Trends for 2019: Affordable Luxury Housing in India
Authored by Farshid Cooper, MD, Spenta Corporation
The full effect of RERA and GST were felt by the real estate sector in 2018, making it one of the most transformational years for industry in recent history. Higher transactional costs for consumers have forced a change in tastes and preferences. Consumers are forced to make compromises by choosing to purchase smaller homes to suit their pockets. The latter part of the year also brought with it uncertainties around liquidity of the Non-Banking Financial Companies (NBFC’s), a significant cog in the real estate funding wheel. Over the past decade, NBFC’s have been crucial to the growth of real estate sector and capital provided by them has been instrumental in bridging cash flow gaps for developers across the country. The government’s focus on affordable housing has been extremely well received and has reaped rich dividends in a very short time. The policies implemented in general target first time homebuyers and not ones looking to upgrade to bigger and better homes. Therefore, 2018 will have seen several first time homebuyers in the affordable housing segment enter the market, but many more homebuyers from the affordable luxury segment have chosen to opt for the wait and watch approach.
The affordable luxury housing sector merges modern expectations with a budget to deliver aspirational comfort that rivals international standards. As a result, the sector has considerable potential for growth in 2019 as India continues to have a population that aspires to improve its standard of living. With the right intervention from the government, 2019 could prove to be an important year for the affordable luxury housing sector in India. The following are some of the trends we see emerging in 2019 from this sector.
With Indian customer’s rapidly growing familiar with international standards of living, the idea of affordable luxury housing has also evolved significantly. Not only is luxury housing no longer defined by only the size and location of the property, customers are today much better informed about the prevalent offerings in the market. As a result, customers will be increasingly looking for luxury homes at affordable prices in popular suburbs equipped with adequate social infrastructure, along with a range of pioneering amenities designed specifically for ease and convenience. Driven by practicality as much as a taste for the extravagant, this trend is aggressively shaking up the entire segment and will force developers to revamp and revaluate their offerings. This in turn will allow people belonging to middle income groups to fulfil their aspirations for affordable premium houses within their budget, which are also equipped with a range of luxury offerings. In fact, this segment is becoming a popular choice for newlyweds and young families, who are looking for vastness of space, along with recreational facilities for children, and locally situated schools, hospitals, and more.
The need for innovation in the domain has had an equally stimulating effect on it, with the need for space management and architectural design to be re-explored to offer more value for money. No longer are customers satisfied by traditional design and offerings, blindly following the prevalent trends and norms. Experimentation driven innovation, will therefore, lead to newer methods of construction, along with architectural design that makes the maximum possible use of space, keeping in mind sunlight, rainwater, wind direction, distance from the highways and major traffic hubs, and safety and security, among others. Several aspects of western architectural influence have already seeped into the domain, creating a confluence of practicality, aesthetics, and high functionality, in an elegant and extravagant package. As a result, the competition driven market will see many developers diversify their constructional contracts, making use of designers who think outside-the-box, and can deliver on the transient demands of their customers.
Technology driven urbanisation and innovation is on a steep rising curve already, assisted by the Government’s push for growth and development in the segment. AI and robotics have already made major strides in the real estate sector, and this will lead to a massive increase in the popularity of smart homes. While the increase in precision-based security and safety will be a major point of impact in the coming year, convenience is still going to be the major driver of the market. Facilities like voice activated locks, climate and temperature control, smart air-purification systems, IoT devices, and more, will grow in popularity, on the back of the rising affordability of technology. As a reciprocal effect of the same, green homes and green technology will also become a popular choice for Indian customers, leading to improved conservation of resources, and a significant reduction in the carbon footprint of every household.
Today, the effects of the unprecedented growth of India’s affordable housing sector are felt not only in the country, but abroad as well, encouraging extensive investment from NRIs and foreign investors alike. Possessing a substantially large spending power, several non-residential Indians have been expressing interest in making investments in properties in the country. The luxurious offerings, complemented by technological advancements, and an affordable budget, makes it an extremely opportune moment for the same, because of which, a number of major foreign players will be looking to leverage the opportunity. This is further catapulted by the favourable laws and policies framed by the Indian Government, which encourages higher FDIs to flow into the sector as well. While domestic developers and brands will continue to dominate the majority of the market share, this will create a healthy competition between the two, leading to increased innovation and advancement in housing technology, as well as the offerings available.
As a result of the aforementioned factors, 2019 is expected to see significant growth and development in the affordable luxury segment, which will continue to experience a massive transformational shift. However, it must not be forgotten that the sector is still at an extremely nascent stage, and its emergence as a standalone segment within the sector and in the collective consciousness of the buyers, will be a process that is certain, but gradual.