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HNIs bargain in Indian luxury residential market

Best deals in stagnant price market


Best deals in stagnant price market




High net-worth individuals (HNI) are now using the tail end of the slowdown in India’s luxury residential market to their advantage, according to ANAROCK Property Consultants’ latest study.

The Indian residential real estate had slowed down over the last few years as HNIs had shun luxury housing and looked at other investments within or outside real estate, noted the report.

Stagnant prices and best-buy deals have brought back some of the demand luxury homes, leading to a decline of 12% in this segment’s overall unsold stock in one year, observed Anuj Puri, Chairman of the ANAROCK Property Consultants.

“To put it in numbers, the current unsold stock of luxury homes (priced between Rs1.5 crore to Rs.2.5 crore) has reduced to approx. 42,650 units against approx. 48,300 units as on Q1 2018.

Typically, the investment portfolios of HNIs and Ultra-HNIs have about 30-35% of the total investments in real estate. That said, the majority of HNIs and UHNIs who have triggered this reduction trend are end-users who perceive that luxury housing prices have bottomed out.

Developers are also offering attractive deals and further discounts to clear their unsold luxury stock, according to Puri.

Among the top 7 cities, MMR predictably accounted for the maximum share of unsold luxury housing stock at about 23,930 units in Q1 2019, while Kolkata had the least stock with around 770 units.

Bangalore led from the front, recording a whopping 49% decline in unsold luxury stock within a year – from 6,370 units in Q1 2018 to 3,260 units in Q1 2019 (ANAROCK’s recent Consumer Sentiment Survey confirms that nearly 31% NRIs currently prefer to invest in Bangalore).

Bangalore’s notable luxury inventory-shedding performance was followed by Kolkata, which offloaded 37% of unsold luxury homes in the same period. On the other hand, Chennai and Hyderabad saw unsold luxury homes pile up further by 50% and 10% respectively.

The two most expensive markets of NCR and MMR each saw a 7% yearly decline, with NCR currently holding ‘just’ 9,590 unsold luxury units as on Q1 2019 and MMR still saddled with 23,930 unsold luxury units.

NCR saw its maximum housing sales in the mid-segment category, with overall unsold stock in this category reducing by 20%. This, in fact, is becoming a nation-wide trend.

Overall, unsold stock of mid-segment housing (priced between Rs.40 lakh and Rs.80 lakh) saw the maximum decline of 14% during this one-year period. As it stands now, unsold stock in this segment across the top 7 cities is nearly 2.25 lakh units, second only to the affordable segment which accounts for 2.42 lakh unsold units.

Contrary to previous trends, the overall unsold stock in the affordable housing category (priced <Rs.40 lakhs) saw a 3% increase since Q1 2018.

This jump in unsold stock is primarily because this segment saw the maximum new launches in 2018. It accounted for a 40% share of the total of 195,300 units launched in the year.

That said, with more and more buyers looking to buy affordable properties on account of several incentives such as lower GST rates, this unsold affordable stock is likely to reduce going forward, Puri said.

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