In January, a flat at Cuffe Parade’s Jolly Maker housing society was sold for Rs. 22 crore. A big-ticket deal in the relatively slow-moving residential real estate market? Traditionally, landmark deals such as these are insulated from the vagaries of economic cycles. The rising interest rate, declining sales or level of buyer confidence does not impact them in any way.
 
These deals are driven primarily by the exclusivity factor. A premium is attached to the size and the location of the unit, even to who is the high-networth neighbour. The price of such deals is dictated by personality, location, wealth and snob value rather than factors of supply and demand. The brief given to property consultants hired to look for such deals is “What are the top five properties that I can acquire? Show me where I can get them and I will buy one if I like it.” Moreover, there are no budgets. According to KJ Singh, who runs a property consultancy dealing in high-end apartments in Delhi, the price of these properties depends on factors like location and the restricted availability of such housing stock. These are primarily bought by extremely rich families who want their extended family to live in the same locality as they do, or by industrialists from UP, Punjab or Rajasthan who want to have a base in Delhi or Mumbai. In Bengaluru, these are procured by top IT honchos. Also, almost 80% of these properties are bought by buyers who intend to use these homes themselves.

The market so far
The Delhi market has so far seen at least two to three deals a month in this category. The Mumbai market, however, is witnessing a slowdown as it is directly linked to the stock market. Still, there has been at least one such deal in the last two months in Mumbai. Industry watchers have also been excited by the recently reported sale of Washington House, a three-storeyed building formerly owned by the US Consulate. The building has been sold to the Lodha Group for over R375 crores. A luxury residential tower is expected to come up in its place. Real estate experts also say that south Mumbai is witnessing a covert exodus with residents who have been in the area for more than 40 years selling their properties to the nouveau riche, especially people who have made money in the last 15 years. “New money is replacing old money in most deals in south Mumbai,” said Aniruddh Wahal, Director, Occupational and Development Market, DTZ. The Bengaluru market is linked to the software business in the US and has been relatively slow for the last two months. An industry expert dealing with marquee deals has revealed that in a month, he witnesses four to five deals worth Rs. 2.5 crore to Rs. 15 crore.

The factors that determine the premium attached to such properties have also seen a shift. A decade ago, an expensive property meant an expensive location. In the last three to five years, however, it’s product design that dictates price. A branded apartment with bespoke features by international designer Jade Jagger or even celebrity Bollywood wife Gauri Khan determines the premium attached to the property. Another differentiating factor is the pedigree. The best people in the city live in these complexes -- bureaucrats, diamond merchants, politicians, actors, industrialists and top corporate heads. The concept of shared public amenities is passé too. Private features dictate the price of the property. These could include private elevators, parking, swimming pool, gymnasium, tennis court and exclusive clubs, says Anand Narayanan, National Director, Residential, KnightFrank, an international property consultancy.

Influencing property prices
These plush homes do set a benchmark where property prices are concerned. Most high value deals in the real estate space have the ability to excite buyer interest and create artificial price situations. The values of upcoming projects in the area also shoot up. One school of thought believes these deals are more the exception than the rule. These experts think such transactions are one-off sales. Though it’s true that high-end apartments will continue to fetch high values, a small-sized apartment in the same area (where a big ticket deal may have taken place) may not fetch the same price. This is because pedigree buildings are few and not all apartments are of the same size.  Therfore, these are best considered as one-off deals.