Purchasing a luxury flat? Here’s your checklist

Buying a house is one of – if not – the most important investment a person can make in a lifetime. Therefore, it is all the more critical that one conducts a thorough and rigorous deep dive into all relevant dimensions before purchasing a luxury flat.

There are numerous aspects to consider before one signs off on the dotted line. Purchasing a flat is a multi-layered process, which calls on the buyer to investigate and examine several facets with great care and diligence. Many of these factors — the builder’s reputation, the location of the apartment building, anticipated ROI or bank loan and interest rates — when looked at thoroughly give clear and loud signals on the pros and cons of a deal.

Surge in luxury flat sales in India

There has been a perceptible surge in the sale of luxury flats in India. As per a CBRE report, sales of flats priced at Rs 4 crore and above have jumped by an incredible 97% in the period between January and September 2023.

Total sales of luxury flats during the January-September period of 2023 stood close to 9,200 vis-a-vis 4,700 flats sold during the same period in 2022. Not surprisingly, the sales were concentrated in a few metro cities, namely, Delhi-NCR, Mumbai and Hyderabad.

Delhi-NCR region accounted for 37% of the total sales, followed by Mumbai which clocked in a neat 35%. Hyderabad positioned itself in the third position at 18% and Pune accounted for 4% of the total high-end sales respectively.

The pandemic-induced change

An Anarock Consumer research survey is quite instructive when it comes to understanding the evolving taste of consumers searching for a luxury flat. Before the pandemic, that is, in early 2019, only 9% of the respondents surveyed by Anarock were interested in purchasing a luxury home priced Rs 1.5 crore or above. However, this figure has moved up substantially in recent years. In 2023, as many as 16% of the respondents were interested in buying luxury flats.

In the aftermath of the pandemic, the demand for spacious and luxurious flats has exploded, and people are keenly eyeing 3-, 3.5- and 4-BHK flats considering work-from-home and e-schooling compulsions. Another factor driving the market is the overarching rupee depreciation that has opened the gateway for many NRIs to channel their savings into high-end premium flats. Multiple discounts and offers put out by major developers across India have also lured in on-the-fence buyers.

Key parameters to monitor before buying a luxury flat

1. Location

This might feel, rather, obvious but a lot of flat buyers deliberately refuse to heed this factor, only to regret their purchase subsequently.

When purchasing a luxury flat in a metro, the location is pivotal. An apartment society being built on the outskirts of the city might offer numerous benefits and amenities, but these benefits are soon outweighed by the long and frequent commutes to the heart of the city.

Today, there isn’t a single city in India that is not victim to long-winded traffic gridlocks. Proximity to the city centre can help boost one’s official productivity while cutting down on the number of hours spent in grinding and mind-numbing traffic.

In any case, the premium one pays for scenic, away-from-the-city locales runs out pretty fast considering the rampant pace of development in urban areas. After a few years, homebuyers are not only saddled with a flat surrounded by other apartment societies but also are forced to spend time-consuming commutes to the office every day.

Paying a premium for a flat at the heart of the city with a short distance from the business hub is far more feasible.

2. Builder’s reputation

There are far too many horror stories of Indian real estate consumers who have paid their hard-earned savings to developers, only for the disreputable and suspicious builders to vanish with those funds. Of course, there has been a stark improvement with the advent of RERA on the regulatory scene. However, the list of projects stuck in litigation is near-endless.

To save oneself from such a fate, prospective buyers should carry out thorough and detailed research, both online and offline. While talking to local property agents and other prospective buyers helps, one should, ideally, go above and beyond in their probe.

Perusing media stories on the identified builder, scanning through the RERA database as well as browsing through online consumer portals can help unearth a lot of existing complaints against the builder. These digital deep dives can reveal both positive and negative aspects of the builder.

A sturdy reputation with a long list of delivered projects is always a good sign, however, even here a customer must not seal a deal on blind faith. Buyers should finalise a purchase only after ensuring the financial viability and business resilience of a builder.

3. After-sales support

In most cases, customers purchase a flat for a lifetime. It is imperative to ensure that the builder has a team present, on the ground, to help with maintenance issues faced by new customers. Interested customers must also ascertain that the purchase agreement mandates timely delivery of amenities in good condition. Moreover, completion of registration formalities is also a critical process in flat ownership. An uncooperative builder can make the registration process cumbersome and hellish for new buyers.

4. Financing options

Modern banks vie with each other to attract reliable individual borrowers with a strong credit history. Depending on your employment track record and your credit profile, you can avail of home loans at competitive rates for tenures spanning anywhere between five to 30 years. Borrowers with exceptional credit records can also negotiate with bankers for a better rate of interest, and should ideally explore loan products on offer by several banks before finalising one.

5. Re-sale value

Many investors take exposure to luxury real estate considering the handsome returns the sector delivered many times in the past. Unlike low-end and mid-range flats, high-end flats often end up defying economic cycles given that prospective buyers hail from the affluent class. By choosing the right flat in an upmarket location, and given a long enough timeline, investors can be rest assured of handsome returns. Luxury flats also enjoy high rental demand and can be leveraged for rental income.

Conclusion

In India, flawed terminology is often deployed in the real estate sector, whereby very tall projects comprising 70-80 floors are automatically slotted as ‘luxury’ projects. New buyers should be aware of this ruse, and take all pains to ensure that the project being advertised is a luxury project, in the true sense of the word. Another misleading marketing tactic is for domestic developers to enter into a tie-up with a global developer. Often, the global developer lends its brand name in return for a license fee without any exchange of technology or expertise. This is a misleading practice that has conned thousands of unsuspecting buyers.