By Dhruv Agarwala
A lot has changed since the coronavirus pandemic started and the world had to adapt ways it hadn't imagined. Now, as the world inches towards the mass production of Covid-19 vaccines that will act as a precautionary cure against this fatal virus, it remains to be seen if the current state of affairs becomes the new normal, or life goes back to the way it was before the pandemic. Many things however have changed irrevocably. Indian homebuyers' preferences in the real estate market, is one such thing.
Remote working to be the mainstay
For a variety of reasons remote working will continue to be the preferred mode of working for corporates across the world, considering the number of benefits it has offered in an atmosphere fraught with concerns about the physical wellbeing of employees and monetary stress caused by the pandemic. Companies would not like to start paying expensive rents for office spaces, when concerns about containing the outbreak of this disease still loom large.
Interestingly, it's not just office spaces that have been impacted by the work-from-home phenomenon. Trends clearly indicate that after becoming the main mode of working since December 2019, preferences are moving towards home ownership as compared to living on rent.
It's also pertinent to note that the pandemic has made people change their investment preferences, with more and more people now preferring real estate investments to investing in the stock markets. Also, amid record low interest rates on home loans, stamp duty reductions and price corrections, properties across the country are far more affordable now than what it has been in the past two decades or so.
Another fallout of the pandemic is how home buyers are viewing the location aspect of a property they want to purchase. Since commuting for work is no longer an issue, most people are willing to move to the peripheries where comparatively lower property values help buyers afford bigger spaces, at lower rates. Since being in the metro cities is no longer a precondition to work in an office located in that big city, migrants have either already moved back to their homes in tier-II, tier-III cities, or are planning to do so, especially since majority of them have seen their salaries getting reduced because of the economic fallout of the pandemic.
Data available with Housing.com show that tier-II and tier-III cities have been able to pip India’s prime residential markets in recent times in terms of demand for house property and land.
High-income individuals and those who are on their way to approaching retirement are also choosing alternative locations like hill stations and beach destinations as work station. Since their home is not only going to be their personal haven but also their professional arena, buyers are now seriously considering bigger homes. This trend has also resulted in a spike in demand for plots. More and more buyers are now considering plot purchases so that they can build a house, with all amenities and facilities suited to their individual requirements.
While it may be myopic to say that the real estate markets in the bigger cities are going to suffer because of the changes brought in by the work-from-home situation, it is certainly safe to say that remote working has brought the focus back on peripheral locations and suburbs of big cities, apart from tier-II and tier-III cities.
For the overall real estate market of a nation to perform well, markets across the country must perform equally well. This kind of overall development is also imperative for a more balanced urban sprawl and development. This was not happening in India. Also, while large-scale migration towards the big cities substantially increased the demand for housing in these markets, it also created major spikes in prices of these properties due to space constraints and a demand supply mismatch.
Despite the fact that a large number of projects were launched in the city peripheries, the suburbs in most of these markets failed to get much attention from the buyer—despite their affordability—because it involved long and often, tenuous hours of travelling from central business districts where the majority of employment hubs are located.
Similar trends were seen in tier-II and tier-III cities. Despite large-scale investment by the government in these cities, demand for real estate there remained dismal because most people moved to the big cities for work-related purposes as the smaller cities were not as successful in creating work opportunities.
Work from home has changed that. With the arrival and spread of the work-from-home concept, small cities and suburbs are now in a position to reach their full potential, enabling real estate in India to spring out of a prolonged slowdown that has been plaguing it for over half a decade now.
-Author is Group CEO, Housing.com, Makaan.com and Proptiger.com