Despite jet rentals and champagne tastings, India’s elite aren't scooping up Mumbai realty

Enter the fortified gates of Indiabulls BLU Residences, an upcoming luxury residential property in South Mumbai’s Worli neighbourhood, and a grand Lorenzo Quinn sculpture stares you in the face. It obliterates the memory of washed laundry left hanging on the railings of a chawl – the cheap tenements where a bulk of the city’s labour class resides – just across the road.

Inside, to the left of the open foyer, a gleaming glass atrium houses another dazzling stained-glass ceiling installation by the same artist.

There’s more by the sculptor, best known for his modernist rendition of human hands. Quinn – grandson of Hollywood legend Anthony Quinn – is evidently an important part of the sales pitch for the Indiabulls property.

After all, a piece of real estate dotted with works of an Italian sculptor of renown has snob value attached to it in India’s financial capital. It doesn’t matter that you may have never heard of him before. It gives the nouveau riche some serious bragging rights.

Dream peddlers

In recent months, real estate developers across Mumbai – home to the largest number of billionaires in India – have upped the ante to entice the wealthy, name-conscious, status-obsessed buyer.

Exclusive branded interiors, in-house spas, indoor Jacuzzis, concierge services, and luxury hotel tie-ups are not the only draws.

Last month, French football legend Zinedine Zidane was roped in by realtor Kanakia Spaces to help sell luxury flats in Paris. No, not the French capital, but another residential property coming up in suburban Mumbai.

This Paris houses replicas of the Eiffel Tower and the glass pyramid of the Louvre. Prices range between Rs 3.5 crore and Rs 6.4 crore for an apartment. An Indian cricketer or Bollywood star clearly wasn’t worthy enough to peddle the French fantasy.

In the same neighbourhood as central Mumbai’s Indiabulls BLU, meanwhile, hoardings announce the re-opening of the ultra-luxurious Trump Tower, a joint venture between the Lodha Group, India’s largest property developer by sales, and the American Republican presidential candidate Donald Trump’s real estate company.

A Trump Tower flat can cost over Rs 10 crore. It also gets you a five-year membership of Lodha’s private jet club.

“Chauffeur driven cars,” as the company’s ads assert, “are passé when you have a private jet at your disposal.”

Champagne viewing

The wooing starts early.

An apartment-viewing at another of Lodha’s marquee projects – World One – in Mumbai’s old mill district (now rechristened Upper Worli to match its posh credentials) begins with potential buyers being ushered into a grand reception room that looks like a five-star hotel’s lobby.

As you wait for a European decorator to guide you through Giorgio Armani-designed sample flats, sales staff extol the virtues of the building’s designer-stamped living. Over champagne and canapés, of course.

World One, supposedly the world’s tallest residential building, has been in the making for over half-a-decade. At 442 metres, it will tower over Mumbai’s skies, as a symbol of the city’s “unfettered aspirations and unstoppable drive”, the company’s website declares.

Targeted at the professional jet-setters, business owners, and urban high net-worth individuals looking to create a family heirloom, the iconic address will “provide a product and experience beyond compare, that which money can’t buy”, insists Samujjwal Ghosh, executive VP & head of marketing at the Lodha Group.

“If we decide to have an installation on site, it will be no less than a Hussain or Picasso,” Ghosh adds, a little irritated when reference is made of the Quinn sculptures.

It is a game of one-upmanship.

Recovery not in sight

The market reality, however, belies such swagger, and the cheery catchphrases of the brochures.

Lodha, established in 1990, has in the recent past seen two downgrades in ratings – first by Moody’s and then by Fitch. Pre-sales and cash collections have underperformed expectations, both the rating agencies said.

Unsold inventory of luxury apartments in Mumbai also remains very high. Sales of homes costing over Rs 2 crore dropped 23% in the quarter ended March 2016, according to a report from Liases Foras, a real estate ratings and research firm.

But prices still haven’t fallen.

In fact, in the premium segment, prices jumped 2% in the second half of 2015, over the same period in 2014, Knight Frank, a real estate consultancy estimated. To add to the chaos, new launches soared by a whopping 490% despite a tepid market, according to the consultancy’s Q2 2015 India real estate report.

“Gimmicks do create mindshare, but are not the real things that people look at when buying an apartment,” says Mudassir Zaidi, head of residential services at Knight Frank India. Zaidi doesn’t expect sales volumes to pick up for another year or two at the least.

Desperation has, however, led builders to sit across the negotiating table, which can bring prices down by between 10% and 20% at least.

Turned off

Still, on the whole, luxury buyers are in the wait-and-watch mode.

Some, in fact, have even been scared away by developers’ hyper-emphasis on opulence.

“I want a home, not five-star frills,” says a banker who’s been scouting South Mumbai unsuccessfully for six months for a no-nonsense property. “For old school people like me, even though I have a budget, it is becoming increasingly difficult to find something tasteful, but low key. Something that doesn’t scream money.”

“There is a gap in the market for understated, non-branded, luxury that emphasizes on the warmth and exclusivity that comes with small buildings, a restricted number of dwellings and a premium location,” adds another potential buyer, requesting anonymity.

Oversupplied

While there is no doubt that a certain class of people will be sold on champagne viewings, imported sculptures, and private jets, these can never be deal-clinchers for the ultra-high net worth individuals segment, says Haresh Mehta, CMD of Rohan Lifespaces, a company constructing a bespoke high-rise on Mumbai’s tony Napean Sea Road.

“It [the UNHI segment] is not driven by gimmicks," he explains. "In real estate marketing, this segment clearly looks for ‘exclusivity’ of location, price, configuration, amenities and quality.”

Then there are also considerations of the simple laws of economics. The scarcer the product, more is the demand, thereby, driving up prices.

In Mumbai’s oversupplied luxury residential market, the biggest problem is that this simple equation is not adding up.

This article first appeared on Quartz.