Moneycontrol
Aug 19, 2016 12:34 PM IST IST | Source: Housing.com/news

Is there enough market research for home buyers?

When Ratan Pandit, a school teacher, searched online for information to buy a house in Noida Extension, the results left him completely confused. While some property consultancy firms endorsed this market as a future R

When Ratan Pandit, a school teacher, searched online for information to buy a house in Noida Extension, the results left him completely confused. While some property consultancy firms endorsed this market as a future investment magnet, others advised buyers to stay away due to over-supply. Even various property listing sites could not help Pandit to understand the market. Pandit’s experience is echoed by many home buyers, who rue the absence of reliable research and conflicting reports on India’s housing market.

“What I needed, was information on the short-term, medium-term and long-term prospects of the market and a comparative study of the investment-worthy projects in the region. However, most of the reports were market feasibility studies from the industry’s view point. I could not find a single report that had been done from the perspective of home buyers,” lamented Pandit.

Analysts seem to agree with Pandit’s observation. Nevertheless, they maintain that research in any industry, including real estate, is completely misunderstood owing to the different parameters involved. One such research pertains to the economic aspects and maps demand. A lot of developers know their market and its prevalent demand and choose the type of project accordingly, while others would like to know the psychology of the consumer.

See also: Are referrals an effective strategy in real estate?

The next type of research pertains to the product and deals with the type of amenities to be offered and other parameters. Then comes the pricing, which itself can be misleading. Pricing, in absolute terms, means nothing and it has to be linked with affordability. So, if a report suggests the mean affordability of a certain location or serves to identify the target buyers, then, one can price the product accordingly.

In the absence of scientific research that is beneficial to home buyers, the market has many vacant and unsold units, even though demand is three times higher than supply. Naushad Panjwani, managing partner, Mandarus Partners LLP, agrees that there is not enough research on which the end-user could rest his decision making.

While developers and HNIs may have access to such research, for the end-users the decision is often based on emotional connect. The cost of the house and its proximity to one’s work place remain the most important considerations.

Nikhil Hawelia, MD of the Hawelia Group, feels that the challenge is not the absence of research, but how to make it available to the target buyers. According to him, most of the market feasibility studies that developers commission to research agencies, are meant to assess the market from the standpoint of potential buyers. However, it is then confined to the developers’ internal assessment team, instead of being made public, he points out, adding that it restricts fair competition in the market.

“Half the problem will be solved, if developers move away from a mindset that one’s feasibility report should not be used by other developers in the same market. Moreover, developers must use the research, to have an open dialogue with buyers and boost transparency,” he argues.

There are many reasons why a person buys a house – it could be economic, emotional or even for a sense of security. A person may also buy a house, with the aim of earning rental yield or for capital appreciation. Nevertheless, until transparency improves and greater scientific research is available for the developers, as well as the home buyers, the mismatch between demand and supply in the Indian housing market is likely to remain high.

(The writer is CEO, Track2Realty)

By: Housing.com/news

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