Branded Homes In India: When Bricks And Mortar Spell 'Arrival'

by Mr. Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India

 

In India, the concept of branded luxury houses is only 2 or 3 years old. Growth of this segment could be pegged at about 5% to 6 % per annum, owing to the fact that it is a very exclusive niche category with a restricted number of buyers. 

The basic premise behind branded residences is that the developers / promoters of such projects tie up with international luxury hospitality or /  lifestyle brands to create unique and highly differentiated offerings.

As in all new business segments, there was no specific pre-existing demand for such houses - the mind-set of the target audience first needs to be primed to create demand, as supply will only follow demand.

This process is happening with a fair degree of success in cities such as Mumbai, Pune & Delhi NCR. 

Branded luxury homes bring various advantages beyond a designer label and location with them. They boast of professionally designed interiors and exteriors, highly evolved, centralized facilities management and various additional features such as concierge services, high-grade electronic surveillance and security and valet parking.

These factors have high appeal value, especially to buyers who have seen such houses abroad & aspire to live at such levels.

Branded luxury homes are targeted at that segment of India’s super-rich that prefer the conveniences and status value of luxury homes designed, marketed and often managed by international hospitality or signature designer brands. Developers of branded luxury homes are generally happy to provide personal customization to their buyers as long as these customizations do not detract from the overall project specifications, aesthetics and integrity.

The overall share of luxury homes in the Indian real estate domain would not exceed 6% to 7 %, depending on how 'luxury' is defined in various markets. In industry terms, we define 'luxury' housing as homes costing Rs.crore 4 to Rs. 5 crore, while homes with ticket-sizes of about Rs. 1 crore to Rs. 1.5 crore fall in the premium or high-end segment.

The branded residences segment is not without challenges. These would include a limited buyer segment, finding the needed land parcels within high-prestige locations, providing the required infrastructure to adequately supplement the overall luxury experience - and, of course, getting the right brands to come on board in the first place.

The latter factor is by no means without challenges, since international designer labels – by their very nature - have very high brand standards which a proposed project must demonstrably be able to live up to. 

The fate of branded residences as a property investment segment still hangs in the balance. From the churn point of view, selling mid-income housing is easier than high-end or luxury homes since a larger base of the population falls in the mid-income category.

The sale velocity is higher and the sales cycle is also shorter, with mid-income housing projects usually being sold with 3 to 4 months of their launch. 

In comparison, high-end apartments and luxury homes often take more than six months to sell. As already mentioned, the bulk of demand for residential properties in India lies in the budget / or mid-income category and comes from buyers who can avail of ready bank funding.

Though buyers of ultra-luxury housing like branded residences are not dependent on such considerations by virtue of their existing networth, it also means that the pace at which the branded luxury housing segment will grow depends on the pace at which India's macro-economic environment is able to produce such individuals.  

About the author.. 

 Mr, Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India

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Arun Chitnis - Head – Corporate Communications & Media Relations

Jones Lang LaSalle India   

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