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Real Estate To Emerge Stronger



Residential sales have been adversely impacted in the first quarter given the pandemic, economic uncertainty and higher unemployment. 

Notwithstanding the lockdown, real estate has emerged as a strong asset class given the renewed importance of an owned home, softer prices, lower home loan interest rates and unpredictable volatility in several other asset classes. 

Real Estate as preferred asset class:

Our consumer sentiment survey that polled  over 3,000 prospective  home  buyers showed that real estate was the most valued asset class for  over a third of the participants  followed  by gold (28%), fixed deposits (22%) and the stock market (15%).

Home Search To Remain Afloat

Majority of the respondents (53%) stated that they have deferred their home purchase for periods upto six months. This is indeed a good sign given that consumers seem to be willing to purchase a home despite projections of contraction in the Indian economy and consequently higher unemployment. This is an assertion of the value of real-estate to the home-buyer.   

First-Time Homebuyers Segment Are Strong

A significant proportion of prospective buyers (73%) have indicated that they are looking forward to buying their first home. Buyers will continue to prefer ready-to-move inventory with over 60% voting in favor of such inventory as opposed to under-construction homes.   

Most corporates are moving towards remote working. This has started to impact home-design and space expectations with over a third of prospective buyers looking for larger homes. With the Work from Home (WFH) concept gaining importance and expected to be a new way to work, around one-third of respondents will look for larger homes. 

Waiting For The Right Place

One other change is that close to 50% of tenants are also willing to buy homes provided the homes are reasonably priced.  However, some of the millennial customers have changed their approach given the uncertainty looming in economic prospects from the pandemic. Developers may need to be flexible in their pricing especially when it relates to ready-to-move inventory given that over 40% of the prospective buyers are price sensitive and are anticipating higher discounts.  

Light At The End Of Tunnel

Home loan interest rates are at record levels which should encourage buyers to acquire new property.  However, developers continue to face liquidity issues.  It is imperative that the Government and Reserve Bank announce schemes such as a one-time loan restructuring scheme that would help developers balance their lower cash flows due to declining sales and ensure timely completion of projects.   

In conclusion, residential sales have been adversely impacted in the first quarter given the pandemic, economic uncertainty and higher unemployment. Having said that, overall sales for the industry have witnessed a significant decline due to the lockdown and the uncertainty caused by job losses and salary cuts. New launches have also been more sporadic and will likely decline further. We anticipate that it will take a few quarters for the business to stabilize.  However, we have seen an acceleration of the digitization of the real estate sector with buyers, sellers and channel partners rapidly adopting emerging and existing technologies such as virtual tours, webinars and online bookings.   

DISCLAIMER: The views expressed are solely of the author and does not necessarily subscribe to it. shall not be responsible for any damage caused to any person/organisation directly or indirectly.  


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