Bigger isn’t necessarily the better in the battle for the ultra-luxury condominium buyers, which gives impetus to the niche segment of boutique luxury – homes which focus on quality, personalised preferences and customised décor. There is a rising segment of UHNWIs who are attracted to luxurious and unique properties that have character, class and are nestled in some of the toniest areas of Mumbai.
A boutique home project usually consists of a limited number of luxurious homes, which have been designed with an innovative approach. Since the value of these homes defy market dynamics and logic, developers are keen to explore this segment wherein they concentrate on creating original and bespoke buildings and customised living that will give buyers the opportunity to feel special. Boutique developments are renowned for their elaborate attention to detail and developers are not settling for anything less than creating homes that will be considered as works of art. The primary difference between a boutique development and a larger scale development is the density of inhabitants. The former offers luxury at value due to economies of scales and has a larger audience, whereas the latter offers luxury at a substantial cost owing to the extremely limited number of homes being sold. The boutique development is a high cost, high margin proposition owing to its low volumes. Another difference is the time of delivery and handover of the property to prospective buyer. The smaller and more niche the product, the quicker it is to construct and develop the structure. Usually, the bare shell home is handed over to the client in 9 to 11 months, for them to customise the interiors of the property.
The primary target audience for this segment are the new-age affluent consumers who are keen to enjoy a lifestyle and aim to buy a residential asset that reflects not only their social status, but also guarantees them a membership into an exclusive club of the uber-rich and showcase their achievements. Additionally, many NRIs are buying these homes these ‘limited-edition’ residences. They are usually well-accustomed to luxury living in their primary residence and can afford to pay price for a similar lifestyle in their home town.
Defying the normal trend of luxury being associated with the top metros in the country, luxury homes are actually being developed in Tier-II or Tier-III cities and towns as well. In fact, this sector which is already established in the major metro cities is fast gaining popularity and prominence in tier-II and tier-III cities across India.
Only a handful of builders today have the knowledge, skill and the capital required to build a luxury boutique development that lives up to its promise. Despite high margins, this niche segment commands extremely low volumes and owns hardly 3 -5 % of the luxury market share. The developer also needs to understand the concept of luxury living and need to be highly capitalised as building such homes involved pertinent raw materials, architects, contractors, and labour.
The segment looks to gain popularity, however, it looks unlikely to being a part of the main stream sector owing to various reasons such as paucity of land in various locations of metro cities, high requirements of capital and skilled labour and the minuscule volumes of the business even though the margins are high.
The article is authored by Mona Jalota, Director – International & NRI, Residential Services, Colliers International India.