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Even as overall residential unit absorption numbers in the National Capital Region (NCR) and Mumbai Metropolitan Region (MMR) have dropped, the tony areas of South Delhi and South Mumbai continue to fascinate and lure India’s deep pocketed buyers — because one hasn’t arrived till one has arrived in either of the two.

It is no wonder then that the upscale areas of these two cities sees a consistent demand, and properties—including disputed ones—being lapped up as soon as they hit the market.

The posh neighborhoods of South Delhi and South Mumbai, which have traditionally been high on aspirational value, have always been coveted for their address equity. Add to that a dearth of supply and you have a property market which does not buck to the (downward) trend of the larger residential market.

Khan Market in Lutyens Delhi.

“The areas of South Delhi and South Mumbai have always seen high values because the people buying into these areas are typically end user buyers and ones with deep pockets,” Shveta Jain, Director (Residential Services), Cushman and Wakefield India Pvt. Ltd told  “They are not affected by macro economic factors, hence rendering the markets they buy into as more resilient than the regular market,” she said.

The resilience of these markets saw through the global recession in 2008. Even as values and sales in most cities were badly affected, the South Mumbai and South Delhi market stood strong.

“While most locations were hit, the values in South Delhi, South Mumbai and Central Mumbai didn’t fall — even though transactions may have seen a lull. In the past 10 years, we haven’t seen prices in these areas getting impacted on a downside in anyway,” Jain said.

Owning property in Mumbai and Delhi’s upscale South is like owning art

What also keeps these markets buoyant may be its buyer profile — that of more end users than investors.

“Owning properties in these areas are more about owning them — as a family heirloom that can be passed on to children and grandchildren. They are not investor driven,” said Jain.

Mudassir Zaidi, Regional Director (North), Knight Frank India, agrees. In fact, he compares buying properties in the swanky neighborhoods of South Mumbai and South Delhi to buying art.

“Buying a property in these posh neighborhoods is like buying art. The rich want to own it. It enhances their status and everyone is clamoring for a masterpiece they can afford to buy,” Zaidi said in an interview to Firstpost. “The location and the address is what matters to buyers in these markets. It is saying, ‘I have arrived’,” he said.

A matter of scant supply and plentiful demand

Another factor that sustains Mumbai and Delhi’s upscale locality demand is the scant supply of property vis-a-vis the demand.

According to a Knight Frank report, South Mumbai made for only one percent of launched units in the 2011-12 financial year compared to 39 percent in the Western and far Western suburbs of Mumbai for the same period.

South Delhi doesn’t even have that liberty.

Much of it which comes under Luyten’s zone has numerous restrictions on building or even modifying the structures. Houses in the area can only have external dimensions and expand horizontally. They cannot build vertically. As a result of this no new construction is easy.

“Luyten’s has less than 70 bungalows and if you have an address there, you have arrived,” Zaidi told . “The restrictions make supply of houses and property in the area extremely sparse.”

This had led to the prices of locations in South Delhi, outside the Luyten’s zone to see a hike.

“Since supply is limited and there are no new additions to the Luyten’s zone, there is some pressure on prices in adjoining areas where some redevelopment of houses is taking place. Builders are buying houses in South Delhi and adding supply for people who spill over from Luyten’s and this is leading to a price rise in South Delhi the areas,” Jain said.

Samir Jasuja, founder & CEO, PropEquity, said the skewed demand supply dynamics is definitely helping sustain upscale markets.

“The properties in South Mumbai depict a classic case of demand-supply mismatch. A quick check at the statistics indicates that South Mumbai witnessed no new villa property addition during the past five years. In addition, South Mumbai received a new launch supply of only 11,832 units during the past five years, which is nearly 15 percent of the new launch supply in the rest of Mumbai. With such a high demand and inadequate supply, prices are bound to increase,” Jasuja said.

A recent PropEquity report showed that absorption rates in both the National Capital Region and the Mumbai Metropolitan Region dropped compared to last year. NCR saw an absorption rate drop of 42 percent and MMR saw a drop of 34 percent.

However, sales of properties in South Delhi and South Mumbai have sustained.

Industrialist Sajjan Jindal recently bought a three storey sea-facing bungalow on Napean Sea Road in Mumbai for Rs 500 crore from four factions of the Maheshwari family. Bharti Enterprises vice-chairman, Rajan Mittal, recently bid Rs 156 crore for a property on Amrita Shergill Marg in the Lutyens Bungalow Zone, for which litigation between four brothers has been on since 1980. Sunil Mittal, chairman, Bharati Enterprises, also owns a bungalow on the same street which he purchased for Rs 38 crore in 2002.

“These markets are not like regular property markets where supply is available. It is more to satisfy egos. A buyer in these areas will already have multiple homes,” said Zaidi of Knight Frank India.

“In South Delhi and South Mumbai, many such buyers will behave emotionally on such large house purchases because money is not so much a concern. On the contrary, a normal market will see people will behave more rationally,” he said.

But then, who said, wads of money every brought a person truckloads of rationale.