After a turbulent year, the Indian residential real estate market is beginning to bounce back from its pandemic blues, registering a 51 percent quarter-on-quarter increase in residential sales in Q4 2020. This recovery is driven by a growing shift towards homeownership across the country.
According to NoBroker.com’s India Real Estate Report 2020, 82 percent of Indians plan to purchase a property in 2021 in the wake of uncertainty created by the viral outbreak.
With housing demand set to increase in 2021, real estate players are quite excited by the growth opportunities that lie ahead. This resurgence is characterized not only by a quantitative revival but also by a qualitative shift brought on by the pandemic’s impact on consumer perspectives and sensibilities.
As a result, several new projects, from affordable housing to premium living are in the offing even as existing residential developments in suburban areas across top metropolises continue to register increased consumer interest.
However, before committing to a project, real estate players must abide by the sector’s core tenet: home purchase is an investment that, like all investments, is influenced by buyers’ lifestyles and preferences, now more than ever. Buyer lifestyle must, therefore, be considered as one of the primary factors before any new undertaking – and to make accurate decisions based on that, we must first understand the different buyer demographics.
Real estate: Types of buyers to expect and what they are most likely to choose
Consumers purchase property for two main reasons: as an investment or for end-use. While purchasing property, those buying homes as investments prioritize factors such as low initial cost of investment, high expected returns, the value of assets, future growth potential, and market trends.
The demand for vacations and second homes in locations such as Dehradun, Rishikesh, and Goa has surged in the wake of the pandemic because of the growing adoption of remote working. In keeping with this trend, the most lucrative real estate investment destinations are shifting away from metropolises like Delhi and Mumbai to tier-2 cities that offer more affordable properties and better returns on investments.
For end-users, on the other hand, aspects such as convenience, access to amenities, security, and standard of living take precedence; the needs and requirements of this demographic can be further broken down by age group, lifestyle, and family structure.
For instance, retired individuals, who are likely to opt for quieter, secure localities situated at the outskirts of the city, will want ready access to amenities such as quality healthcare, groceries, and other essential items. The move will also take them away from COVID-19 hotspots in urban centres to which they, at their more advanced age, are more susceptible.
Moving away from metropolises: Why end-users want to purchase a home in the suburbs
Younger professionals, who have long favoured metropolises such as Delhi/NCR, Mumbai, and Bengaluru for better job opportunities, are also beginning to move. Thanks to the rise of remote working policies, it is no longer necessary for them to physically live closer to physical offices. Therefore, with the cost and time required to commute no longer a factor in their choice of residence, many single as well as cohabiting migrant working professionals are choosing to shift either to adjoining suburbs or nearby tier-2 cities in spacious houses at a more affordable cost.
The logic behind this reverse-migration is simple: they can easily swap hefty monthly rents in metropolises for home loan EMIs while adding a tangible physical asset to their name in the process. Suburban and tier-2 areas also have lower costs of living, enabling these young professionals to unlock more value and savings for their incomes. The larger living spaces on offer also enable them to set up dedicated home offices – an essential requirement in the era of remote working. It is little wonder, then, that the percentage of millennial buyers in the real estate market has shot up from 49 percent to 63 percent post-Covid.
Larger living spaces are also a priority for homebuyers with families. With multiple members engaged in online meetings or classes while at home, the need for multifunctional rooms in which to conduct work, study, or other activities without disturbance cannot be stressed enough. Prospective buyers with school-going children also factor in proximity to good schools when committing to purchase; with pandemic restrictions gradually being relaxed, the academia is likely to implement a mix of online and classroom-based models of pedagogy. As a result, localities with good connectivity to schools will feature higher on the list of such home buyers.
The growing demand for greener environs and better amenities
The pandemic also saw homes take on different roles as offices, schools, gyms, yoga centres, and recreational spaces. This shift in lifestyle brought to the fore the importance of good ventilation, adequate lighting, and comfortable living areas conducive to mental peace in the individual’s living experience.
As a result, there is greater demand for more spacious homes across all demographics, with an increased appreciation for areas such as balconies, terraces, patios, and backyards. The desire for greater self-sufficiency has also seen a surge in the demand for smart appliances such as washing machines, dryers, dishwashers, refrigerators, stoves, ovens, and microwaves. Built-in space for such appliances in kitchens and bathrooms will, therefore, be an asset during the sale process.
The growing emphasis on holistic wellbeing is also leading to a heightened appreciation for greenery and parks, as they provide an opportunity to be outdoors, but without as much risk and responsibility that other public spaces entail. Accordingly, homebuyers are looking for residential areas that include easy access to parks and green spaces. There is also a growing demand for secure, walkable access to essential facilities and amenities, which is taking precedence over other factors such as distance from the workplace.
As a result, there is a greater demand for residential developments which offer facilities such as community halls, playing areas for children, gyms, walking tracks, and pleasant outdoor spaces. 61% of prospective homebuyers are looking to move into gated residential societies to avail benefits such as easy access to reserved spaces and better safety enabled by society dwelling. By partnering with leading society management apps that enable restricted physical contact environments and touchless entry for society staff and guests, real estate players can also deliver added value to their customers.
All in all, thanks to the strong purchase sentiment, the prospects for the Indian residential real estate market appear extremely positive in 2021. To capitalize upon these trends and generate optimal returns, however, real estate players must identify the stated and unstated requirements of their target consumers given the locality, city and demographics. Doing so can help them deliver the most relevant housing and investment options to prospective homebuyers and drive accelerated growth for the industry – and, consequently, the nation.
The author, Amit Agarwal, is Co-Founder and CEO at NoBroker. Views expressed are personal