The luxury real estate sector in India has been witnessing mixed fortunes for a long while now, particularly with the twin impact of demonetization and GST in addition to the introduction of RERA. Sales figures had previously dried up in the segment with the shift of the market towards the more affordable ends of the spectrum. Yet, luxury realty has made a comeback of sorts in recent times with several high-value transactions being noted and NRIs playing a vital role in reviving the segment.
There is a visible new trend in the luxury real estate space currently where real estate developers are partnering with top luxury brands for enhancing sales volumes at their luxury or ultra-luxury realty projects. There are umpteen examples of such tie-ups which are also marketed/advertised extensively. Prospective buyers of luxury real estate usually find projects more enticing when they have tie-ups with big brands. Although, such exclusivity and upward social mobility comes for a considerably higher price. These projects are costlier as compared to non-branded real estate projects. The difference in pricing for branded projects could be anywhere between 5-20% or higher as compared to regular projects in the same residential neighbourhood.
However, buyers in this category are not shy of paying the additional premium. In case the project has been properly implemented, the tie-up with a leading brand will enable owners/investors to sell the property as a resale unit more easily in the market at a higher price. Branded projects come in handy in the resale segment where investors can hope to earn higher returns over their initial investment.
How is India’s luxury real estate market doing in recent times?
Amidst widespread speculation about an economic slump in the market, the luxury real estate market in India has actually made a comeback. The trend has firmly set in with regard to possessing branded homes, particularly amongst high net worth individuals and NRIs who are going for designer apartment/villa units in prime areas in metropolitan cities.
Here are some key facts worth keeping in mind in this regard:
- Approximately 3,000 ultra-luxury and luxury residential housing units were successfully sold in Q1 2019 as per studies.
- 236 units were sold in this period in Delhi-NCR and Bangalore witnessed sales volumes of 84 units.
- NRIs and affluent buyers are now choosing to purchase bespoke units at premium prices which is in sync with global trends.
- Increasing demand in this category has resulted in developers striving to partner with luxury lifestyle/hospitality brands for offering differentiated products in the ultra-luxury residential space.
- Ultra-luxury and luxury residential housing projects have continued drawing more buyers due to reasons like the presence of several high net-worth buyers, a preference for such properties amongst NRIs and competitive pricing in Indian micro markets as compared to several global cities.
Developers are now tying up with premier brands in various categories
Real estate developers in India are not just restricting themselves to any category in particular for their tie-ups with luxury brands. They are now partnering across various such categories. Here’s taking a look at some of the key developments in this space over the years:
- Panchshil Developers has already tied up with Philippe Starck, the reputed product designer from France in Pune.
- Gauri Khan, Bollywood star Shahrukh Khan’s wife, has already signed a contract with Gliteratti Penthouses for interior designing solutions at the company’s Pimple Nilakh project.
- Lodha Developers, based in Mumbai, has inked a deal with J.Jagger, ex-model from Britain and a famous home and jewellery designer. This partnership covers the Lodha Fiorenza project situated at Goregaon. Lodha has also tied up with Armani for the World One project in Mumbai.
- Panchshil has also tied up with an international brand for its Trump Towers luxury project at Pune.
- Lodha Group has another partnership with Bovet, the luxury Swiss manufacturer of watches and organized an event to showcase the exquisite horology techniques of the brand sometime earlier.
- The One Mahalaxmi project’s developers, Radius Developers and DB Realty, recently organized multiple brand collaborations across experiential events in Maximum City.
- Navnit Motors had Ferrari showcasing its new Portofino and GTC4Lusso T at this project while the collaboration with Art of Time (official retailers for IWC Schaffhausen and Cartier timepieces in the city) was also highlighted. Porsche Centre in Mumbai also collaborated for exclusive test drives and displays of its new Macan.
- Lodha Group also brought the director of the Giacometti Foundation (set up by legendary Alberto Giacometti, the sculptor from Switzerland), Catherine Grenier for a discussion on Souza and Picasso for prospective clients.
