Economic uncertainty and rising stock market volatility is positioning real estate as the preferred asset class for investments in India with over 91 percent preferring to buy an apartment over renting in the next six months, says JLL, a real estate consultancy firm.
According to JLL’s Homebuyer Preference Survey, 91 percent respondents wanted to buy a home when asked to choose between buying and renting. Additionally, 67 percent believed that buying a home is a necessity, not a luxury.
The evolving COVID-19 pandemic will also influence short-term decision making with job security cited as the biggest concern when contemplating the purchase of a home, respondents said.
The survey uncovered that a greater proportion of people in the age group of 20-35 years were likely to defer their home purchase plans by more than six months. Polled consumers above 35 years indicated that they are more inclined towards buying a property in the next six months.
Also, more than 50 percent of the prospective homebuyers indicated a preference to buy a 2 BHK apartment with size ranging from 800 to 1,000 sq ft.
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“Real estate has emerged as the most resilient asset class today and we see potential for more consumers to pivot towards home ownership in the longer-term. In tandem, ongoing work from home arrangements are pushing developers to become more flexible and granting homebuyers the option of creating a study room if need be,” Ramesh Nair, CEO & Country Head (India), JLL, said.
The pandemic has also accelerated the pace of digital transformation among developers and intermediaries. "In the past, we have seen project discovery happen online, this moved to virtual tours and interactions, and now one-fifth of the respondents in this survey said they are digital-ready to affect their transaction online end-to-end," he added.
The requirement of study rooms as work from home practices are adopted is a key highlight of the study. Elsewhere, the importance of healthy living is gaining currency as societies with wellness amenities are being preferred.
Homebuyers want to mitigate the risk and are willing to pay a premium for properties from reputed developers, showing an affinity towards ready-to-move-in properties in gated societies and township projects.
“It is encouraging that more than 50 percent of the prospective homebuyers surveyed have expressed their readiness to potentially buy homes within the next six months. At the same time, developers are relatively flexible to allay buyers’ concerns in this fragile business environment with respect to immediate cash outgo and long-term financial obligation by offering attractive flexible payment options with minimum upfront payment,” said Samantak Das, Chief Economist and Head of Research & REIS, JLL.Interest varies by market
Further analysis reveals longer-term resilience may appear first in the southern markets of Bengaluru and Chennai. The larger markets of Delhi NCR and Mumbai have high levels of unsold inventory in various stages of construction as well as greater YTS due to a prolonged slowdown in sales. The proportion of prospective homebuyers who deferred their home purchase decisions by more than six months is also higher in these larger markets.Affordable and mid-segments will continue to drive the marketMost respondents indicated a preference for properties in the sub-Rs 50 lakh and Rs 50-75 lakh categories. On the supply side, developers have also realigned their products, with 60 percent of the new launches in the past two years falling in these price segments.
According to JLL, COVID-19 can be credited as the catalyst for accelerating vital trends such as price rationalisation in larger markets, adoption of technological platforms to enable seamless buying and selling while resetting the significance of ‘owning’ a house among potential homebuyers.
The survey was conducted in June-July and has seen participation from 2,500 respondents across Mumbai, Delhi NCR, Bengaluru, Pune, Chennai and Hyderabad.