Living life King-size

Call it the spillover of bulging wallets, or the simple desire for scaling up. India's aspiring middle and upper classes, eager to upgrade their lifestyle, are driving the real estate market to new highs. The numbers speak for themselves - as developers build up their capacity to meet this growing demand, the luxury apartments market (Rs 1 crore to Rs 5 crore) has grown by over 25% in 2006.

Take a look around. Luxury apartments, which often feature standalone villas or high-rise apartments, continue to pop up in and around big cities - with each vying to provide the best of luxuries, from the usual air conditioning, parking and security to the unimaginable - jacuzzis, pools and spacious yards.

Says Anshuman Magazine, managing director, CB Richard Ellis, South Asia: "Luxury housing in India is on a high growth curve. People are now willing to shell out premium for quality, larger space and amenities.

There is a lot of pent-up demand for luxury housing. The demand is being driven by globe-trotting executives, new and successful businessmen, higher income levels and NRIs whose interest level in India has increased, besides availability of mortgage. The shortage of good housing in the country is also pushing the demand for high-end homes. The consumer is now exposed to global standards. They look for good infrastructure and hi-tech amenities."

Agrees Sanjay Verma, executive MD, Cushman & Wakefield: "Property prices increased by 30 to 40% in 2005, but last year saw prices appreciating by almost 60 to 70% and in some cases by even 100% for projects under construction and other Grade A luxury properties. New benchmark rates were created as prime stock of apartments hit price levels that were higher than 1995 levels."

Due to higher returns on investment, many developers are switching to the luxury housing segment, especially in heated markets like Mumbai and the National Capital Region (NCR). Not to be left behind are Hyderabad, Bangalore, Chennai and Pune, where a number of luxury residential projects are under construction. Another thing that has attracted more demand for these apartments is the rising aspirational level, leading to demand for better quality homes built on international standards offering state-of-the-art modern amenities.

Many locations in Mumbai, where demands for high-end options far exceed supply, have witnessed significant appreciation in property prices ranging from 80% to 120% over the last 12 to 15 months, according to Cushman & Wakefield. At the high-end segment, the size of large apartments used to be about 3,000 sq ft. Today, that space is about 5,000 to 7,000-sq ft in the city. In addition to space, the newer complexes offer ample parking space, swimming pools, gardens and health clubs.

Even grander in scope - and price - are the full-scale city communities, much like those in Dubai, which are being developed around the nation. Among the pioneers in this arena is RIRIC, the Vancouver-based global real estate investment firm, which has plans to launch multiple planned city sites around India in the next few years.

Says Rohtas Goel, CMD, Omaxe Group: "The buyer seems to be impressed by the hi-tech amenities being provided by various developers. These luxury apartments are in exclusive neighborhoods done by renowned architects with plenty of space, luxurious interiors, private lifts, landscaped gardens, gyms, swimming pool, mini spas in bathrooms, children's play areas and security and CCTV."

Developers even provide billiard rooms, sound-proof cinema halls, three to five covered garages, open air Jacuzzi, 16-seater home theatre, semi-covered 100-foot pool-facing scenic walks and gardens with gazebo. Security features promised include high-tech perimeter security, videophone doorbells from main gate, compound movement sensors with intruder alarms and infrared car proximity sensors.

The demand for luxury housing would continue at the back of expected economic growth, resulting in increased purchasing power for larger number of people. But just because there is demand doesn't mean there is supply or enough supply, anyway. The demand and supply dynamics clearly point to an unabated demand for good housing in this country.

As far as the market is concerned, luxury apartment prices are end-user driven to a large extent. For instance, this kind of development is led by individuals buying their second or third homes. Developers are, therefore, able to construct and develop more projects of this kind. In the residential sector, the price boom is a phenomenon that literally feeds itself.

Says Vikram Sabharwal MD, Sabharwal Developers: "The current boom in luxury apartments has been largely contributed by rising income levels and affordable interest rates on mortgages. The rising interest rate scenario, coupled with the rising property prices will not effect the off-take of this segment. Merrill Lynch has forecast that the Indian realty sector will grow 7.5 times by 2015."

The demand for quality options far outweighs the supply with too much capital chasing too few properties especially in the Rs 1 to 5 crore range. As a result, the upward trend is likely to continue over the next 12 months with a stabilising of prices at current levels.

Settled right

UNLIKE THE TRADITIONAL INDIAN PRACTICE, STUDENTS TODAY ARE TAKING ON THE RESPONSIBILITY OF FUNDING THEIR OWN HIGHER EDUCATION
It's payback time of a different kind for these youngsters- young, ambitious students who move abroad for their higher studies, funded by educational loans, they are expected to pay back over a stipluated period of time, once they are employed,without passing the burden on to their parents. And the number of such students is only rising.
Take the example of BCom graduate, Arindam Saha. His cost to pursue an MSc in Management at the University of Central England was 8,000 pounds.To fund the same, he took a loan of Rs 6 lakh at an interest rate of 11.5 per cent.
”The bank gave me a up to seven years to repay the loan. You are expected to start repaying the amount a year after completing the course, or once you start earning,” elaborates Saha. Currently employed with an inte r n a t i o n a l n e w s agency,Saha repays Rs 12,000 a month, and hopes to clear his loan in five years.
Loan notwithstanding, Saha is one of many students who prefer studying abroad as the MBA programme in India is often a two-year course, (as opposed to one year in England), in addition to the valuable exposure that comes with studying abroad.
While Saha went abroad soon after completing his BSc, Harsha Vellal completed a year of work experience before leaving for foreign shores.
Following a BSc in Computer Science, Harsha worked for a year before enrolling for an MBA in Marketing at the University of Liverpool. The course fee alone stood at Rs 11 lakh, for which he took a loan to pay the entire amount. Before leaving the UK,Harsha also completed a course in interior design, and has since,established an interior design business in India. ”I'm still repaying my loan. I was given seven years for repayment, of which I have completed two years,”he says.There are others who have worked longer and saved part of the fee amount before going for higher studies in foreign universities.
Aravind Krishna did his BE, worked with Infosys and decided to then add an MBA to his portfolio. He did an 18-month MBA at NTU, Singapore and was able to fund his education by himself. On the other hand, his classmate, Gaurav Sharma, a chemistry honours student, began a 16-month MBA at NTU, Singapore after working at a pharmaceutical firm.While he paid for a part of the course fee with his savings, the availed of an educational loan of Rs 10 lakhs to finance the remaining costs. Although he was given 10 years to repay the loan,“I've already returned my entire loan amount,'”he asserts.
Evidently, a common thread tying all the above cases is the student’s pride stemming from funding his or her education, as opposed to passing the buck of funding their higher studies on to their parents.