Luxury homes in India stop selling

Like much of the world, the financial crisis is hitting Indian property markets hard. Particularly high-end homes, with the problem being exacerbated by a very skewed proportion of luxury homes to starter homes. During the boom times, Indian property developers concentrated almost exclusively on building luxury apartments aimed at foreign investors or NRIs (Non Resident Indians.)

Despite offering incentives such as a four-wheel drive vehicles and gold bars as “free gifts,” for buying property, luxury home sales in India have come to a standstill and sales in the overall market are down by more than 50% compared to last year. India’s largest developer, DLF have seen their share value fall 80% this year and have canceled or deferred several large projects. Their share price is continuing to fall, with another 3.81% drop today. DLF’s chairman warned of increasing layoffs and the likelihood of developers closing down completely if the market continues to contract.The company’s owner, Kushal Pal Singh is estimated to have lost around $39 billion. Unitech, India’s second-largest property firm, is also cancelling or delaying new projects as its shares have fallen 90% this year.The Realty Index of the Bombay Stock Exchange has also dropped nearly 90%.

Land prices in many parts of the country have increased by 400% in the last three years making property increasingly unnaffordable. Sachin Sandhir, India head of of the British-based Royal Institution of Chartered Surveyors, said,  “There’s going to be a correction. Properties have to be made more affordable.”

It is estimated that India faces a shortage of 25 million homes currently, so the issue is not one of demand. But it is fair to say most of this demand is in the lower income housing bracket, with the luxury market being heavily over-supplied. Interest rates for home loans are around 12-13%, and many analysts believe this has to come down drastically before the market can begin a recovery.

Back in August, Donald Trump Junior announced a $1 billion hedge fund to invest in Indian real estate, and I suspect he may be biding his time now. At the time, he said, “We feel it is now time to invest in Indian realty projects as the quality has moved up and we see emergence of some high-end developers with a product level that will support our brand.”

“Luxury for All” -  the motto of buyers and the Indian property developers it seems. Everyone wants everything within arms reach today. The spending power of Indian consumers has increased along with the booming IT Sector, real estate and readily available, hassle-free bank loan facilities.

Due to widespread development and increased knowledge of tourism in India, it seems as if luxury properties have emerged from nowhere. Actually, we can’t really say from nowhere. We Indians have been and still are intelligent enough to and educate ourselves wisely in the ways of many other foreign countries. Our youngsters are taking degrees and diplomas from foreign universities and putting their intelligent brains to use in their own country. Thus we have many high-tech strategies for the improving the Indian economy.

Since 1999, India has seen a high growth rate in the IT Industry; the idea of luxury properties, homes and apartments has been brought into focus by the blossoming real estate market. The Indian approach to study, perseverance, enthusiasm and the desire to improve the financial position of every citizen has pushed the Indian economy forwards.

There are a number of  luxury properties which are famous both within the country and overseas. Amongst them are NCPA Towers, Buckley Court and Hiranandani in Powai, Mumbai. The first view of Hiranandani Gardens Township as you get into the wide Jogeshwari-Vikhroli link road pretty much leaves you gasping for air. It’s a wonderful sight.  From nowhere, a skyline suddenly appears with regal arches, royal and palatial domes. They have amenities like Hiranandiani School, a Club house, the famous galleria shopping mall, a beautiful Nirvana park, Hiranandani Hospital, Hakone Entertainment etc..

Unlike the capital, Delhi - Mumbai has two main advantages. First , Mumbai is never in darkness- due to the privatization of power. Second and something that affects the whole community - the water chaos during peak seasons. The smallest luxury can make one feel luxurious if you are satisfied with the basic amenities. So, in Mumbai, one really enjoys luxury, even in a small apartment which is equipped with small luxuries.

Some luxuries remain out of reach, of course. Mukesh Ambani, India’s wealthiest man, is busy creating what will be one of the most expensive private residences in the world. Rumored to be costing in excess of $1 billion, his 27 storey building, “Antilla,” will be complete with private helipad, internal waterfalls and an attempt to recreate the hanging gardens of Babylon.

The outer skin of the building has been designed to have entwined plants running through to the top of the building and will reach a height of 170 meters making it one of the highest buildings in Mumbai. The top four floors will be given over to personal space for the Ambani family, and much of the space on the lower floors to guest residences, parking spaces, and, amongst other luxuries, a movie theater.

Ambani has come in for some considerable criticism over the design of this building, mostly over the fact that it is being touted as an “eco-skyscraper,” and such a gross display of personal wealth in a city that houses one of the largest slums in Asia.