India's real estate market is operating at a frenzied pace as developers strive to accommodate the country's burgeoning middle and upper classes looking to upgrade in lifestyle.
But just because there is demand doesn't mean there is supply--or enough supply, anyway. So while developers can't seem to snap up land fast enough, the country, which was essentially closed to outside investment until only recently, has much catching up to do.
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In the meantime, luxe complexes--which often feature standalone villas or high-rise apartments--continue to pop up in and around India's wealthiest cities, like Mumbai and Delhi. With one more impressive than the next, these developments boast amenities, from the once unavailable--air conditioning, parking and security--to the once unimaginable--Jacuzzis, pools and spacious yards.
Manoj Benjamin, chairman of Royal Indian Raj International Corp, says the population is suddenly more attuned to what is available, and thus desirable, thanks to its travels abroad and on the Internet. "They see the walk-in closets, the fancy kitchens, the pools and the big yards and they say, 'Why can't I have this?' "
Well, now they can, for a price. Locations throughout Mumbai, for instance, where demands for high-end options far exceed supply, have witnessed significant appreciation in property prices ranging from 80 per cent to 120 per cent over the last 12 to 15 months, according to Cushman & Wakefield.
"At the high end, large apartments used to be about 3,000 square feet. Today, that space will be 5,000 to 7,000-square feet in the city," adds Cushman's executive director Sanjay Dutt. In addition to space, the newer complexes offer ample parking spaces, swimming pools, gardens and health clubs.
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Even grander in scope--and likely 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.
Among their offerings is Royal Garden Villas and Resort, a five-star community in Bangalore. In addition to plush homes--both high-rise apartments and villas--the resort community will offer shops, a winery and a luxury hotel. Also included will be tennis, fitness and equestrian facilities, as well as a Jack Nicholas signature 18-hole championship golf course.
According to Benjamin, the villas have already commanded a sizeable waitlist. He says the company expects to sell 10,000 to 15,000 units in the next 12 months, followed by 30,000 to 50,000 in 2008 and 2009, and 100,000 in 2010.
So what's driving India's surge in demand at the high end?
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Among the explanations is significant income growth. That change has much to do with an influx of multinational companies, such as General Electric, which has come in to exploit the highly educated and vast worker pool. This, coupled with continued population growth, has resulted in increased demand, particularly at the high end.
Benjamin adds to this list deregulation, which has attracted more investors as well as capital. Until recently, mortgage financing was neither accessible nor affordable to most and tight regulations prevented direct foreign investment in the real estate market. Now, the availability of cheap financing has enabled aspiring homeowners to afford a higher-caliber product.
What's more, the increasingly wealthy nation has seen a cultural shift in terms of image and lifestyle. Thanks to a surge of returning expatriates, who have grown accustomed to showy standards elsewhere, it is suddenly okay--if not encouraged--to flaunt one's wealth in India.
So bring on the bulldozers--not to mention the pools and parking spaces.
