Villas are a unique product because unlike in apartments, the buyer gets to own the piece land on which the villa is built. Pricing of villas would vary with the size of the plot on which they are built, their built-up areas, the amenities offered, whether or not they are gated, the location of the project, its accessibility, value-adds such as sea view and so on.
Top management officials of the major office occupiers in each of the respective cities along with NRIs and HNIs are the typical target audience in the villa segment. Typical second home buyers looking at villas as holiday homes are also a potential target for this segment.
The villa business is indubitably a high-margin game. Developers can focus on this segment to ensure product differentiation in their offerings in a particular city. By doing so, they get to tap a demand stream that is uniquely different from that for apartments and high rises. Developers can also strategize their villa venture as a ‘hedge’ against their other real estate businesses (typically offices/high rises) by proactively acquiring land in the farther suburbs and marketing villa projects to ensure sustained cash flows.
Mumbai city, which is primarily known for its tall vertical real estate developments, also has a sizeable market for villa developments. However, these developments are located predominantly on the outskirts of the Island city. While there are few noteworthy villa developments in Greater Mumbai (which includes locations such as Borivali, Goregaon, Dombivali, and Thane among others), most of the ongoing as well as new villa projects are located in the farther suburbs of Karjat, Khopoli, Shahapur, Murbad, and Badlapur (among others) and in Navi Mumbai, which includes areas such as Alibaug, Kharghar, Panvel and so on.
While the buyers of villa projects in Mumbai are primarily second home buyers, those in cities like Delhi NCR and Bangalore buy them for their own use as primary homes. However, apart from this difference in consumption of villa projects among the three cities, buying a villa is perceived as a lifestyle purchase as compared to buying an apartment. Traditionally, the perceptions of owning a home among buyers in these three cities vary significantly. Mumbai city imbibed the apartment and integrated township models much earlier than the other two cities, largely because of its linear expansion, which contrasts visibly with the rounded expansion of Delhi NCR and Bangalore.
With their own target audience, villa developments have always been perceived a niche product among the residential market offerings in the metros. The supply is in tandem with the demand, provided it is suitably priced for the amenities that the projects offer. However, a sustained price rise in the past few quarters (post recovery) among the tier I cities, along with the hardening of interest rates, has led to a short-term stability in the demand for housing in the major cities of India. The key to future success in the residential sector – including in villas – lies in product differentiation, which can be achieved by offering variegated configurations and ticket sizes of units.
