With the rise of work-from-home (WFH), prospective homebuyers will see sense in shifting to city peripheries and take up larger homes at affordable prices and the 'walk-to-work' concept may lose some sheen, according to a report by Anarock.
The previous 'gold standard' of Indian housing - the walk-to-work/short drive to work, by definition only in and around central corporate workplace hubs - may shed some its popularity for the middle class.
Central locations would retain their allure for HNI/C-suite buyers who can afford larger spaces there, the report noted.
"Millennials' new-found preference for buying rather than renting homes, are among the most prominent new residential real estate trends of the COVID-19 era. With the rise of the WFH culture, many may now prefer to live in more spacious and cost-effective homes in less central areas. While sufficient supply currently exists in most of the peripheries, this new demand will eventually also dictate fresh supply. Bigger homes, affordable prices and more generous open spaces in the peripheral areas will draw demand from tenants and buyers alike," said Anuj Puri, Chairman, ANAROCK Property Consultants.
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Apart from changing real estate consumer preferences in a strengthening WFH environment, affordability is an enduring concern especially to the backdrop of a faltering economy and job loss/uncertainty. The peripheral areas are more affordable both from a rental and purchase perspective. ANAROCK has analysed the cost difference for India's three largest economic dynamos - MMR, NCR and Bengaluru.
In MMR, the average price for a standard 1,000 sq. ft. property in areas within city limits is approximately Rs 1.85 crore, against Rs 55.35 lakh in the peripheral areas – a 70 percent cost difference.
Micro-markets within city limits considered include Andheri, Vile Parle, Goregaon, Malad, Kandivali, Chembur, Wadala, Ghatkopar, Vikhroli, Powai, Mulund, etc. Peripheral areas include Kalyan, Bhiwandi, Dombivli, Mira Road, Vasai, Virar, Thane beyond Kasarvadavali and Owale Panvel, Ulwe, Taloja, etc.
The average monthly rent for a standard 2BHK home in areas within city limits is approximately Rs 45,800, against Rs 12,500 in the peripheries.
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In NCR, the average price for a standard 1,000 sq. ft. property in areas within city limits is approximately Rs 88.20 lakh, against Rs 37.50 lakh in the peripheral areas – a 57 percent cost difference.
Micro-markets within city limits considered include Vaishali, Vasundhara, Indirapuram, Noida, Golf Course Ext. Road, Sushant Lok, Dwarka Expressway, New Gurgaon, Dwarka, etc. Peripheral areas include Ghaziabad-Rajnagar Extension, Faridabad, Greater Noida, Sohna, Bhiwadi, Bahadurgarh, etc.
The average monthly rent for a standard 2BHK home in areas within city limits is approximately Rs 22,000, against Rs 9,500 in the peripheries.
As for whether one should rent or buy, the ANAROCK data reveals that the 5-year rental outgo for tenants living within city limits is equivalent to 27-52 percent of the total property cost in the peripheries of the top 3 cities (MMR, NCR and Bengaluru).
Also, the current home loan interest rates are at an all-time low, averaging around 7.15-7.8 percent - with the possibility of more reduction as the RBI recently cut repo rates even further.
In MMR, the average monthly rental outgo in city-limit areas is Rs 45,800. For five years, this equals nearly Rs 28.66 lakh (including standard rental escalation for this period). This is almost 52 percent of the total average cost of a property in MMR's peripheral areas.
In NCR, the average monthly rental outgo in city-limit areas is Rs 22,000. For five years, this equals nearly Rs 13.77 lakh (including standard rental escalation for this period). This is almost 37 percent of the total average cost of a property in NCR's peripheral areas.
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