Moneycontrol
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Residential property demand may pick up in 6-12 months, says report

The activity would be a mix of affordable and mid-segment, as the purchases will be linked to the stability of jobs and cash flows.

Moneycontrol PF Team @moneycontrolcom

Residential real estate demand, though currently stalled, could show signs of a gradual pick-up in 6-12 months once the COVID-19 impact reduces, a research report has said. About one-fifth of end-users or 21 percent may return to the market during this period, but a significant 70 percent do not plan to purchase a home within a year.

The activity would be a mix of affordable and mid-segment, as the purchases will be linked to the stability of jobs and cash flows, according to the report by Savills India.

Savills’ sixth research nugget on COVID impact series, titled Profiling Locked-Down Homes, says despite the gloom, about one-fifth of end-users may return to the market in 6-12 months, as per the sentiment during May. Though a minor segment, this could still be a reason for the light at the end of the tunnel.

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However, as expected, a significant 70 percent end-users do not plan to purchase a home within 12 months. Similarly, most investors plan to wait and watch, with almost 94 percent planning to take a decision after 12 months.

According to Shveta Jain, managing director, Residential Services, Savills India, the activity would be a mix of affordable and mid-segment, as the purchases will be linked to the stability of jobs and cash flows.

As for which segment will be the first to recover post-COVID, “we should see activity across all segments as the pent-up end-user demand will emerge across segments,” she told Moneycontrol.

End-users as well as investors are likely to show a higher preference for smart homes and integrated townships in the post-COVID world, the research paper by Savills noted.

Over 50 percent in each category prefer such propositions. In terms of paying premium, about 30 percent of end-users as well as investors showed a willingness to pay premium for homes that incorporate wellness concepts, the report said.

Homes with carved out office-like workspaces would possibly be attractive to nearly 24 percent of end-users, it said.

End-users also showed an inclination to purchase second homes. About 30 percent of such buyers said that they would be interested in locations like Goa and about the same number showed interest for properties situated in the hills.

The report also analysed the residential market in the last decade to fully understand the decline, recovery and growth patterns over a long drawn period. Post a slump in 2015 and subsequently, after demonetisation at 2016-end, the housing market had begun a very slow revival but kept hitting roadblocks.

In 2018 and in 2019, it did record small growths, despite dampeners like NBFC crisis. However, COVID-19 has brought it to a standstill in 2020, it added.

The small recoveries of 2018-19 were rooted in structural changes, size-shrinkages and average price-resets. The future will depend greatly on continuing policy support and economic stabilisation; and it may take until the second half of 2021 for the markets to return to a steady state, the report added.
First Published on Jun 16, 2020 05:14 pm
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