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Changes to Delhi Zoning Will Lead to More Hotel Residence Options

Upcoming changes to local laws in the Indian city of Delhi are likely to lead to rapid development of hotel-residential projects, in addition to the conversion of some existing hotel rooms into luxury branded residences.

According to a report in The Economic Times, the government of Delhi, India, is planning to revise zoning laws to allow new and existing hotels to offer up to 20% of the building area as for-sale apartments. This will likely create a mini-boom in hotel redevelopment in parts of the city, as new hotel-residential developments become more viable and existing hotels expand or repurpose to increase profitability.

While the change in laws will not affect all districts of Delhi – it notably excludes the Lutyen’s Bungalow Zone, the Taj Mahal, Le Meridien, and Shangri-La hotels – the change may make it possible for hotels including the Hyatt Regency and The Leela Palace to alter their properties. These existing hotels may seek to expand the premises to add apartments where possible or convert and sell hotel rooms and for-lease suites in the short- or long-term.

The addition of for-sale residences will have an immediate impact on new hotel construction in the affected zones. With higher returns and shortened pay back periods, real estate developers will have a greater incentive to build new hotels, and the pre-sale cash proceeds will lessen the dependence on debt for construction while giving lenders more comfort and facilitating easier project financing.

The concept of luxury homes with full hotel services and management and bearing the mark of a major international brand is still relatively new in India, but the market is taking cues from their widespread success in the Middle East and Southeast Asia. In addition to the Four Seasons Private Residences Bengaluru which is currently on the market, recent projects have been announced that include Ascott and Grand Hyatt Residences in Guragon and The Leela in Bangalore.

Hotel-branded residences are increasingly popular globally as buyers enjoy the luxury hotel services, professional management, top-quality design and bragging rights associated with these new luxury homes. While hotel homes generally sell at significant residences to non-branded homes, the increasing wealth in India and demand for the highest quality luxury properties globally, at least one segment of high net-worth buyers agree they are worth it.