JANUARY 2018 CONSUMER SENTIMENT REPORT What does 2018 have in store for Indian Real Estate?
While real estate has grown significantly in recent years, it has been largely unregulated which led to lack of professionalism, no standardisation and inadequate consumer protection. To make real estate more transparent, Central Government has introduced various initiatives like Real Estate Regulation and Development Act (RERA) and Affordable Housing. RERA is definitely a step in the right direction and is expected to remove the chronic issue of late delivery of projects. This will also attract investments in the sector and restore the buyers and other stakeholders confidence in the sector. RERA brings in clarity and fair practices that would protect the interests of buyers and also impose penalties on errant builders, hence making the real estate sector organised, transparent and consumer centric. In this backdrop, Quikr Homes conducted a comprehensive survey to capture the consumer sentiments. The survey received responses by as many as 1500 participants from cities across India. This survey provides insights about the future of home buying and enables one to understand the expectations and interests of property buyers from consumer demand perspective. It highlights the key impact on the real estate market that will shape the realty sector in 2018.
Survey Participants Geographic & Demographic Distribution TIER-II CITIES 2 Gender of Participants Age of Participants 1 6% 16% 39% 81% 26% Male Female Below 25 25-35 35-45 45-55 55+
41% respondents are still not aware of RERA and its impact completely! 41% 59% RERA promises to help the Indian Real Estate sector appear much systematic, transparent and capable of prolonged and sustained growth. Quikr Homes asked participants regarding awareness of RERA and 59% replied they were aware of its guidelines while 41% of the respondents were unaware of it which means that there is a need and opportunity to educate consumers about their rights. Yes No Transparency leads the consumer expectation post RERA regime 2 5 Out of the participants aware of RERA, 5 expect RERA to bring in much-needed transparency in property dealings through provisions for registration of real estate projects and agents with the real estate regulatory authority along with specified functions and duties of promoters and agents. Transparent Deal On-time Delivery Construction Quality Another 2 consumers expect construction quality to be at par with the specifications and promises made by the builder. consumers expect RERA to eradicate delays in possession which causes unnecessary loss of time and money.
Real Estate remains the best Asset Class for Investment 10 2% 9% 11% 8% 7 51% 6 49% 61% 5 46% 56% 66% 2 2 3 1 1 22% 11% 8% 1 1 6% 1 1 1 1 6% 1 Fixed Deposit Gold Mutual Funds Real Estate Stocks With so much hustle and bustle in the market, it is important to know which asset class is dominating the investors mind. More than half of the respondents believe that real estate is the best asset class for investment by attaining votes in Quikr Homes consumer survey. Mutual funds are the second most viable investment option with 18% of the respondents believing it to be a short-term profitable investment class. While fixed deposits, gold and stocks continue to be in mix of investment as an option, gold and stocks are showing a declining trend whereas real estate and mutual funds are climbing up the ladder.
Renting vs Buying? Owning a house is still desirable 10 7 58% 6 7 8 7 5 72% 42% 4 3 2 28% 1 Yes No More than of the consumers interviewed by Quikr Homes team, currently live in a rented accommodation across metros and tier-ii cities. Pune, Hyderabad and Bengaluru are amongst the top destinations with more than 8 respondents living in a rented accommodation. Even though the preferred accommodation type depends upon the city density and availability of land near city center or work place, the preference of consumers is to own a house. Need to relocate for better prospects, high property prices, easy access to school and workplace are primary reasons for people to choose a rented accommodation. Kolkata, Hyderabad, Mumbai and tier-ii cities have as much as 8 buyers wanting to own a house which can be seen as a positive outlook for real estate sector in 2018. What stops you from buying a property? 3 1 Fear of Delayed Possession Job Uncertainty Government Policy Unavailability of Reliable Info Unstable Property Prices The top reasons stopping consumers from purchasing property are unstable property prices, job uncertainty, fear of delayed possession, unavailability of reliable information and government policies. According to the survey, 3 of the consumers across India are waiting for property prices to come down. The other major factor curbing sales is job uncertainty with participants influenced by it. Consumers intent to wait out the slowdown so as to avoid any loss or mishaps.
