Villa projects back in lexicon of developers

Villa projects back in lexicon of developers
Business Standard, December 30, 2009, Page 3

Raghavendra Kamath / Mumbai

Unitech, Jaypee Greens to launch new projects in the segment.

Villa and bungalow projects are back on the agenda of property developers as demand for premium homes picks up. Though villas were popular with the affluent during the boom years of 2004-07, the economic slowdown saw many premium projects put on hold due to diminishing demand.

Large developers such as Unitech, Parsvnath and Jaypee Greens, which had shifted focus to mid-income housing in the range of Rs 20 lakh to Rs 60 lakh to beat the slowdown, have all launched villa projects in the last two months to tap demand for such properties.

Unitech, the country’s second-largest property developer, which launched its luxury villas ‘Alder Grove’ in Gurgaon last month, has already sold out all its 50 villas. Prices started from Rs 1.25 crore per villa.

After selling the first phase, the company has put the second phase of Alder Grove on sale, where villas are priced upwards of Rs 1.7 crore. Now, the company is exploring villa projects in other parts of the country, sensing renewed demand for such projects.

Jaypee Greens, a unit of Jaiprakash Associates, launched Jaypee Greens Sports City, including villas and town homes, on the Yamuna Expressway in Gautam Budh Nagar, this month.

Says R Nagaraju, head of corporate planning, Unitech: “In the last couple of years, there were no new launches in this segment. We felt there was a big gap and thought of launching the project to tap the demand. Within a month of launching it, we were proved right. Now we have launched the second phase.”

Adds Neetal Narang, assistant general manager, corporate communication, Delhi-based Parsvnath Developers: “All our residential projects have villas and penthouses. Though the sale of such properties went down during the slowdown, now they are in recovery mode. People are coming back to us with enquiries.”

According to property consultants in Delhi, prices of villas in the secondary market have also increased 20-30 per cent in South Delhi in the last couple of months due to renewed demand.

“Buyers thought it was the right time to buy such properties as prices corrected significantly. In South Delhi itself, there is enormous demand for villas in second sale,” says Raminder Grover, CEO, Homebay Residential, a unit of property consultancy Jones Lang LaSalle Meghraj.

In Mumbai, several small developers are marketing villas on the peripheries of Mumbai, pitching them as ‘second homes’. Villas, priced at Rs 25-35 lakh, are coming up at Kasara, Karjat and Shahpur — about 70-100 km from Mumbai.

“When markets go down, such projects are first to go down. But when markets go up, they are the ones that move faster than others. Villas are an important portfolio for us and we want to take it across different geographies,” says R Karthik, senior vice- president (marketing), Lodha Group, which is developing Lodha Goldcrest — a ‘by invitation only’ villa project in Lonavala, a two-hour drive from Mumbai. The cost for each villa is Rs 3.5 crore.

“We have many such projects under planning,” Karthik says.

Consultants say lower land prices and availability of large tracts of land in these localities are inducing developers to launch villa projects. While land price ranges from Rs 100 to Rs 500 a square ft in places such as Kasara and Karjat, a square ft of land costs Rs 3,000 to Rs 20,000 in Mumbai.

This leads to better margins for developers. While realty projects in Mumbai carry a margin of 25-35 per cent, those on peripheries carry 35-40 per cent margin due to lower land prices.

But not everybody is enthused. Rajeev Talwar, executive director at DLF, the country’s largest developer, says the company will continue to focus on apartments rather than villas and bungalows.

“The days of selling per square yard are gone. We can derive more value in apartments by selling per square ft,” Talwar says.

Adds Sunil Bajaj, a property consultant: “The reliability of many of the villa projects on Mumbai’s peripheries is doubtful. In many cases, they were only photographs and not real projects when buyers seriously looked at the projects.”