Home-buying will always remain in vogue as almost all of us want to own a home at some point of time in life. All the noise around the sector notwithstanding, home sale numbers picked up in the first and second quarter of the current financial year compared to the numbers a year ago, when real estate was perceived as smarting under the combined effect of the real-estate law and GST. It is hard for those seeking property to stay off the market – no calumny of the sector or doomsday predictions would discourage this lot from investing in real estate, as the numbers showcase. Now arises the more complicated question: What does a homebuyer really want today?
Rules of the road: Location is the key
Some adages never lose their significance. And that location, location and only location defines all property transactions still hold true in the world of real estate. India’s major cities continue to attract millions of migrants every year, and they need a place to stay. The definition of an ‘ideal location’ is quite extensive, and it is not only the city centres that make the cut to deserve that moniker. Most cities are expanding beyond erstwhile known boundaries and larger municipal organisations are being formed to manage them.
It is true that the freedom to commute has enabled homebuyers to live in far-flung locations; they are no more huddling around city centres like before. India’s metro network is spreading fast and the number of car owners is also dramatically increasing.
The meaning of an ‘ideal location’ changes from time to time and this change is brought in by the completion of new infrastructure projects.
If people are investing in a far-off location around, say, Mumbai, Navi Mumbai airport, or the Delhi-Mumbai Industrial Corridor, the Mumbai Metro, bullet train projects and the many expressways and bridge-link projects have much to do with it. Far-off locations are much more affordable compared to city centres, improving their attractiveness for homebuyers.
In case of Bengaluru, the IT capital of the country, IT companies have moved out of the city centre to outer locations such as Electronic City, Whitefield and Hebbal, driving demand in these locations.
Similarly, Hyderabad can afford to expand without any fear of the suburbs being less alluring because projects such as the Outer Ring Road (ORR), metro-rail, the Regional Ring Road and the Information Technology Investment Region are there to depend on.
Rates of property, along with their popularity among homebuyers, in several of Delhi’s not-so-developed areas spiked as soon as they got metro connectivity.
Those who chose to build affordable homes in far-off locations around major cities do not have a reason to lose heart if they were not able to sell their projects successfully so far. As the sector adapts to the new changes – regulatory as well as structural – buyers will come looking for affordable homes that offer great connectivity. Investors, too, would not stay behind.
Money matters: Affordability is the defining word
A large part of India’s population is turning middle class – according to a UN report, 271 million people in India moved out of poverty in the past decade. This increasing middle class population will certainly look for homes, and their purchases will be defined by the word ‘affordable’. As affordable is the word that would keep defining India’s real-estate sector for a long time to come, real-estate developers should also do everything in their capacity to maintain their projects affordable, without allowing any compromises on quality.
Developers should adopt state-of-the-art technologies such as prefab and precast to reduce construction cost as well as use ERP tools to keep a close tab on their costs. Another way to maintain affordability is to build more compact units – developers in space-crunched Mumbai have been doing this for a long time; data shows other cities such as Ahmedabad, Bengaluru, Chennai and Pune are also following this model to keep budgets in control.
India is becoming heath conscious. Builders must pay attention Another factor that plays a key role in home purchases in modern times is a property’s green quotient. We live in contradictory times.
While awareness of heath has increased exponentially, new maladies are being discovered quite frequently that are born out of our unhealthy lifestyle. Living spaces built keeping in mind eco-friendly measures and offering amenities that encourage residents to get out of their sedentary lifestyle are preferred today. When buyers know they will be saving a great deal in future if the housing project operates on solar energy – mind you, the gains are not monetary alone – by paying an additional cost for investing, they are more than willing to pay the extra cost. People do not mind paying higher maintenance charges, for instance, if the housing society offers a well-equipped gymnasium and a swimming pool.
Delivery schedules: They could be brand killers
If the real-estate sector earned itself a bad name in the recent past and if several businesses are shutting down, project delays have much to do with that. There are lessons to be learnt from the crisis. Try and stick with the delivery schedule. Let the penalty set under the real-estate law not be your only concern when you do so. A brand that you might have built with years of sweat of your brow will lose its popularity if buyers start associating you with something that makes false promises. At the end of it all, property buying is and will always remain an emotional business for a homebuyer; do remain mindful of that fact at all times.
About the author:
Ankur Dhawan, Chief Investment Officer, PropTiger.com, looks after the Real Estate Investment Fund that PropTiger.com has created for the sector. He has played an instrumental role to help the company’s core transaction business. He has built the resale business and data labs business from scratch and has led the home loans business as well.