Complexities and charm: What it takes to sell legacy properties in India

Navigating regulatory hurdles and historic preservation add layers to high-end real estate deals

In February, a sprawling bungalow in Lutyens’ Delhi came up for sale. It made news since properties in this highly coveted area of India’s capital do not often come on the block, and when they do, it takes time to find a buyer for them. Exclusive as it is, this property on Firozeshah Road is no different in this respect.

Over a month since Sotheby’s International Realty India put this bungalow of seven bedrooms, seven-plus-one bathrooms, a swimming pool and all on sale, the property remains “available” for discerning buyers. This is not unusual. Legacy properties that cost the sky and the moon are not sold in a hurry. There are various reasons for that.

To begin with, high-profile realtors such as Sotheby’s and Christie’s do their due diligence before even agreeing to deal in such properties. And once they take them on, the sale process too goes through several layers.

“When potential sellers come to us to list such properties, we independently verify if all the information provided by them, such as titles, is in place,” says Himmat Singh, managing partner, Christie’s International Real Estate. “We do not deal in a property if there are problems with the title.”

Brokerage firm Sothbey’s also says that uniting all property heirs and title holders for a sale demands professional skills, and meticulous due diligence for organising documents and establishing a clear title chain.

Then begins the search for the right kind of buyer. “We specifically reach out to those who are fit to buy properties of this nature,” Singh says.

Additionally, news about such properties reaches potential buyers via word of mouth, “be it from people in their circle who are interested in real estate, or via advisors,” he adds. The firm often connects with buyers through word-of-mouth referrals. The nature of these transactions is discreet, with both parties preferring low-key dealings, Christie’s notes.

Sotheby’s also emphasises the discreet nature of marketing and selling legacy properties, targeting a select group of buyers for confidentiality. This approach demands strategic marketing to attract interest while maintaining exclusivity. 

“Sellers aim to maintain confidentiality throughout the process, restricting it to a select group of home buyers,” says Amit Goyal, managing director, India Sotheby's International Realty. “Moreover, since these properties often command values in the multi-crore range, with many exceeding Rs 100 crore, only a select few can afford them.” 

The brokerage primarily caters to ultra high net worth individuals (UHNIs) and high net worth individuals (HNIs) and family offices. “In many cases, if the property is appealing, it is swiftly acquired,” Goyal says. “In recent years, we have witnessed increased sales to professionals such as top lawyers, doctors, etc.”

The brokerage firm engages existing clients through diverse channels such as mailers, messages, word of mouth, and its website. Advertisements in national newspapers are also employed for broader outreach. “This entails leveraging our existing networks of clients, and deploying tailored messaging along with photos and videos that highlight the unique features and allure of the properties,” Goyal says.

The coveted clientele for luxury properties, especially in the Lutyens Bungalow Zone, includes industrialists, entrepreneurs, celebrities, professionals, and other affluent individuals.

Building blocks

There are, however, complexities involved.

In Lutyens’ Delhi as also in South Delhi, the presence of numerous ancient monuments and sites adds both allure and challenge to the properties. 

“These historic sites are subject to protected limits under the Archaeological Survey of India,” Goyal says. “The National Monument Authority oversees any construction, renovation, or repair work within a certain circumference of these protected limits. This regulatory oversight significantly influences both the transfer and pricing of properties in these areas.”

The demand for such properties fluctuates based on factors like location, architectural style, and upkeep. 

Legacy properties may be subject to additional regulations or restrictions, real estate consultancy JLL highlights. Sellers may need to navigate zoning laws, preservation ordinances, and other regulatory requirements, which can complicate the selling process, it says.

Legacy properties, especially those with a history spanning a century or more, can often come with a range of complexities related to their lineage, ownership history, undivided status, documentation issues regarding deeds, etc, JLL adds.

In Lutyens’ Delhi, properties are predominantly owned by families for generations, often with multiple heirs. 

Sothbey’s says the primary challenge with these properties lies in reaching family settlements or agreements among the heirs for selling them. 

“Obtaining a no-objection certificate and transferring rights can be challenging, compounded by cases where clear property titles are absent, further complicating property transfers,” Goyal of Sotheby’s says. 

“Due to the substantial property values in this area, buyers tend to steer clear of properties with issues or inadequate documentation,” he adds. “For buyers, it's not financially prudent to invest significant sums only to become embroiled in legal disputes.”

Perceived value also continues to challenge the sale of legacy properties. 

“Some may see historical charm and architectural details as desirable features, while others may view them as outdated or impractical,” says Ritesh Mehta, senior director and head (North and West), residential services and developer initiative, JLL India. “Sellers may need to effectively communicate the unique qualities and potential of the property to attract buyers.”

Sotheby’s International Realty brokered one of Kolkata's most lavish real estate transactions in 2020 – a Rs 100 crore deal for a 31,000 sq ft bungalow on Judges Court Road. 

“In Kolkata, Rs 50 crore-plus is a decently high ticket size for an individual residential purchase, hence such sales are few and far between,” says Abhijit Das, senior director-east India, Knight Frank India. “Usually, owners of such properties get into joint ventures transactions with developers.”