By Accommodation Times Bureau
By Vaibhavi Vasant
Prices of luxury apartments in cities such as Delhi, Mumbai and Bengaluru are not rising
as fast as it used to two years back. It forces the wealthy investors to retreat turning into a
buyer’s market for the first time in two years.
Slowdown has been seen since the beginning of 2012. Two years back, it was thought
that the properties were over priced. Such a slowdown is the outcome of the trouble in
the global market including the US and Europe. The investors are now waiting for a price
correction to re-enter the market. The market had began recovering post the Lehmann
crisis in 2008 wherein the developers hoped for better opportunities in launching high-
end projects. The definition of luxury homes varies from city to city. In Gurgaon for
instance, luxury homes would cost above Rs. 2 crore, but in Mumbai, it would be
apartments costing Rs. 4-5 crore and beyond.
Two years ago, 20 out of every 100 apartments sold in the country were in luxury
category. Today that number has fallen to 9 out of 100 said Samarjit Singh, managing
director of property broking firm IndiaHomes. He also added that the yearly appreciation
in the high-end segment has come down by 35-50% since 2008-09 when investors
booked returns of 15-20% on an average. In the past two years, price appreciation in this
segment had risen with yearly returns of only 6-7% across the country.
Of a total of 63,662 high-end apartments that are under construction today in NCR,
Mumbai and Bengaluru, about 19,332 are currently unsold, says data provided by the
property research and analytics firm PropEquity. The sales of properties priced above Rs.
2 crore in NCR is down by 25% in the last one year, while in Mumbai for property priced
above Rs. 3 crore, sales are down 60%.
Developers are also concerned about the deadlines to finish the projects. So much
money has been already invested and somehow the returns on the same do not look very
attractive at this juncture. The developers are in a state of dilemma how they should deal
in the time of slowdown.