While housing sales are on a decline due to the COVID-19 pandemic, listed developers continue to do well, indicating that homebuyers prefer better-organized players that now dominate the segment.
As many as 62 percent of the prospective buyers prefer to buy a home from branded developers, even if it is priced higher, according to ANAROCK Research’s latest consumer sentiment survey.
The developers are also cognizant of the changing market condition and have effectively controlled launches to not create an oversupply situation.
Amidst controlled new housing launches, the residential sales-to-supply ratio has improved to 1.36 currently, as against 0.63 in 2014, the FICCI-ANAROCK report, Indian Housing Sector: Disrupted, Transformed & Recovering, released at the 14th Annual FICCI Real Estate Summit 2020 said.
The COVID-19 pandemic has also altered homebuyers’ preferences and their housing requirements due to which we are likely to witness trends such as demand for larger and functional homes, townships, plotted developments, weekend homes, and farmhouses. Also, one has to remember that the market is now driven by end-users only and so product offerings must be appropriately planned, it said.
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The coronavirus-related lockdowns have also put brakes on the sector’s growth momentum. Industry estimates of the Indian real estate market, prior to the COVID-19 pandemic, were projected to be $650 billion by 2025 and $1,000 billion by 2030.
However, the value of real estate under construction increased from $94 billion in 2009 to $243 billion as of H1 2020, a 2.6X increase. During the same period, the share of housing (residential) grew from 49 percent to 88 percent, indicating large-scale expansion witnessed in this segment, the survey said.
Weighted average prices across the top seven cities have grown nominally at a compounded rate of 3 percent between 2012 to 2019. This has been less than the prevailing inflation rates and the growth in income which provides an opportunity for homebuyers to do bottom fishing, it said.
Some trends that are likely to shape the future of the Indian residential real estate sector include need for larger homes, altered home layouts, a rise in demand for plotted developments, more demand for weekend homes and farmhouses.
In the National Capital Region, there’s a huge demand for farmhouses, and average monthly transactions have gone up from 2-3 in the pre-COVID era to 10-12 as of now, the report said.
Townships too have gained interest. There is a rising preference to live, work, and play in controlled environments. As a result, we may witness a rising interest in townships in the years to come.
Housing requirement is expected to rise in Tier 2 and Tier 3 cities. There is a rise in reverse migration across the length and breadth of India as the urban residents are looking to remain safe and be with the family. Also, with work-from-home becoming the new normal, working professionals can work from their hometowns. As a result, there may be a rise in housing requirements from the tier II-III cities, the report added.