“Around 15 real estate IPOs have been lined up. They plan to raise in excess of $6 billion. I don’t think that all of them are going to have a smooth journey. One or two may falter, as well,” Anuj Puri, Chairman, Jones Lang LaSalle Meghraj, told news agency here.

Puri said unlike previously, when investors lapped up issues at any price, this time, investors would like to see the pricing, the credibility of the developers and their ability to execute the undertaken or proposed projects, before subscribing.

“This time, the market will differentiate on three factors – what’s the price, credibility of the developer and the delivery capacity of the developer.”

Investors would like to see how transparent is the developer, the level of corporate governance in the company, the brand, the pricing of the issues and how much is left for the investors to be benefited, Puri said.

“The capacity of the developers is going to be viewed under the microscope. If one says that he is going to develop 50 million square feet and has completed only five million, investors are not ready,” Puri said.

The market also, he said, does not have the appetite for $6 billion real estate IPOs as the problem of liquidity still persists with the real estate sector, which had been badly hit by the economic slowdown.

“There is no liquidity problem as such in the market. But, it is a problem for the real estate sector. The market does not have appetite for so much,” he said.

Among the upcoming public issues, Sahara plans to raise Rs 3,450 crore, Lodha Developers Rs 3,000 crore, Godrej Properties Rs 600 crore, DB Realty Rs 1,500 crore and Kumar Builders Rs 450 crore, among others.

Emmar MGF has also filed a draft red herring prospectus (DRHP) with the market regulator SEBI and plans to raise Rs 3,850 crore.

So while the demand for volume luxury projects is still taking some time to pick up, the preference right now is more for boutique houses which are attracting the attention of HNI buyers.

Boutique luxury properties are much more exclusive, smaller in size and boast of ultra-luxurious specifications. Such properties are constructed in limited numbers in high-profile locations that are highly sought after among the super-rich. Typically, there are not more than 5-10 units in a project. Unlike volume luxury projects, these are extremely unique residential propositions and target only end users.

The demand for such properties has risen by 30-40% over the last year, ever since the prices bottomed out on the market, according to global real estate consultancy Jones Lang LaSalle Meghraj (JLLM).

But the bigger developers are not really into constructing these properties. And the logic for that is simple. “These projects are not a suitable long-term business model for developers focused on large-scale branding and expansion. The greater business potential lies in larger volumes, where the developer has a better cost arbitrage on the number game in terms of land and construction expenses by virtue of the economies of scale and also a far larger client base,” says Raminder Grover, CEO – Homebay Residential, JLLM.

Hence there are developers who specialise in this particular market segment
as part of their core competencies.
Developers such as Uppal Group, Orbit Corp and Thapar Homes are actively looking at boutique properties. Mumbai-based developer Orbit Corp, for instance, has such upcoming projects in Malabar Hill. “We announced Orbit Haven in May which had 13 apartments. It was sold out by July. We will soon be commencing work on Orbit Sky Chateau which will have about 7 or 8 apartments,” says Pujit Aggarwal, CEO & MD, Orbit Corp. Average price for the apartments here are Rs 45,000/sq ft.

Similarly, Uppal Group and Thapar Homes construct boutique luxury properties in South Delhi. Manish Uppal, MD, Uppal Group feels that there has been at least a 10% increase in their demand over the last few months. “The concept is now being understood. When someone is buying luxury, they would prefer it to be more exclusive rather than being mass produced. Boutique properties offer this exclusivity,” he says. The rate in areas such as Vasant Kunj and Shanti Niketan would be around 30,000-40,000/sq ft, as per JLLM.

The boutique property model is a tough job, according to developers. “One has to identify property, redevelop land, clean up the titles, tenants and get a whole lot of permits. The gestation period is longer too,” adds Aggarwal. But good margins and niche demand keeps developers interested.