When The Going Gets Tough, The Rich Go An A Luxury Real Estate Buying Spree

A Slow Market, Really ?

A bearish financial market and a sheepish real estate market in India has triggered some of the most super wealthy folks into action and they are on a real estate shopping spree like there is no tomorrow.

Imagine real estate developers in Mumbai struggling to sell inventories in the INR 5 Cr plus category and on the other hand luxury real estate deals worth hundreds of crores of rupees materializing for some of the most expensive luxury homes at the same time in the city.

There is an old adage that says “Strike when the iron is hot”. In real estate it works exactly the opposite for property investors. Their mantra is “Strike when the market is really cold”.

Big Luxury Real Estate Deals

Yes, two big herculean real estate transactions within the span of one month coming during this sleepy realty period for two sprawling bungalows in South Mumbai have woken the Mumbai realty fraternity.

In the first deal industrialist Kumar Mangalam Birla emerged as the highest bidder for the sea-facing, 30,000-sq-ft, Jatia House in Malabar Hill. Mr. Birla is apparently parting away with a cool Rs 425 crore for this iconic SOBO property and very recently , Cyrus Poonawalla, chairman of Poonawalla Group, is buying US consulate's Lincoln House at Breach Candy for Rs 750 crores. In 2014, the Godrej family acquired Mehrangir, the house of Homi Bhabha, father of India's nuclear programme, in Malabar Hill for Rs 372 crore.

A sense of hope

These two and previous transactions in 2014 have managed to create a big sense of hope amongst Mumbai’s battered and bruised real estate market but they have also proved that the best time to buy real estate especially the big ticket size ones is during the lull phase. These properties have been bought much below their original bid prices which would never have been possible during the “crest” phase of the property boom wave.

Luxury Real Estate Lessons

Lesson to be learnt from this is very simple – the luxury property market is never ever down.  Simply because the luxury property purchasers are way securely insulated against the minor fluctuations of the financial markets and they are always ready with funds in case a good opportunity comes knocking by.

As we discuss the ramifications of these deals, another iconic property , Hindustan Unilever's guest house Alhambra on Carmichael Road, is actually doing he rounds amongst property buyers in the big league and it seems a deal closure for the same is just around the corner.

Luxury Real Estate is a Forever Market

There are not many who fall under this particular bracket of ultra rich investors but the ones who are do have the capacity to make decisions immediately making sure such good opportunities to buy luxury homes do not go to waste. Given the sluggish property market scenario it would be no surprise to see many similar luxury properties coming out into the market very soon.

In the end it is still a win-win scenario for the both buyers and sellers of such high priced luxury properties. This is because the money that is locked up in these assets is humongous and for the luxury real estate developers or luxury property owners; holding onto such huge assets is actually losing a lot of money. In fact, liquefying such properties during boom times is sometimes more difficult because the buyers perceive every luxury real estate asset on the market as “overpriced”. The dull and damp market scenario helps the buyers look at assets with more time on their hand and decision making is done with more clarity.

These luxury properties have an intrinsic and the value of these luxury homes keep moving north due to their exclusivity and iconic status. The big luxury home buyers prefer these luxury real estate purchases as trophies along with their other conquests in life.