mumbai find not only a co-relation among the three, but also find the three working in tandem can ignite the property market as well.
Luxury properties and HNIs have a symbiotic relationship, along with another key demand driver Non Resident Indians (NRIs). However, an outside view on the property market in the city in general, and luxury property in particular, may not co-relate the fact that this set of buyers is equally driven by the festive spirit. And hence, it is anticipated that after a brief lull, Akshay Tirtiya will re-ignite the luxury segment of housing in Mumbai.
Luxury property that did well in the Mumbai market even at the worst economic cycle when other segment of real estate was witness to a standstill has been going slow in the last few months. Reasons are many: from macro-economic outlook to the effects of political uncertainty and the wait & watch approach of its key demand drivers in NRIs and HNIs.
Analysts in the Mumbai property market who are tracking the ground level activity report that luxury properties were the only segment with healthy transactions at a time when even the affordable housing was stagnant. Also, the fact that the recession proof buyers in luxury projects were least affected by the fundamentals of economic up and down makes this segment of housing a very interesting case study.
Akshay Tirtiya is the time when the movement in this segment is expected to re-start. Of course, the high net worth individuals and the NRIs have slowed down on the luxury properties of Mumbai in recent months, but analysts maintain that on this Akshay Tirtiya the Mumbai market will be back to what it is known for—defy the fundamentals of property market trends with movement in luxury properties.
Many believe already the enquiry level and the movement of price point in key locations on the eve of Akshay Tirtiya is indicative of a turnaround. These enquiries also suggest that the wait and watch approach of buyers in this upper end of property market is over.
Facts speak for themselves. Even though South Mumbai stands as the costliest part of the city in terms of real estate pricing, there has been price a decent appreciation in the last few months. This phenomenon applies equally to all categories of housing in this area, but the appreciation is especially noticeable in luxury homes. Since the upcoming demand in the segment has been anticipated, hence the appreciation.
Of course, the fact that South Mumbai has limited land parcels left within the prime locations has resulted in the direct implications on the cost of land acquisition. This, of course, has a chain effect on the pricing of the apartments across the segment. But then, this could not have been possible without a substantial surge in demand as well.
For example, if we take Worli as a case study to understand the demand of high end properties in this part of the world, then what has been noticed is that Worli has seen an increase in demand by investors, especially the BFSI (Banking, Financial Services & Insurance) segment who are looking for prestigious places to set up a desirable habitat here. These sectors understand its close proximity to the Central Business Districts (CBDs) and easy connectivity to the Secondary Business Districts (SBDs) due to the Bandra Worli Sea Link.
Worli has been dotted with several premium residential properties which range in excess of Rs 1, 00,000 sq feet, even in the present sluggish scenario. In order to leverage its prime setting, luxury residential projects are at a price band of Rs 35,000-45,000 per sq feet.
Hiral Sheth, Director, Marketing with Sheth Creators maintains that the trend of property demand going up and along with it price appreciation is more with the properties that are supreme luxury projects linked with connectivity, ultra modern spaces, state of art architecture and landscaping. The buyers today do not hesitate to pay an amount that spells luxury.
“Keeping in mind the buyer perspective, the developers in this segment believe in enticing their end users purely on the basis of their projects and customised value added services,” says Sheth.
Similarly, the investment of NRIs that was put on hold for quite some time after the rupee stabilised a bit against the dollar and the expat Indians were also concerned with the political uncertainty prior to the general elections, is expected to get back to the Mumbai property market. Reasons of this optimism with NRI investment in luxury projects are emotional drive towards Akshay Tirtiya to settling political scenario and chances of economy going up hereafter. Many of these expat Indians are Marathis and Gujaratis who have a deep emotional connection with the festival of Akshay Tirtiya.
Dhruv Jaywant, CMO, Ahuja Constructions agrees that the festive time brings in the positive sentiments. Even the NRI demand for properties during this time is quite high. The real estate sector definitely witnesses an increase in the number of buyers closing the deal.
“The past sales record of the property market have spotted adequate rise in the number of home aspirers finalising deal on their dream projects. Buyers wait for a favourable period for booking and their demand is centric to value for money. If the project is valuable and has amenities, investors are definitely willing to pay more,” says Jaywant.
Akshay Tirtiya is considered to be an auspicious occasion for creation of wealth and good fortune. People across Maharashtra and expat communities wait for this day to buy their property as they consider it as a good omen. Often associated with positive sentiment this occasion more often than not motivates fence-sitting buyers to take the plunge where they would have otherwise hesitated to make the investment. This year, it seems, luxury residential market will make the best of the festive spirit of Akshay Tirtiya.
