A Closer Look at Boutique Luxury Homes..!

A Closer Look at Boutique Luxury Homes..!

 by Mr.  Anuj Puri, Chairman - ANAROCK Property Consultants

With the revival in Indian residential real estate well underway, it is pertinent to turn our attention to which formats have been in high demand at every given juncture.

Such awareness is primarily useful from an investor’s point of view, but anyone who tracks Indian real estate out of pure academic interest cannot fail to be interested, either.

The Value Chain

Despite a lot of ambiguity attached to the term, affordable housing rules the roost today. With the Government having a taken a sharp-focus policy approach to boosting this segment and employment market opening up once again, mass-housing makes more sense today than ever before. 

Mid-income housing, which comprises of the 2 BHK ,  3 BHK formats in not-so-remote locations, is also seeing a pick-up in interest from buyers, with ready-to-move options in RERA-compliant projects by reputed developers selling well.

Luxury housing was one of the major losers after the demonetization move and has now taken an extreme back seat. However, there is one niche segment which still holds its own to a great extent.

While most developers of luxury housing were concentrating on generating volumes in the luxury segment, there is a category of builders who are cashing in on this rather specialized niche – the boutique luxury homes category. They are also known as 'limited-edition' residences, and for good reason.

A Unique Business Model

The boutique luxury homes segment is based on a sound business premise, and such homes continue to sell well even as volume luxury properties lag far behind. This is primarily because there is a distinct scarcity quotient attached to them. 

Such properties are constructed with a very limited number of units in extremely high-profile locations and are in consistently high demand among the super-rich. In fact, the demand for such properties has risen visibly over the last couple of years, as land availability in our larger cities’ core areas reduced. 

Many of the builders who create boutique luxury homes are highly specialized and cater only to this particular market segment. 

They find this format a unique business proposition, since it is possible to construct and deliver boutique luxury projects within 6 to 8 months, while volume luxury projects take much longer to complete. 

Other players deploy boutique homes as a lucrative sidelinewhile they continue to focus on high-volume mid-income housing. 

What Constitutes a Boutique Home?

Developers of boutique luxury homes throw in every possible high-end amenity into such properties and even factor in the personal specification requirements of individual buyers wherever possible. 

Unlike volume luxury housing projects, boutique homes are extremely unique residential propositions. Interestingly, unlike in volume luxury projects, marketing of such properties tends to circumvent the larger investor community entirely and focuses on small ‘inner-circle’ investor groups and end-users.

In short, boutique luxury properties are defined by an extreme focus on quality rather than volume. 

Demand for them comes from the HNI segment, and is focused and competitive because of the small number of units involved. Typically, there will be no more than 5-10 units to a project, and each of these units will be fully embellished with ultra-luxurious specifications further customized to the individual buyer’s personal wishes. 

Interiors, furnishings and lifestyle accessories will be uncompromisingly top-of-the-line. Private lifts, in-house Jacuzzis, saunas and swimming pools, sun decks and multi-car parking are the norm. 

Not A Game for Every Builder...!

With the consistently high demand for boutique luxury homes, one could be pardoned for asking why more developers are not concentrating on this segment. 

However, the fact is that while such projects are definitely in high demand among HNIs, they still about a highly-focused and exclusive niche clientele. The margins are high, but the volumes are negligible. 

Also, a developer needs to understand the concept of luxury living at a very intricate level, must be able to source the pertinent raw materials and appliances, have the right kind of architects, contractors and labour at hand, and obviously needs to be highly capitalized. 

Boutique home projects depend on the availability of small land parcels or redevelopment opportunities in high-profile areas. The developer's expenses on each unit are extremely high. 

Anuj Puri, 
Chairman,
 ANAROCK Property Consultants

As such, these projects are not a suitable long-term business model for developers focused on large-scale branding and expansion.

For the majority of players, Indian residential real estate is still very much a game of numbers. The greater business potential lies in larger volumes, where the developer has a better cost arbitrage on the number game in terms of land and construction expenses by virtue of the economies of scale, and also a far larger client base. 

In other words, boutique home projects are best suited for developers who do not address the market as a whole, but rather market micro-segments.

For media contact
Arun Chitnis
Media Relations
ANAROCK Property Consultants Pvt. Ltd.
m: +91 9657129999
e: Arun.Chitnis@anarock.com

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