About 26% of mid-segment homebuyers moved residences within pandemic period: Survey

Nearly 26% of mid-segment homebuyers with annual household income between Rs 10 lakh and Rs 25 lakh shifted to another residence within the COVID-19 pandemic period. The relocations were motivated by factors like want of more open space and proximity to friends and family, said Knight Frank in its Global Buyer Survey that analysed the impact Covid-19 had on residential buyers’ attitudes to purchasing homes around the world.

An overwhelming 87 percent of respondents who desire to switch homes in the next year, favoured the suburban neighbourhood of their current city of residence, while 13 percent who wish to relocate are open to considering an alternate city.

On price outlook, the report said that 64 per cent of the respondents expect the value of their primary residence to increase in the next 12 months.

Nearly 40% of respondents across income segments in India are more likely to buy a second home due to the pandemic closer to big cities. As many as 37% from the mainstream Indian category are more likely to buy a house. Outdoor space and the need for greater privacy have pushed homebuyers in the Global Indian segment to evaluate second home purchases in India, UK and the US, followed by Singapore and Australia, it said.

In India, study from home and work from home demands have made homebuyers in the Mainstream Indian segment lean towards second home purchases, the report noted. Globally, one-third of the respondents are more likely to buy a second home.

With an objective to closely capture the impact of the COVID-19 pandemic and consequent lockdowns on residential segment consumers in India, Knight Frank conducted a two-part primary survey for the country. Part I of the survey comprised respondents in the high-end income segment, referred to as the ‘Global Indian Segment’ and Part II that gauged buyer sentiment in the mid-end income segment referred to as the ‘Mainstream Indian Segment’.

Mainstream Indian Segment respondents have an annual household income in the range of Rs 10 lakh to Rs 25 lakh. Global Indian Segment respondents have an annual household income in the range of Rs 40 lakh to Rs 1.5 crore.

For Indian Mainstream non-movers, 32% were more inclined to move residences in the next 12 months. An overwhelming 87% of the respondents who desire to move homes in the next 12 months, favoured the suburban neighbourhood of their current city of residence, while 13% of respondents who want to relocate, may consider an alternate city.

As many as 32% of the respondents from the Mainstream Indian segment expressed willingness to move into a new home in the next 12 months as a result of the pandemic, whereas 14% from the Global Indian segment indicated a desire for relocation.

Of the total respondents looking to buy in the Mainstream segment, 87% of respondents are looking to move within the city. In contrast, respondents from Mumbai and Pune are more inclined to move to another city post the pandemic. One in five respondents are more inclined to move houses within the next 12 months globally, due to the pandemic, the report said.

“It is interesting to observe how homebuyers’ preferences have been influenced by the pandemic. With all the pandemic related restrictions, 26% of the mainstream Indian segment moved houses during the pandemic, higher than the 19% observed globally. Moreover, a good 32% of the respondents in the Mainstream segment in India are looking at relocating in the next 12 months,” said Rajani Sinha, Chief Economist and National Director – Research, Knight Frank India.

The pandemic related changes in living and working style have induced the need to upgrade homes. Good air-quality, access to green space and healthcare infrastructure have become prominent features influencing homebuyers’ preferences, she said.

Another interesting aspect that came out from the survey is that amongst the Global Indians, a large number expressed no change in their spending propensity for home buying. However, in the Mainstream Indian segment, 43% revealed a reduction in spending propensity, while 38%  expressed an increase in their spending propensity despite the pandemic, she said.

The report said that in a price sensitive environment, more than 50% across all income segments in India cited lack of willingness to pay a premium for branded residences. Marking a significant citation, 32% of the Global Indian segment expressed willingness to pay a premium for a greener home, the report said.

In the case of the Global Indian segment, which represents the higher-income segment, 32% expect prices to rise. Reflecting a more optimistic outlook, 61% respondents in the Mainstream Indian segment expect prices of their primary residences to rise in the next 12 months.

Around 30 per cent of respondents in the survey expect rates to rise up to 9 per cent, while 25 per cent hope prices to rise by 10- 19 per cent and 6 per cent feel rates to appreciate by more than 20 per cent.

Nearly 58% respondents in Mumbai and Kolkata expected up to 10% increase in residential prices, while 53% in Pune also have a similar expectation. More than 60% respondents in Southern cities expect up to 20% price increase in next 12 months. Around 19% respondents in Bengaluru and 18% in Chennai expected prices to increase 20% or more in the next 12 months.

The report emphasises that the future of work will play a significant part not only for the commercial sector but also for the residential.  More than half of the respondents in the Mainstream Indian segment expect to be back in office for the entire work week once all restrictions are lifted.

As many as 47% of the Global Indian segment respondents expect to continue working for 2-4 days in a week from office once all restrictions are lifted. In the Mainstream Indian Segment, the highest inclination towards 5 days of work from office was shown by professionals i.e. lawyers, architects, doctors, chartered accountants etc. In case of the salaried class segment, the preference for work from office ranged from 3 to 5 days. This is largely due to the impact of tech-firm employees working from home, the report noted.

Globally, the report noted that 19% of respondents have moved to a new house since the start of the pandemic; this rises to 25% in Australasia and North America. Of the non-movers, 20% are more inclined to move in 2021 even as the pandemic continues.

The world over, 64% of the respondents expect the value of their primary residence to increase in the next 12 months. The world over, 59% of respondents envisage working 3-5 days in a week from office once all restrictions are lifted. In the Middle East and Asia, the figure is 41% and 36% respectively.

“The pandemic has changed the outlook towards ownership of homes right across the different income strata in India. Our Buyer Survey confirms that across the spectrum of Indian homebuyers, 32% showed interest in relocating from their pre-pandemic homes," said Shishir Baijal, chairman and managing director, Knight Frank India.

"It is observed that apart from the spending propensity and house type that typically govern an Indian home buyer’s purchase decision, factors such as access to open green spaces, healthcare and proximity to workplace have also started playing an important role. Energy efficient homes are also gaining traction as the concept is finding preference amongst home buyers in India,” he said.

Global Indian willing to pay a premium for energy efficient homes In the global context, energy efficiency ranks high in priority for people evaluating a home purchase in future. Around 57% of Global Indian respondents indicated energy efficiency in new homes as a very important feature for purchase consideration. Around 32% respondents from the Global Indian segment expressed a willingness to pay a premium for greener homes.

While features such as good air quality, proximity to green areas and access to good healthcare have become more important, factors such as being within walking distance to a public transport hub have slid down in the order of ranking for the Global Indian segment. Residents of cities like Ahmedabad, Bengaluru, Pune, Hyderabad and Mumbai have rated accessibility to green areas as the most important feature, the report said.

About 52% of the global Indian segment indicated that they are more likely to move to a waterfront residence when it came to property type preference. In line with the responses globally, 46% of the Global Indian segment buyers would want to live in a detached home/villa. However, for the Mainstream Indian segment, the comfort of a suburban home followed by city centre apartment was of importance.