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The Home Buying Market has Stood the Test of Time
The new normal created a potential opportunity for not only the real estate sector but also for the prospective buyers contemplating buying their dream homes. Even though the last quarter of FY21 was marred by the second wave of the pandemic, the real-estate sector was quick to pull through and gracefully embraced this challenging situation. According to the Knight Frank report, the residential sales in Q3 of FY22 (July- September 2021) increased by 92 percent across the top eight cities. Moreover, the new launches shot up to 90 percent on a year-on-year basis. Emerging enquires about the properties and seamless adaption of technology, both by builders and customers, contributed towards the pacing up in the development of the sector.
The current year has turned out to be a boon for buyers as RBI has reduced the repo rate to 4 percent while making the reverse repo rate to 3.35%. Low-interest rates, taxes rebates, stamp duty cuts, an extension of tax benefits till March 2022, and governmental scheme of affordable housing are some of the factors that have been encouraging home buyers to invest in the real estate sector. Cities like Chennai, Hyderabad, and Kolkata saw a marginal increase in their property prices but overall, the prices were either reduced or haven’t increased significantly in both the second and third quarters of FY22, as per Knight Frank. Nevertheless, people are looking for more investment options during uncertain times like these. Also, there has been a surge in inquiries about 3BHKs and villas in Bangalore after the second wave as per a report by 99Acres.
With work from Home (WFH) continuing in most organizations and with the preference to rise in online education, people are in dire need of owing comfortable spaces coming with an option for open areas to relax and rejuvenate.
The sale of luxury properties, ranging from Rs. 50 lakhs to 1 crore, grew to 35% in Q3 attributing to buyers’ need for upgrading to a larger living along with state-of-the-art amenities available at their disposal. Furthermore, the demand and availability of bigger homes in peripheral areas and Tier II and Tier III, with affordable prices, encouraged the buyers to shift to places closer to nature.
DIGITAL SHIFT AND CHANGE IN PREFERENCES FOR BUYERS
With the world taking a turn more toward the digital era, the process of purchasing real-estate assets has fallen in line too. The emergence and acceptance of PropTech, including Artificial intelligence, cloud-based technologies, virtual tours of properties, and Robotic Process Automation (RPA) created a convenient environment for developers to continue doing business even during the second wave of the pandemic. On the other hand, buyers found it suitable to book properties and do paperwork seamlessly on online platforms.
Therefore, the procedure of researching and buying from anywhere in the world with few clicks proved to be one of the most significant advantages for the industry during the lockdown. The trend is likely to continue as it is taking the edge off traveling and searching for a home of preference. Today, people have progressive ideas about their homes, and their priorities are of global standards. Their demand helps builders to explore different concepts in terms of theme, design, style, etc. The lockdown period was when people experimented with their taste with respect to home designs while giving ideas to builders for creating their dream homes. As a result, themed homes are one of the latest trends in the market that have gained immense traction recently.
Another trend that is notable during the pandemic is that young people want to make the right investment at the right age. Homebuyers, between the age group of 25 to 50, are also driving demand for second homes that could give them good returns. They are also looking for locations that are closer to social and medical facilities and are well connected with places providing basic amenities. Second homes are bought to make them either a vacation home or for earning rentals. The growth of second-home purchases and real-estate investment has increased over the years, and this trend will continue to grow over the coming years as the expected ROI has now become the appealing component for buying a second home.
Developers are confident that the real-estate sector will continue to be one of the most significant contributors to the Indian economy as it is estimated that the sector will grow to USD 9.30 billion by 2040. The industry has already seen a rapid improvement in the last two quarters of the year. Increased sales, reduction in unsold inventories across states, and offers from developers for the festive season are further improving the sector’s stability. According to a survey by No Broker, 82% of respondents have shown an interest in buying a property this year as compared to the 64% in the previous one. Also, considering the more controlled impact of the second wave on the real-estate sector than the initial wave, the third one is likely to be much shorter and less harsh.
The home buying market has been exposed to several changes. However, with the use of appropriate technology and foresight, the sector has stood the test of time. Some of the established real-estate brands have pivoted well to find their niche during the pandemic when the rules of the games have been reset.
Senior Vice-President, SOBHA Ltd
Abhinav Kanchan is a Senior Vice President at SOBHA Ltd. He has 25 years of rich experience in strengthening brands and setting strong communications frameworks at FICCI, Aditya Birla Group, ArcelorMittal India & Moser Baer. Abhinav Kanchan has a double Master’s degree (MA from St. Stephen's, Delhi University; & MSc in Media Management from the University of Stirling, the UK as a Chevening Scholar). In addition, he has specialized training in journalism, mass communications, content creation, integrated marketing communications, TQM, and filmmaking from prestigious organizations in Tokyo and India. He is currently pursuing a Doctoral program. Value creation through credible and trustworthy communication practices is his forte. He volunteers his time for NGOs working with poor kids afflicted with cancer.