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Limited edition suites, sprawling penthouses, bespoke villas customised to individual tastes and preferences, luxurious condominiums, the story of Indian luxury real estate has only just begun. | by Namrata Kohli

It seems everyone from domestic end-users to overseas investors wants to own a slice of the pie as India emerges as a promising investment destination. A recent advert released by a prominent Indian developer read: “You can have the Sistine chapel on the ceiling of your home, or anything you desire in our customized villas.” The ad is for Opulent Villas by Unitech, a development in a 500 sqm yard, with properties offered for Rs8Cr (US$1.75million), part of a new breed of ultra luxury properties that is fast emerging to cater to the demand of cash rich Indians and overseas investors.

Favourable conditionsWith its positive values of democracy, rule of law and a free market economy, the sun is shining brightly on India, and the sub-continent is fast becoming a formidable investment destination. Non Resident Indians (NRIs) and People of Indian Origin (PIO) have of course been investing for a long time in their ‘home away from home’, but the supply side has, until recently not been as creative and aggressive in terms of marketing a second home to overseas investors. Real estate developers are now launching expensive and exclusive apartments across key Indian cities, fuelled by demand from high net worth Indians, expats, NRIs and foreign investors. In fact, the nomenclature on developer websites has shifted from mid-end, affordable to premium category, semi-luxury, super luxury - and some even go on record to say that they will launch one such project every quarter, because of the healthy profit margins and strong buyer interest.

High-end developers are also now undertaking international marketing campaigns through channel partners in different regions and also through representatives in different countries. Viral marketing and campaigning through social networking sites is another technique to reach out to overseas investors. Indian developers also participate in international property exhibitions to increase their visibility and this trend is on the rise.

Desirable locationsAccording to Sachin Sandhir, managing director, RICS South Asia, most luxury housing market action is concentrated in the Tier I cities of Mumbai and Delhi. “This is where approximately 43 per cent of the affluent population resides,” he says, “ but there is also an uptake in areas such as Pune, Ahmedabad, Bangalore, Chennai, Hyderabad, Punjab and Kolkata.”

The country’s largest developer, DLF recently launched no less than six projects in

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the super luxury category, including Queen’s Court in heart of India’s capital New Delhi, priced at Rs18Cr (US$4million), King’s Court in Greater Kailash, and in New Delhi’s up market suburb, Gurgaon, there’s the Aralias and Magnolias, also DLF projects being sold by invitation at prices upward of Rs 12 Cr (US$2.5 million). Magnolias offers lavish, centrally air conditioned apartments with large sizes varying from 5,825 sq ft (for standard apartments) to 9,000 and 10,000 sq ft (for duplex and penthouses). “We pioneered the concept of ‘Sale by Invitation through these projects,” said a DLF representative. “The idea was to identify an exclusive community of like-minded residents who would be proud to own a high-end apartment, offering the best features and facilities on par with those available internationally.” Another arrival in the luxury real estate sector is Emaar MGF’s Palm Springs, which was recently awarded “Best Luxury Residential Project - North” at the RICS Real Estate Awards 2011. The project features low rise luxury villas to apartments in a 15.5 acre luxury residential project on Golf Course Road in Gurgaon and offers amenities such as a clubhouse, spa, health club and cinema, along with advanced security technology smart card access and perimeter

security. Polo suites were also launched recently by M3M group, in Gurgaon at Rs6Cr (US$1.3 million) upwards. These luxurious condominiums offer 4000-5000 sq ft of living space and also provide access to world’s leading international polo events for the residents. Omaxe’s Forest Spa in Noida also has apartments facing the golf course, with huge balconies, and a personal health club in every master bedroom, priced at Rs 9,300 per sq ft (US$ 200 per sq ft).

luxury additionsTypically, luxury projects in India come with differentiating factors such as the nearby presence of an 18 hole golf course, a private helipad, a private swimming pool, personal gym, international spa zones and other branded specifications, as well as the usual lifestyle amenities and tie-ups with the world’s leading designers, architects and landscape experts. Many experts feel Asian markets are now frontrunners when it comes to global institutional investment - particularly for those seeking high returns on investment. India has grown rapidly to become a preferred destination with returns as high as 25-40 per cent and investors drawn predominantly from the Gulf, the US and the UK. Asian investors

are also increasingly looking at investing in Indian property, although regional investors strong in the market are still primarily NRI (Non Resident Indian) or PIO (Person of Indian Origin). Domestically, there has also been a rise in demand for luxury housing. A growing affluent population in comparison to other emerging countries is prompting developers to focus more and more on the luxury segment. As of late, the concept of designer and branded homes has captured the attention of international and domestic investors alike, with several global real estate focused PE and VC firms parking their funds in such projects.

According to Delhi-based Raheja group who operate in the ‘affordable luxury’ segment the major investors from abroad are from UAE, Singapore, Hong Kong, London and US. “International investors mainly look for a property from a reputed developer which has the potential to appreciate and give good returns,” said their representative. “Almost all the Indians settled abroad look for properties in India as an alternative investment market, but people from Singapore and the Middle East are very strong financially and thus, their percentage as compared to other investors is also high.”

Apart from interest among the world’s

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HNWIs, India has also become a compelling choice for institutional investors and private equity players. Real estate ranks fourth amongst the sectors that attract the FDI inflows. At a cumulative level, FDI in real estate has attracted close to US$10.7 billion over the past decade. However, existent policy and investment constraints have affected the investments being drawn by the sector, with FDI levels plummeting to a four year low. On the upside, the level of private equity investment as an alternative to more traditional means of capital in the sector has increased substantially with a 47 per cent jump in comparison to 2010. According to DTZ, based on recent volumes and available capital targets, there will be higher levels of cross-border investment in 2012, particularly from the Asia Pacific.

legal issuesSo what does Indian law say about investment by foreign nationals? The Foreign Exchange Management Act (FEMA) permits a NRI or a PIO to acquire immovable property in India, although not agricultural land, plantation property or farm houses. Furthermore, foreign companies who have been permitted to open a branch or project office in India are also allowed to acquire immovable property in India. However, citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan cannot acquire or transfer immovable property in India, (other than on a lease not exceeding five years) without the prior permission of the Reserve Bank of India. “Acquisition of immovable property in India by persons resident outside India (foreign nationals) is regulated in terms of section 6 (3) (i) of FEMA 1999, as well as by the regulations contained in the Notification No. FEMA 21/2000-RB dated May 3, 2000. The act is amended from time to time.”

Foreign citizens of non-Indian origin (whether resident in India or not) and foreign companies including trusts, societies and associations incorporated/registered abroad will be permitted by the Reserve Bank, on application, to acquire immovable property in India, provided certain conditions are satisfied. Namely, the property to be purchased is for residential use only, the consideration for purchase of the property must be met out of foreign exchange remitted from abroad in any convertible currency through normal banking channels, income accruing by way of rent from the property purchased, or the sale proceeds of such property/income arising out of investment of such sale proceeds at any future date can only be credited to an Ordinary Non-resident Rupee (NRO) account opened by the non-resident purchaser.

Top and Bottom: Atlantis, Raheja. Middle: Palm Springs.