Selling luxury homes is a personalised art.
How does one sell a home in the clouds which costs the earth? Certainly not through mass advertisement. Rahul Saraf, whose company is building a Rs 550-crore ultra-luxury residential condominium in Kolkata, knows that what he’s selling is not meant for the masses. So, he’s not wasting his time on advertisement. Instead, the managing director of Forum Group is “hand-selecting potential buyers.”
The select audience, some of whom could finally end up being the residents of Atmosphere, as the project is called, are being shown 3D floor plans of the apartments. There are only 80 such apartments, which are in fact “villas in the sky” — they are part of two residential towers — with large open decks and private lift lobbies. Once sold, each of the 80 apartments will be customised with the help of proprietary software according to the owner’s needs and desires. That, says Saraf, is luxury. The project, designed by Singapore-based architects Khoo Peng Beng and Belinda Huang, will only be ready by July 2014, but Saraf has already clinched several deals — 21 by mid-September, one of them worth Rs 20 crore; at Rs 23,529 per square feet, this is the most expensive real estate transaction in Kolkata.
Though it is one of its kind, Atmosphere is but one of the many luxury projects coming up across the country, the slowdown in the real estate segment notwithstanding. DLF’s King’s Court in Delhi, Unitech’s Golf & Country Club in Noida, M3M’s Polo Suite in Gurgaon, and Lodha Group’s Armani designer flats and villas in Mumbai are other luxury or super-luxury homes that are coming up.
With “exclusivity” and “limited edition” being the catchwords, a peep into high-living is offered strictly “by invitation” with “price on request”. A big-ticket deal also calls for an impressive sales pitch. So, the broker — yes, luxury homes are also sold through brokers — may flaunt his iPad to showcase the features of the house or he may settle for a 3D demonstration of the property in an air-conditioned auditorium. The ‘exclusivity’ can involve a guided tour of the locales around the apartment, including a teeing opportunity at a golf course nearby, followed by a drink at the club. Sometimes a test drive of a luxury car is also thrown in to attract potential buyers.
“We believe in engaging our customers by giving them an experience of our product so that they can appreciate the lifestyle that awaits them,” says a Unitech spokesperson. Besides a tee-off opportunity, the company organises wine and cheese parties for both prospective and existing consumers. Some time back it also organised a summer camp for the customers of its Golf and Country Club in Noida which has 19- to 43-storey residential towers.
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“Luxury is all about exclusivity, so mass calls and messages will only send out a wrong message,” says Sachin Sandhir, managing director, Royal Institute of Chartered Surveyors. Cold calls are avoided due to the assumption that a more personal approach is needed in servicing high networth individuals (HNI), says the spokesperson of Cushman & Wakefield. So, is selling luxury homes different from selling luxury cars? Developers say the marketing is similar. M3M hardselling its polo suites as a lifestyle product is an example. “This project will be developed on the concept of living with the polo sport. We want to create a lifestyle here,” says M3M India President Kunal Banerji.
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Even in the luxury segment, brokers are an essential link between developers and buyers, says Anshuman Magazine, chairman and managing director, CB Richard Ellis (South Asia). All major developers have their close network of brokers “who identify most HNIs through business relations and marketing,” says Magazine. Direct deals between the developer and buyer are rare. “Normally, the developer calls up his bigger brokers for luxury homes. These brokers often underwrite companies/developers and do bulk bookings,” says Sandhir. For instance, out of 1,000 units, the broker could underwrite 600 units and pick them up at a discounted price. For the developer, these 600 units are as good as sold.
The brokers in turn have their investor base who will be contacted for potential deals. Sub-brokers could also be involved. Each developer has around eight to 10 major brokers. “Whenever there’s a likelihood of a high-end project, the regular clientele is sounded off,” says Prakash Vir Arya, director of Delhi-based brokerage firm Prakash Property. Commissions for brokerage work differently in the luxury segment. “While it is around 1 per cent in other real estate deals, in the luxury segment it is much less in percentage terms,” says Anoop Pabby, India head of Brookfield Global Relocation Service. “But the brokerage works out to be a sizeable amount as the total value is high.”
Take, for example, DLF’s homes at Queen’s Court. Each apartment here is priced at Rs 26,000 per sq ft. At King’s Court, the rate is Rs 32,000 per sq ft. Located in a south Delhi colony, the starting price of a single unit is between Rs 18 crore and Rs 20 crore. At the Lodha-Armani project, the price of a basic three-bedroom, 3,000-sq ft apartment in World Crest (Mumbai) is Rs 8.5 crore. But a mansion (duplex with a 360-degree view of the city) could cost as much as Rs 100 crore. There are only 11 such units.
Developers in this segment are not worried about the economic sentiment or rising interest rates on housing loans. Most HNIs, after all, do not take loan to buy property. Recently, when a leading developer sold around 40 super-luxury homes in an upmarket south Delhi locality, all by invitation, only five buyers went for a loan. Then, too, the average loan was just 20 to 30 per cent of the total value of the four-bedroom apartment, the starting price of which was a little less than Rs 20 crore. Estimates suggest that while 30 to 35 per cent of home buyers take loans from a bank or financial institution, in the luxury segment only about 8 to 10 per cent opt for loan.
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So who is buying these luxury apartments or bungalows? A new category is making its presence felt in the rich and famous club. “Around 10 to 15 per cent buyers of luxury homes are CEOs, COOs and CFOs,” says Pabby. The rest are HNIs — businessmen or self-employed. Sandeep Walia, general manager at Ritz-Carlton, Moscow, recently bought a high-end property developed by Unitech in Noida because of its proximity to Delhi, access to facilities like a golf course, club house, tennis courts and a swimming pool. Dubai-based Rajinder Kumar, partner in Orient Financial Brokers SLP, who bought a luxury house in Gurgaon this summer also owns apartments and houses in several other cities of the world. He says that buying property in and around Delhi is a bit confusing because there are about a dozen extras over the quoted base price. “In Dubai you are quoted one price, which is all-inclusive.”
In terms of volume, luxury residential segment accounts for only 6 per cent of the total market, but money wise, it is around 25 per cent of the total — and growing. It’s projected that Delhi and its surrounding areas will have 1,000 new luxury residential units by 2014. Mumbai and Bangalore are expected to add 900 and 5,000 units, respectively.