Millennial Emerges as New Set of Home Buyers - Dr Niranjan Hiranandani
Monday, August 31, 2020 11:50AM IST (6:20AM GMT)
Mumbai, Maharashtra, New Delhi, Delhi, India:
On the recalibrated start from the national lockdown imposed during the COVID-19 pandemic; the aftermath of the economic impact of lockdown has the investor community re-evaluating options. As values underwent sharp swings in terms of paper investments, the one aspect which registered was that investment in real estate was arguably the safest option during the pandemic-induced lock-down. Secured under one’s own roof was the prime need of every individual. Thus, owning one's own shelter has once again topped the investment list amongst the options available to safeguard the interest and bring in the anticipated value addition.
Buying a home has always been an integral part of investment strategy, and under new normal norms, buyers are seeing a value proposition in terms of investing in real estate. With the significant correction in paper markets and the continued volatility, it is not surprising that real estate becomes the investment asset class of choice. For one, homes offer capital appreciation, along with the option of rental income – which works for the home buyer/investor in the short term as also long term scenarios.
Home loan rates are at historic lows, the calibrated restart to the Indian economy sees a flurry of enquiries from the potential domestic as well as NRI home buyers. Taxation benefits on repayment of home loans add to the deal being too good to resist. Falling interest rates attract less interest earned on bank fixed deposits in comparison to the rental yields earned in real estate investment and additionally enjoy the benefits of capital appreciation.
As per the recent media report findings, real estate with 35 percent of those surveyed opting for it as the preferred mode of investment in the present situation. This is followed by Gold at 28 percent, Fixed Deposits at 22 percent and Equities at 16 percent. This indicates positive sentiments of the discerning home buyers amidst prevailing uncertainties, and rekindles the gradual return to the market in the coming six months. Nearly half of the potential homebuyers surveyed are currently staying in rented accommodation, which has recognized the need of their own houses in case of an unprecedented crisis.
In an interesting aside, figuring out the categories of potential home buyers, the survey found a majority of respondents surveyed, at 73 percent, comprising ‘first-time homebuyers’ looking to buy a ‘ready-to-move-in-house’ for end-use. These are from the age group of 25-45 years. This new millennial segment lived a nomadic life in hunt for better job opportunities in the rented accommodation. The survey suggests that the trend of renting will give way to self-owned homes, given the experiences many renters had during the lockdown when many Resident Welfare Associations ended up treating rental residents differently as compared to self-owned houses residents. Also, rental payments added to the financial woes amidst economic activity grind halt with national lockdown situations.
The pandemic has come as a rude shock for the economy, and real estate is witnessing a change in consumer behaviour and perception. Owning a house is now being seen as a priority in context to the safe and secure investment. This will drive the enhanced demand for homes, as the economy sees a calibrated restart. In response to the changed consumer behaviour and perception, real estate is adapting to a tech-savvy future. The digitization is being incorporated in all spheres of business like home designing, smart home automotive amenities, tech-driven equipment at the construction site to expedite work, and digital platforms for virtual site tour as pre-sales tools.
Real estate will be ‘positive’ for both end-users and investors in the post-COVID-19 world. Those living in rental homes have realized the importance of being in their own homes while NRIs facing challenging times in their present domiciles are looking at creating a safe haven ‘back home’ in India. Demand for additional space for home offices is on the rise, with the need for more efficient layouts. The importance of common amenities, business centers, and more open spaces will be an inherent part of the new demand criteria in the post-COVID-19 world.
Real estate has traditionally been less volatile as compared to other asset classes, effectively making it perceived to be among the safest investments on offer. The survey reflects the preference of the new age home buyer, which has adapted during the crisis and the industry is adopting new designs, new technologies, and new innovations which will make the entire home the buying process for this new age home buyer an easier and transparent process.
As The Hiranandani Group is preparing for opening up the economy in a phased manner, real estate takes positively the survey findings which say that 60 percent of respondents opined that for the next six months, they would prefer a ‘ready-to-move-in’ property. Similarly, 21 percent of those surveyed said they were okay with a property with a delivery timeline of a maximum of one year. This opens up possibilities for the home seeker as also for real estate as an industry – the company will work their way out from the pandemic’s lock-downs by creating homes for the new segments of home seekers - homes which befit their lifestyle quotient.