Snob effect: Sea-facing duplex in Worli sold for Rs 43 cr!

Mumbai: A sea-facing duplex in Worli’s opulent Samudra Mahal building has been sold for Rs 1.18 lakh per square feet, thereby cracking the second-most expensive real estate deal in the country.

A leading glass manufacturer Borosil bought the four bed-room duplex spread over 3,638 sq ft on the ninth and tenth floors of the Samudra Mahal building for Rs 43 crore, the Times of India reported today.

This deal has broken the record of Rs 1.07 lakh per sq ft in the 28-storey marquee building. But it is still behind the June 2012 sale of an apartment in Tanhee Heights on Napean Sea Road, which was struck at Rs 1.2 lakh per sq ft, the report added.

Firstpost take: Such a high-value deal does not mean that prolonged slump in India’s real estate market is over. In fact, such deals are just one-off and such flats in prime localities will continue to fetch premiums since the supply of luxury penthouses and duplex apartments in landmark buildings is restricted. Hence, it is simple economics of too many people chasing the same goods, but when it comes to luxury real estate, the income elasticity of demand is higher, i.e. as people become wealthier, they will buy more and more of the luxury good and are willing to pay a premium for it.

Demand for luxury real estate does not reflect the actual sentiment in the market, but rather is a result of the snob effect wherein consumers want exclusive products and price is just treated as quality. Decreasing their price would actually take the sheen off such properties as they are no longer perceived as exclusive or high-status products.