Lack of Buyers puts Pressure on Luxury Home Prices in Metros

April 3, 2008	(Be the first to rate this story!)  Loading ...
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Caught unawares by a falling stock market, inflation, and high interest rates that show no signs of giving way, the demand for luxury homes is slackening.

In part, it’s led by unreasonably high property prices and the exit of investors from the market, who are cashing out ahead of a possible softening. If the slowdown continues, there could be a price correction of up to 20% in the luxury market segment, say developers and analysts.

While most developers still say that business has not suffered, some like Omaxe agree that the demand for luxury homes has turned sluggish.

Omaxe is developing luxury homes in Noida and Faridabad near New Delhi. There has been a softening of demand in the past six-eight months, the company says.

As India’s economy has grown, the wealthy have become wealthier and their lifestyles have become more lavish. They have been dipping into their kitty to buy everything from luxury cars to the odd yatch to swanky homes, which mimic the concept of luxury that was once confined to glossy brochures.

Luxury homes now come as apartments or villas with golf courses, swimming pools, Jacuzzis, terrace gardens and personal plunge pools. The apartments are priced at a minimum of Rs2-3 crore, and the price can go up to as much as Rs10-15 crore, depending on the location.

Bouyed by enough takers, developers have been putting in their money in developing luxury homes as these yield higher margins than middle-income homes. But now, the mood is turning mellow. Real estate agents marketing luxury homes say bookings have slowed down considerably.

“The demand for luxury homes has come down 10% in the last 3 months and this is going to fall 10% more,” says Pramod Kumar Jain, a partner of Piyush Jain and Co., a property broker that has sold properties of developers such as DLF Ltd, Unitech Ltd and Suncity Projects Ltd.

There are no buyers in the real estate market; says Deepak Kohli, director of real estate agency Deep Realtors Pvt. Ltd. “People who invested in the stock market have lost money. There is not enough money to invest in the stock market, gold or real estate. The liquidity is just not there.”

News Published Under:   Real Estate India |

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