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- By Suman Tarafdar

Making the Right Investment

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Location, amenities and services should be your reason to invest in real estate, which still provides some of the best returns.

The number of millionaires is growing by leaps and bounds every year. Depending on the source, Indian billionaires number somewhere between 100 and 150 — Forbes has them at 109 for 2019, with a net worth of $405.3 billion. Meanwhile, a Credit Suisse report revealed that the number of dollar millionaires in India was at 3,43,000 in 2018, up from 39,000in the year 2000.

For this fast-growing segment, growing wealth via investments is almost a lifestyle, an asset manager a must-have accessory. A favourite investment, of course, has been real estate, buying which was already an aspiration hardwired into any Indian’s DNA. A rapid rise in the number of high net-worth individuals (HNIs) in conjunction with transforming lifestyles have contributed to the growth of ‘statement houses’.

Beyond a hazy understanding, however, is it possible to define what constitutes luxury real estate?

“Luxury real estate is more a function of location, specifications, project finishes, amenities and services which cater to a specific lifestyle wealth category,” says Rohan Sharma, Research Head, Cushman & Wakefield India. Typically, anything that is The right address is a very vital priced Rs 5 crore and upwards factor while investing in luxury real estate. The Trump Tower at Lodha Park. India’s most expensive market has will constitute true luxury. Mumbai, Location, amenities and services should be your reason to invest in real estate, which still provides some of the best returns. apartments north of Rs 10 crore price tag. According to Knight Frank’s Wealth Report 2019, the ultra-wealthy population (individual’s worth over $30 million) has risen by four per cent between 2017 and 2018 in Asia. Over the next five years, a strong growth of 39 per cent in the ultra-wealthy population is projected for India.

Indian scenario

“With property investment activity having slowed down, luxury real estate was the most impacted,” says Sharma. “People are now buying strategically to take advantage of the sales slowdown and the resultant price decline in the luxury segment.” Over the past year or so, strategic project launches in core luxury markets with developers reworking the product around the ticket size, have seen some momentum in buying/investment activity. “Key players, who are identified with development in the luxury space have ventured into the market again and have seen moderate momentum,” he adds.

So, how do you choose what makes for a good real estate investment?

Location, location, location

For luxury home buyers, the pin code matters the most. “Developers are marketing their projects by highlighting the location along with luxurious amenities,” says Sharma. Branded homes, often co-branded with international luxury players or lifestyle brands, offer a unique lifestyle of global standards with hospitality services from the finest brands. Themed villas — usually with a touch of the exotic, are another emerging trend. Well-heeled buyers often opt for smart homes — ones that create an ‘experience’, which are laden with technology-enabled systems, aimed as much at comfort and entertainment (if moving drapes by remote qualifies), as they are with waste management, energy saving and security facilities.

What should one look for while investing

According to Sharma, no one factor can work by itself. Cities which are economic engines of growth offer a mix of returns, transparency and options by large players. “The areas within the city which are witnessing the growth and have the potential for sustaining it and upcoming corridors become investment magnets. Selection of the development partner and project is critical to ensure money is invested in the right asset.”

Sharma adds that in a market which is not witnessing high levels of price growth, one could look at renting out the apartment if one is not planning to stay in it. “An apartment BetterLife with services can yield better returns if managed by a professional serviced firm, which also ensures a mix of short and long-term stays by professionals.”

As for the top five things to look for while investing in an apartment or any luxury property, Sharma suggests looking out for regulatory approvals, location, developer, amenities and services, and price points.

Good time to invest?

Sharma also points out that the volatility is now largely gone from the real estate market, “though some pain points remain, largely centred around unsold inventory and stuck projects with a slowly improving buyer sentiment”.

Sure, there seems to be a bit of a glut in the supply of luxury homes in comparison to the demand. Surely that’s the time to grab a great deal? Sharma, however, cautions that before investing, it is crucial to ensure that the investor chooses the right mix of the development partner, quality and location to make the most of the luxury real estate investment. “It is critical that the purpose is well- understood and market dynamics have been studied before venturing into investing, and that one is buying into a superior living experience.” Indeed.