Bottom Line: Despite of slowdown and slow sales in general and luxury housing in particular, most of the analysts in the Mumbai are not ready to subscribe that the Ultra High Net Worth Individuals have lost interest in real estate.
The critics who often question the high ticket size of Mumbai residential property and its inclination for luxury property need to cross check their facts & fundamentals. The latest New World Wealth Report yet again confirms what everyone within the built environment of city real estate has been maintaining for long ‚Äď Mumbai is the home to richest Indians and hence their choice would always be for luxury living.
The report says India‚Äôs financial capital Mumbai is the richest city in the country followed by Delhi and Bengaluru in the second and third place respectively. The city is home to 46,000 millionaires and 28 billionaires with a total wealth of USD 820 billion.
Millionaires or High Net Worth Individuals (HNIs) refer to individuals with net assets of USD 1 million or more. The report also lists some of the affluent suburbs in the country. In Mumbai localities like Bandra, Juhu, Goregaon, Parel, Worli, Palm Beach Road were named as the richest.
Endorsing Mumbai‚Äôs wealth¬†
New World Wealth Report says Mumbai is the richest city in the country followed by Delhi and Bengaluru as second and third place respectively¬†
Mumbai is home to 46,000 millionaires and 28 billionaires with a total wealth of USD 820 billion
Millionaires or High Net Worth Individuals (HNIs) refer to individuals with net assets of USD 1 million or more¬†
Localities like Bandra, Juhu, Goregaon, Parel, Worli, Palm Beach Road were named as the richest¬†
Sales figure of couple of non-listed luxury developers higher than the listed developers that are market leaders by size
Average number of residential properties owned by wealthy Indians is 4, which is higher than the global average of 3.7 and 3.9 in other Asian countries
Housing a magnet?
This obviously raises a fundamental question as to why this wealth is not finding its way into housing market in general and luxury housing in particular. After all, the growth of luxury housing in Mumbai is even slower than the growth of overall housing market of the city.
Ankur Malik, a city-based HNI maintains the perception that Mumbai being the home to richest Indian and yet the housing sales being no indicative of this reality is not true. According to this exporter, the real estate industry in the last few years has been going through recessionary phase and Mumbai has been no exception.
‚ÄúNo other market in any of the Indian cities has as many takers for the luxury housing as Mumbai. MMR has historically been the highest contributor of sales of homes both in the ultra-luxury and luxury categories. Therefore, it may not be correct to say that investment by HNIs in the real estate has gone down. There are certain super luxury projects in BKC and in Worli which have bucked the trend of slowdown in the last two years and the HNIs and super rich have bought in these projects,‚ÄĚ says Malik.¬†
Sanket Rajpurohit, an architect who has worked with some of the luxury projects in the city of Mumbai says residential real estate accounts for a quarter of the average UHNIs investable wealth, while commercial property investments make up 11 per cent. It is also to be noted that the average number of residential properties owned by wealthy Indians is 4, which is higher than the global average of 3.7 and 3.9 in other Asian countries.
‚ÄúThe developers who have redefined the luxury quotient have done extremely well even in the slowdown. As a matter of fact, if you see the sales figure of a couple of non-listed luxury developers in Mumbai you will be surprised how come they have outnumbered even the top players at the national level who have bigger market size and are also listed players,‚ÄĚ says Rajpurohit.¬†
Industry not surprised
The stakeholders of the real estate sector in the city are not surprised either. Rajendra Joshi, CEO of SD corporation is the report that Mumbai is home to richest Indians is only on the expected lines. According to him, the fact that Mumbai is the financial capital of India and contributes largest share of corporate tax is the testimony of this fact. He nevertheless does not find any co-relation between wealth report and the sentiment leading to the revival of Mumbai‚Äôs housing market.
‚ÄúLet us see it from this perspective that despite of its limited land mass Mumbai has the maximum supply of premium and luxury housing. However, I am not sure how far this report will affect the sentiment leading to the change of ground reality in Mumbai‚Äôs housing market. The revival of housing market in the city is a result of many factors contributing together,‚ÄĚ says Joshi.
Most of the analysts at the ground level believe that Mumbai‚Äôs luxury real estate market offers the HNIs and super rich mindboggling options in high-end super luxurious and niche housing market. The sentiments play a major role in the real estate market and reports like this has the potential to reignite a sense of confidence among the ultra HNI homebuyers. This may lead to a significant surge in demand of high-end luxury homes.
The ultra HNIs and super rich are always on the look out for new projects and have astute eagle eye for ultra luxurious lifestyle. Today, Mumbai market is at par with the foreign markets when it comes to the luxury and ultra luxury homes and townships. With the swift and speedy pace of urbanisation there has been a huge change in the lifestyle and disposable income among successful people having high net-worth and riches. Possessing a luxury home with ultra modern facilities is a matter of eminence.
Cost & benefit
Despite of slowdown and slow sales in general and luxury housing in particular, most of the analysts in the Mumbai are not ready to subscribe that the Ultra High Net Worth Individuals have lost interest in real estate. They maintain that it will be incorrect to say that subdued growth in real estate sector in past few years has driven the Richie Rich to explore other avenues to park their money.
A closer look at the investment portfolio of most of the ultra rich also indicates that the expanding interest for properties in India is way ahead to stocks and gold. Moreover, properties have the privilege and benefit over gold of being an asset of significance that rises in utility and value. HNIs being foresighted and wanting to have a distinguished ‚Äėperforming resource‚Äô consider investing in luxury homes as¬†a quintessential opportunity that guarantees status symbol, long term assets appreciation and attractive returns on investments.
Market conditions notwithstanding, it is therefore expected that as the number of UHNI has increased significantly in Mumbai, it will be catalyst to the growth of real estate in general and luxury housing in particular. The indications with slow sales, as of now, might be misleading due to various factors.¬†
By: Ravi Sinha