For about 61% respondents, real estate is a safer investment bet than equities, revealed a recent survey conducted by RoofandFloor. With rising stock market volatility, real estate emerged as the most preferred asset class for investment. Clearly, the pandemic has further strengthened the desire to own a home. The reasons? Safety and sense of security that comes with having a roof over one’s head.
“The security of owning a physical asset during a coronavirus-like crisis now combines with a rising aversion to high-risk investments. As a result, the demand for residential real estate has increased. Millennials are key demand drivers, their preferences now dictated by the prevailing uncertainties, stock market volatility, and recent-past financial sector incidents,” explains Anuj Puri, Chairman, ANAROCK Property Consultants.
(Note: The above bar graph represents the average score of responses when respondents were asked to grade on a scale of 1 to 4, where 1 is ‘least important’ and 4 is ‘very important’)
Real estate was followed by gold and FDs/bonds. This indicates that in the current uncertain scenario, people prefer to park their money in safe-havens or traditional asset classes like gold and fixed deposits. While high-risk avenues such mutual funds and equities have taken a backseat for a while.
Best time to buy a home
About 77% respondents are looking to buy a home in another three to six months. These people are looking to grab the offers and discounts that developers have rolled out to attract consumers after the lockdown.
About 45% respondents think that a year from now would be a good time to enter the market, while a good 59% are unsure about their home buying decision. This can be attributed to job insecurity and slow economic growth. These respondents are also waiting for the property prices to correct.
When asked what would trigger them to buy a home in the current scenario, about 28% respondents voted for a reduction in prices. Price correction was followed by lower interest rates, relaxation in government taxes & duties, and relaxed payment schemes.
Are property prices headed for a correction?
Well, “Property prices are a culmination of the cost of construction, land, government charges, capital, and margins. The sector has not exactly been very buoyant for a while now. In end-user markets, rates have more or less been stable and not unrealistically skyrocketed. In the current scenario, developers have been working on fragile margins and expecting a price correction may not necessarily be a good idea,” believes Ashish R. Puravankara, MD, Puravankara Limited.
Maximum demand for affordable properties
In terms of budget segmentation, about 77% respondents voted for affordable properties, i.e. within Rs 50 Lakh. This was followed by properties in the mid-segment (Rs 50-75 Lakh).
Is there enough supply in these two segments? Well, according to JLL, about 60% of the new launches in the past two years fall in these two price brackets.
When it comes to BHK configurations, 2BHK units clearly have high demand when compared to other configurations. This is because 2BHKs are ideal for first-time homebuyers as these provide comfortable space for couples and nuclear families. Not to mention, the majority of developers offer this configuration. Additionally, when compared to 1 or 3BHKs, 2BHKs are easy to sell or rent and yields better returns.
Importance of a study room
During the nationwide lockdown and changing work patterns, homes were turned into workplaces, schools for kids, and a place for us to exercise and relax. Thus, the need for that extra space has further strengthened.
For about 88% respondents having a study room is very important.
“As the corporate world embraces work-from-home culture, many homeowners are seeking to upgrade their homes. Thus, we can expect 1.5/2.5/3.5 BHK models to gain prominence as the extra ‘half bedroom’ can be converted to workspace or study space depending on the changing needs of homeowners,” said Ram Raheja, Director, S Raheja Realty.
Over the last few months, the importance of healthy living has gained importance as never before. Thus, people are also looking for wellness amenities within their residential complexes. This was also validated by our survey where kids play area, gymnasium, and swimming pool received good interests from home seekers.
Great post. As population is raising everyday, need for place is also raising simultaneously. So investing in real estate in valuable always.
Real estate investment can be fruitful given that the investor must be smart enough. The investment time must be conducive so that high return can be guaranteed.
Thank you so much for the post which is very useful.