Take a reality check before you invest in luxury home

The definition of what constitutes luxury and premium property is much abused these days.  A look at the property market reveals that it is often developers who define luxury and ultra-luxury projects.

“Luxury apartments or villas often get priced high with the addition of a few key features. For instance, a series of newly developed plots does not constitute a villa,’’ says Kuldip Singh, Avron Consultants, an advisory firm that focuses on NRI and HNI investments.

“Hence through our interactions with our clients, we make it a point to understand exactly what the buyer perceives as luxury and when they plan to let it out. A balance of these two key factors plays a key role when zeroing in on a property investment, especially when it is high-end,” he adds.

One of the first things that real estate consultants suggest is to make a detailed list of amenities and environment the prospect perceives as luxury. This needs to include the kind of surroundings, the approximate size of the rooms and the garden and may be even the size of the private pool they would like have in the villa they plan to invest in.

“India is a very price-sensitive market. Irrespective of the social or financial status of any individual, people still ask about the mileage of a BMW or an Audi car, before making the purchase. Similarly, at a right price, luxury or premium makes sense and not just to pay additional money for a product that may eventually become a trap for blocking your capital and you later struggle to find a tenant or a buyer,’’ says Om Ahuja, CEO – Residential Services, JLL India.

Some things to checkout according to industry watchers before investing in luxury projects in Bangalore:

Track record: The developer’s track record in terms of past project execution and current status of the said project. This needs to be tracked in addition to the credentials, project location, project features and amenities.

Project density: By that it means how many apartments are there in total in the project, how many per floor, other upcoming projects in the neighbourhood.  “A villa-gated community next to a mall or a range of mid-segment projects impacts the potential for rental/value growth,” says Singh.

Not always long term: “It’s a myth that one makes more money in the long term by buying only luxury properties,’’ says Aditya Banwar, proprietor, Spring Villa Developers. “In the last decade, properties in the mid segment have found similar or more growth compared to the luxury segment. Buyers need to decide if the premium segment is really the right choice for them?”

Know the trade-offs: It is easy to buy premium assets as a onetime buy but maintenance costs are often equally back breaking. “Often considering the costs and the consequent stress involved, buying two upper-mid segment properties can make more sense instead of one luxury property,” says Banwar.

Kanchana Dwarakanath, Magicbricks.com Bureau

Kanchana Dwarakanath is an integrated communications professional with diverse experience in journalism & Marketing Communications. Her current focus areas include real estate, infrastructure, urban management and the skill development market.