Returns Fade, Investors Shun Buying Luxury Homes

Mumbai has seen the maximum number of unsold units in luxury segment with 11,086 of a total of 28,905 apartments, followed by Bangalore with 4280 units out of a total of 10,242. Whereas, Delhi-NCR has 3966 number of unsold units out of 24,515 under-construction apartments.

In the luxury home segment, out of every 100 apartments, 20 apartments used to get sold but the number has dropped to nine in today’s date.

The luxury home prices differ from place to place. For instance, such homes cost around more than 2 crore in Gurgaon, but in Mumbai, the same home would cost around 4-5 crore and above. In the high-end property segment, the yearly appreciation also dropped down to 35-50 percent from 2008-09 when investors used to get returns of almost 15-20 percent on an average.  

"People saw humongous returns earlier. Now the scope of appreciation has become very limited in the high-end segment as prices have gone up," said Anshuman Magazine, Managing Director of property advisory firm CB Richard Ellis, reports Economic Times.

Today, investors are not showing much interest to buy luxury homes due to fade in returns. Investors feel it is overpriced. There is a fear that there might be a correction round the corner," according to Richa Karpe, Director-Investments at multi-family office Altamount Capital.

Also, investors are worried about delays in project completion. "Most projects in the luxury and ultra luxury segment are delayed," says Samir Jasuja, CEO at PropEquity.

"So much money has been lost in real estate because of project delays. The return on investment does not look attractive today as many projects which were to be finished in three years are taking six years," added Jasuja.