For luxury home seekers, architects matter more than price!

Strange are the ways of the rich. A wobbly economy may be making even the country’s rich cautious about their investments. But their caution ends there. When it comes to buying a luxury house, money doesn’t mean a thing for them.

According to a 2013 Wealth Report by Kotak-Crisil, the single most important factor driving India’s ultra high net worth individuals’ (those with a minimumaverage net worth of Rs 25 crore accumulated over the past 10 years) purchase of a luxury home is location. Price of the property is least in the reckoning.

Twenty-five percent of the UHNI respondents in a survey said location, i.e. exclusivity that the address holds, is the most important factor determining their purchase decision, while only 5 percent said that price of the property matters.

But are they not concerned about the few crores that they have to shell out? Nope, not at all. In fact, data from the report shows they are more interested in who the interior designer is, what amenities are being offered and which country the wood, marble and other furnishing are being imported from.

So, forget the crores you have to doll out, factors such as brand aspects relating to the architect/ developer, architectural significance, amenities on offer etc-anything that offers a chance at exclusivity becomes a swing factor in the purchase.

For the right locations, HNIs are sometimes wiling to pay staggeringly high prices, irrespective of the general state of the city’s property market.

Little wonder one often hears stories of sea-facing duplex in Mumbai’s Worli being sold for a record Rs 43 crore at a time when India’s realty market is in a general limbo and realtors are struggling to make ends meet due to the broad-based liquidity crunch in the economy.

However, location alone does not imply exclusivity. For instance, in Worli itself a location often loses its sheen if the sea-facing view is lost, which is why many sought-after luxury buildings in prime locations are becoming unattractive because the sea-view is being blocked by new taller buildings ans skycrapers in the vicinity.

For instance, an Economic Times report in June had said prices of marquee apartment buildings such as Kamal Mahal on Carmichael Road or new buildings such as Lodha Bellissimo in Mahalaxmi, which used to get a premium for the view, are now down by at least 30 percent as new high rises are blocking the view.

The irony is played out even further. For the common man, real estate is the biggest investment he would ever make and spends a lifetime paying off his EMIs just to own a property, even if it is located two-and-a-half hours away from the city centre. Surprisingly, for the country’s rich capital appreciation and investment are the least important factors while purchasing real estate.

While 58.6 percent of the HNI respondents said a luxury home is a status symbol to tell the world that one has arrived, only 4.3 percent said it was an investment.

While professionals prefer to buy readymade villas, bungalows or an apartment in multi-storied complexes, utra HNIs prefer building customised villas on their own land and the stature of the architect of developer plays the biggest role here.

European designers, particularly Italians are the flavour of the season as it satiates their desire for exclusivity within the social circles.

“Many renowned real estate developers cater to this demand by roping in world-class designers. For example, Lodha, Sunteck have tied up with renowned designers such as Armani, Jade, Jagger to offer unique designs and craftsmanship,” the report said.

And guess what are the most preferred amenities?

A personal swimming pool and a mini theatre is a must have for most of the ultra-HNIs, followed by touchpad-controlled smart homes, health spas and a private gym, a helipad on the roof and outdoor gourmet kitchens.

But how do builders lure the rich?

Whisper marketing and invitation buys are the order of the day for nothing more can arouse the curiosity of the rich than a pitch that he will own something that very few will have a chance to. An HNI will never go scouting for a house. It is always the other way around.

“Known people, some business acquaintances and wealth management companies approached me,” said one HNI who was surveyed in the report.

Looks like the prices in this category would never fall, even if they crash in non-luxury segment. It will be the buyers’ prerogative to hold the prices at higher level than the builders. And of course, the builders will have the last laugh.