By Mr. Anuj Puri, Chairman, JLL India
India is reeling under the continued onslaught of inflation, petrol price hikes & generalized insecurity about where the economy is headed. Against all expectations, property prices in our metros have held firm and even show signs of upward movement. While the man on the street continues to wonder when he will be able to buy a modest home of his own, India’s super-rich are raising palatial homes at truly astronomical expense.
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| Mr. Anuj Puri |
Mukesh Ambani - Vijay Mallya..!
Antilia, Mukesh Ambani’s 27-floor fortress at Altamount Road in South Mumbai, is already being talked of as the most expensive house in the world.
Vijay Mallya has levelled his 4.5 acre ancestral house on Vittal Mallya Road in Bangalore to make way for the 82 apartment ‘White House’, in which he will be occupying an a cre-sized ‘palace penthouse’ on the 33 rd & 34 th floors.
On the surface, India’s super rich appear to operate in an entirely separate dimension which has no overlap at all with the ‘real’ world. There is certainly an element of truth in this – wealth tends to beget more wealth, and at some point a perpetual motion machine grinds into motion – a cycle of money generation which vibrates on a rather unique frequency. The question is – does this frequency broadcast an ever-widening social divide? Not quite.
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| Mr. Mukesh Ambani’s 27 floor - Antilia |
There are more elements to these super-houses than meets the eye. The trend of India’s extremely high networth individuals building palatial homes needs to be viewed from various angles. Of course, it is to a great extent a lifestyle statement that broadcasts the fact that the individual and his family have ‘arrived’ & should be numbered among the country’s wealthiest and most influential people. This statement alone brings inalienable social benefits with it.
Fundamentally, these palaces serve the same purpose that the houses of other affluent people do. At the same time, they also encompass a number of practical functions – they serve not only as residences but also as business centres and entertainment complexes.
In other words, these residences have strategic importance to their owners and are not mere indulgences.
Generate Employment..!
They also generate considerable employment and commerce in and around the localities they occupy. For instance, Ambani’s Antilia will provide jobs to no less than 600 people from all levels of the services industry. Many of the supplies that go into building such houses and keeping them operational must necessarily come from the local markets. Coupled with the employment-generation factor, they should be seen as economic dynamos in their own right.
Beyond doubt, the houses of the super-rich create a certain upward pressure on the price tags of luxury and premium homes in the immediate vicinity. However, it is also true that the real estate market in general is not affected, as these luxury developments represent a minuscule segment of the wider fabric.
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| Vijay Mallya's 82 apartment ‘White House |
Affordable housing - Middle income housing - Super-luxury housing..!
It must be remembered that the Indian residential property sector operates on 3 distinct levels.
1. The first is affordable or budget housing, for which the demand is constant and highest. Such housing does not occur anywhere near the prime areas where HNIs tend to build their homes, and remains entirely unaffected by these developments.
2. The next is mid-income housing, which is most sensitive to price movements. Though certain mid-income housing projects do happen near the prime areas of our cities, buyers in this segment have very little tolerance for unnatural spiking of property prices. Builders of such projects have to keep the larger market in mind and can ill afford to price themselves out of the market. This segment is therefore also not significantly affected, either.
3. This leaves premium and luxury housing, which does happen in the neighbourhoods in which India’s mega-rich build their houses. This rarefied segment caters to a class of buyers that tends to be, at least to a large extent, insulated from the usual financial concerns of housing loan interest rates and percentile in creases in property rates.
In the super-luxury housing segment, home buying is also a lifestyle-related undertaking. In creased property rates can and are often borne as long as there is a commensurate in crease in the capital value and aspirational quotient of the property. Ironically, for this segment, a higher ticket size is sometimes valued more as it attaches an esteem value to the property & limits its accessibility to the masses.
Many tend to look at these super-luxury residential properties as irrational extravagances. However, the ground reality is that the homes of India’s super-rich play their own role in boosting commerce, even as the larger industry remains demo cratized and oriented to the needs of the masses.
About the author..!
Mr. Anuj Puri is Chairman and Country Head in Jones Lang LaSalle India
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