The Premium for Experience Grows in Real Estate Projects
When Birla Estates, part of Aditya Birla Real Estate, sold a 2,434 square feet apartment in the luxury project Birla Niyaara in Worli early this year, the selling price was Rs 85,090 a sq ft. The property got registered in March this year. Next month, another property by a local developer got registered at Rs 42,007 a sq ft, according to data provided by Zapkey, a real estate data analytics firm.
The difference between the Birla property and that of the local developer’s was 103%. This is just one example of the widening price difference between residential properties of top and local brands. When an apartment in Oberoi Sky City in Borivali East in Mumbai was sold and registered this month, the selling price was Rs 51,712 a sq ft. As per registration data, a local developer in the same locality sold an apartment for Rs 26,463 a sq ft, which was lower by 95%. Though the branded properties are feature-heavy and come with the promise of quality construction as compared to those of the local players, it gives an idea of the extent of premiumisation of the property market in India.
Consider this: the difference was 20-30% a couple of years ago. It has now on average reached a minimum of 50-60%. And the trend is not restricted to Mumbai alone. In Pune, Panchshil Realty sold an apartment in the Kharadi locality in June for Rs 25,907 a sq ft. In the same area, a local developer sold apartments at almost half the price — Rs 13,979 a sq ft. A consultant, who did not want to be quoted, said while DLF’s ultra luxury property The Camellias in Sector 42, Gurugram sells between Rs 80,000 to Rs 100,000 a sq ft, its other projects — The Aralias and The Magnolias — in the same locality sell at Rs 60,000 a sq ft.
Prices vary vastly in a single location nowadays. Brands are getting priced; not the location, said Anuranjan Mohnot, co-founder & managing director, Lumos Alternate Investment Advisors. Like watches, real estate brands and addresses are now commanding higher prices and getting them from buyers, Mohnot added.
When Leena Gandhi Tewari, chairperson of pharmaceutical giant USV bought two luxury duplex flats in Naman Xana in Mumbai’s posh Worli area for Rs 639 crore or at Rs 2.83 lakh per sq ft, it made headlines immediately as one of the country’s most expensive residential property deals. Interestingly, apartments sell between Rs 70,000 to Rs 100,000 a sq ft in the locality. The Naman Xana property has just 22 exclusive residences of 6,500 sq ft each and boasts of column-free layout.
Sandeep Reddy, co-founder, Zapkey elaborates further. He said that smaller developers can’t match the amenities offered by big brands. Buyers are effectively front-loading the cost of a better post-possession experience, he said, adding the products of top brands offer super liquidity too. The entry price is higher, but the exit is smoother, and that liquidity premium is what drives the price divergence we see in the registration data today, he added.
Top property developers agree. Irfan Razack, chairman and managing director at Prestige Estates said their projects are valued by the target clientele as premium offerings backed by a strong track record of better quality, planning, and choice of locations. This, along with timely delivery, transparency, and customer-centric approach has enabled us to achieve this, Razack said. He said it is pertinent to remember that they use best-in-class architects, designers, consultants, and contractors with a full commitment to adhere to the quality standards set by the company.
Though Razack did not speak on the price difference with local bands in their projects on the outskirts of Mumbai and Gaziabad in NCR, a consultant said the projects command a premium of 30-40% to local developers. A spokesperson at The House of Abhinandan Lodha (HoABL) said amenities and scale make all the difference. He said they reserve about 45% of the land in any project for amenities and open spaces which other developers may not provide.
For example, their project The Sarayu in Ayodhya spans across 75 acres, the next closest development is just about 5 acres, he said. Similarly, our project in Bicholim Goa which is over 130 acres, is the single largest project by any developer in Goa. One can therefore easily imagine the scale and quality of the facilities as well as the project itself, he added. In short, premium is paid for the experience.
All our projects were delivered ahead of their committed timelines. Our platform is fully tech-enabled, which means complete transparency and convenience throughout a customer’s ownership journey, he said. Anuj Puri, chairman at Anarock Property Consultants, said improvements in micro-location precision, such as better infrastructure like metro systems and IT parks, can lead to price increases of 30-80% in specific locations. This effect is often stronger than the impact of brand recognition, he concluded.
