BENGALURU: A Kolkatabased businessman recently picked up a Rs 10 crore residential unit in the upscale locality of Sadashivanagar after his son got admission in a city college. This is one among numerous sales of luxury apartments, villas, and row-houses happening in the country's third largest property market.
In the four years between 2010 and 2014, Bengaluru has seen a stupendous 531% growth in luxury residential unit launches. International property consultancy firm JLL India reports that in 2010, eight projects comprising of 950 units priced above Rs 3 crore were launched. In 2014, an eyepopping 6,000 luxury units spread over 35 projects entered the property market.
The demand, said Om Ahuja, CEO-residential services, JLL India, is on account of the rise in the number of high net-worth individuals (HNI) in the city, the rapid pace of urbanization, and the influx of global lifestyle trends. "The fast growth of industries such as technology and financial services is propelling many middle-income group individuals into the HNI bracket," said Ahuja.
The inflection point of luxury residences seems to have happened in 2012, when 3,800 units were launched as compared to 1,350 units in the previous year, a 182% growth.
"Today , in Bengaluru, Rs 3 crore is no more considered luxury . Homes starting from above Rs 5 crore is where the luxury market actually begins," said Farook Mahmood, president of the World Council of Brokers (FIABCI) and CMD of Silverline Realty.
Mahmood's office has been closing around two to three luxury home transactions each month and is currently working on closing a Rs 10 crore residential buy for a South East Asian client. Typically , sale closures at the top-end of the property market take 6 months to 8 months per unit.
Compared to that in Mumbai or the National Capital Region, the number of Bengaluru-based HNIs is still small. But there's good demand from buyers outside of the city, including NRIs."Bengaluru is much more affordable than Mumbai and Delhi," said Mahmood.
Developers are increasingly using global property developers and architects to design and develop the projects. Several branded luxury residences, wherein homes are comparable to the best 5-star hotel rooms in the city, are being built.
But some also fear the city is heading into an oversupply of luxury residences. Anshuman Magazine, CMD of property consultancy CBRE South Asia, says the luxury real estate market is interwoven with the state of the economy and to the inherent cyclicality of the housing market.
"The luxury element typically thrives in a feelgood market. We expect the sector to pick up with the economy's revival, which is now likely ," said Magazine.