- Developers often collaborate with reputed designers and architects like Armani Casa (owned by Giorgio Armani) has designed the World Towers project by Lodha Group in Mumbai along with Supertech Realty’s Supernova mixed-use project in Noida and so on.
- Disney cartoon characters have been used for the branding of a project by Sunteck Realty at Goregaon in Mumbai.
- Supertech has also taken a similar branding route for its Fable Castle on the Yamuna Expressway in Greater Noida.
- City Corporation from Pune has tied up with Swarovski Crystal which will provide interior designs for the luxury Gateway Towers project.
- Developers are also collaborating with celebrity designers like Gauri Khan and Sussane Khan for interiors. Twinkle Khanna, for example, has already designed interiors for the ORB project at the Cape Town Township by Supertech at Noida. She has also designed the One North project in Pune by Panchshil Realty.
- Developers are also inking deals with global organizations for offering exclusive amenities including hospitality and dining, sports, lifestyle, concierge, wellness and other facilities.
- Mumbai based Nirmal has already launched an exclusive sports city at its project in Thane. The facilities have attained approval from organizations like the US Open (for the tennis courts) and FINA for its swimming pools.
- Greg Norman, the legendary golfer, has designed the golf course at the Belmondo project by the Lodha Group in Pune.
Key aspects worth knowing about this latest market trend
Experts feel that there are several categories of partnerships between real estate developers and global luxury brands. There are tie-ups made for interior design, architecture and other design aspects. The second category encompasses partnerships relating to the wellness, luxury spa, dining and restaurant side of things. The third category encompasses sports celebrities or brands for fitness/sports amenities. There are several key aspects worth noting about this trend in the luxury real estate market.
- Tie-ups linked to fitness and sports have succeeded more as compared to architecture and interiors as per reports.
- Projects find more buyers when they offer world-class amenities for aspirational and well-travelled buyers with exquisite taste.
- Supply levels are often limited for these luxury projects with the exclusive and limited edition taglines. Prices may even surpass Rs. 30-50 crore or more at such projects which is not surprising in this category as per studies.
- There are multiple luxury brands varying from apparel, accessories, interior design and automobiles to gourmet dining, jewellery, home appliances and alcohol that may appeal to the overall lifestyle preferences of the customers.
- Some developers feel that premium developers and luxury brands combine to create like-minded, engaging and exclusive customer experiences which always add to the value of a project.
- Experts feel that luxury real estate developers essentially reach out to the same buying audience for luxury brands including premier cars, watches, golf clubs, apparel, appliances and watches.
- Some global brands also infuse more credibility and appeal to the real estate developer. For instance, Embassy Group had the Four Seasons collaborating with it for building private homes in Bangalore. Only 2,500 such people own homes developed by the Four Seasons worldwide.
- Brand properties are costlier by at least 20-40% as compared to non-branded luxury properties in the same area/neighbourhood.
- Developers are hence going for theme-based or resort-based designs and amenities for residents along with more creative branding exercises and global-level sports and recreational facilities.
- Global brand endorsements boost recall value amongst the prospective audience and help developers clearly differentiate their offerings from the rest.
- They can thus ask for a higher price point as compared to similar competing properties in the specific micro market while also generating ample buzz about the project in question.
- These tie-ups help in tapping into rapidly increasing aspirations of truly global Indians who have seen/wish to see the world and learn more about new things and experiences. Fortunately, they have the budget to do so as well.
- In case the developer can properly zero in on the high net worth audience interested in premium experiences, he/she can generate more interest with a big brand tie-up and charge a premium for the residential unit in question.
The big brand partnership trend is here to stay and what this means is that several experiences/marketing activities centred on the same set of consumers will now be immersed together. It will be a collective feature of luxury, right from a luxury residence to luxury amenities, appliances, automobiles, memberships, watches, fashion, wine and lots more. This immersive experience means that you basically cater to the same audience and win their trust/appreciation.
This is why developers have been hitting the sweet spot by initiating collaborations with premium global brands for their projects and the trend should only grow in the near future.
