This is a big question in every
property investor's mind - do you stand to profit more from luxury properties
or budget homes? Generally, lower-end real estate needs lower capital, which
makes it especially appealing to small-time investors. Luxurious real estate,
however, is an asset class reserved for people with a lot of capital to spend
on a prime residential property.
So, what are budget properties?
Budget housing primarily targets
the middle and lower-middle income bracket of buyers. This would include
regular starter homes in emerging or non-prime areas. Such homes are cheaper
and not top of the line, but they are adequate to meet the requirements of the
mid and lower income groups. In other words, investors with smaller budgets can
invest in such properties - though even the more well- heeled property
investors in India often investing in bulk in budget housing projects to
capitalize on the high-demand middle and lower middle-class marketplace.
Now that we've defined budget
housing in a nutshell, what is high-end real estate and how does it compare as
an investment with budget housing?
What is luxury property?
Luxury housing caters to the
wealthy who have a predilection for first-class amenities and facilities, which
they are not averse to paying a premium for. Basically, such properties must be
exclusive, desirable and unique in many ways. Premium central location used to
be a primary factor while selecting a luxury property - but with the new trend
of extremely prime and ultra-modern projects coming up even in newer areas,
this is no longer strictly true.
What exactly does exclusivity
mean? After all, by virtue of every home having only a single owner, can it not
be argued that all homes are technically 'exclusive'? Not really. As far as
high-end real estate is concerned, exclusivity means closeness to other
high-end residences, and suitable access to a variety of tasteful conveniences
like five-star hotels, shopping malls, sports complexes, and parks.
In areas like Pune's PCMC where
planned urbanization has preserved a lot of the available green cover, natural
beauty is also an essential determinant in defining exclusiveness. While some
buyers may favor mountainside views, others are more into countryside or
lakeside and park views. In recent years, integrated luxury townships have been
offering such features - and a lot more.
Generally, well-to-do luxury home
buyers want the same things that all buyers for lower-end properties do, just
on a considerably bigger scale. While budget home buyers are satisfied with
rudimentary security, regular maintenance of the project and basic fixtures and
fittings, luxury homeowners expect advanced facilities and project management
that provide a seamlessly comfortable, convenient and visually enriching
experience. They also expect round-the-clock electronic and human surveillance
of the premises, smart security and convenience features in the properties, and
top-grade international branded fittings.
Obviously, luxury properties cost
a lot more than budget homes. The question is, do luxury properties make more
sense investment-wise than budget homes? There are various schools of thought
on this, with a lot of emphasis being laid on the fact that the highest demand
in India is for budget housing.
However, market readings also
indicate that the number of wealthy home buyers in India is on the rise - and
these buyers all seek top-class, refined housing with all the latest amenities
and facilities.
Moreover, they are invariably not dependent on home loans and
have enough wealth to make outright purchases. Simultaneously, a huge
complement of India's highly cost-sensitive budget housing segment of buyers is
sitting on the fence, waiting for declining home loan interest rates and a
correction in property prices.
Also, over the last couple of
years, a volatile economy has significantly impacted pricing of luxury homes,
making them more affordable.
Closing Verdict
It is fairly safe to say that
both budget housing and luxury properties are finding buyers in India. It is
certainly advisable to run an all-inclusive market analysis locally before
embarking on a real estate investment, since the exact dynamics driving ROI on
different property typologies differ on a market to market basis.
For instance, investment in a
luxury integrated township in the Pimpri- Chinchwad Municipal Corporation make
a lot more sense that investment in a small budget housing project, because
luxury townships offer residents neighbours of comparable status and purchasing
power, highly adequate facilities such as green open spaces, in-project schools
and shopping malls and superlative project maintenance and smart home features
at a unit level.
By Anil Pharande,
Chairman -
Pharande Spaces