2018 can be the year of buying and selling homes 22% The survey indicates that 78% of respondents are planning to buy a property in 2018 and around 22% of them are hesitant and not willing to invest in year 2018 as per Quikr Homes survey. 78% In comparison, the survey conducted in 2017 showed only 5 people were willing to invest in 2017. Clearly, the 2018 survey indicates a positive outlook for all the stakeholders in realty sector. Yes No Bangalore, Mumbai, Hyderabad and Pune remain the hotspots for real estate investment while there is emergence of Tier-II cities in the mix India's residential real estate market hasn't had it easy in 16% recent years. Short-term demand factors have stalled growth, and low consumer demand at current prices has accentuated the problem. Absorption rates have stagnated, causing high 1 1 levels of overhang across all major cities especially Delhi NCR, Mumbai and Chennai. Consumer survey indicates that, Bangalore, Mumbai, Hyderabad and Pune will be the top four real estate hotspots Bangalore Delhi NCR Kolkata Pune Chennai Hyderabad Mumbai MMR Tier-II with 16%,, and 1 buyers respectively showing their intent to invest in these metros while of the total respondents are willing to invest in tier-ii cities across India. This indicates a positive revival in the unstable realty market post RERA.
Apartments are the most desirable type of property 10 7 1 18% 2% 42% 11% 18% 1 1% 29% 1 29% 11% 3 91% 2 72% 1 5 56% 38% 28% 3 Apartment Independent Floor Office & Retail Plots Villas Although the preferred property type depends upon the city density and availability of land near city center or work place, the preferences of the buyers are gradually shifting towards investing in an apartment. Consumer survey reflects that apartment/flat is the most desired property type across India, with 49% buyers looking to purchase apartments. Mumbai MMR and Pune have maximum potential buyers with 91% and 72% respectively looking for apartments. Meanwhile, Noida is following a different trend with a mere 1 buyers looking for apartment and 5 looking for plots. Gurgaon has the highest demand for office & retail space with 29% potential buyers as compared to the Indian average of mere 1%.
4 of the consumers surveyed are potential buyers in the first quarter of 2018 10 7 38% 26% 2 29% 2 2 3 38% 38% 46% 48% 38% 4 4 3 0-3 months 3-6 months More than 6 months In the past, real estate was facing stagnation and low-absorption due to high and ever-changing property prices and delayed possessions. RERA will facilitate a chain of consumption and growth with increased transparency and customer-centricity. This will help accelerate the consumption process and reduce overall costs for consumers by providing attractive discounts and innovative pricing schemes. Around 4 of the prospective buyers are looking to purchase in the first quarter of 2018 which is a positive outlook for the real estate.
RERA boosts confidence of first time property buyers Yes 69% No RERA has brought in greater transparency, timely project delivery and organized development while reducing approval charges and construction costs. It has accelerated the construction process and reduced overall costs for consumers. In addition, inflation rates appear to have stabilized and interest rates have started to come down. While existing property prices are still to be corrected for the overhang in supply, discounts and innovative pricing schemes, such as possession-linked payment plans and subsidy schemes, have increased. As per survey, a staggering 69% of the potential buyers are first time buyers who can now put their money and trust in the real estate sector due to its immense potential and future outlook in 2018. Consumers want to invest in Ready-to-move-in properties 10 7 5 76% 76% 5 5 58% 6 61% 1 16% 16% 1 3 32% 26% 21% 22% Under construction Near completion Ready to move-in Investment in property is a strategic step which largely depends on the Stage of Construction which directly affects the budget. But, due to construction delays and large number of early- launched properties going into litigation has made ready to move in properties a safer bet, among all Indian consumers. Consumer survey results indicate that majority of consumer sentiments are with ready to move in property with as much as 76% buyers in Delhi NCR and Chennai. More than 5 buyers prefer to go for ready to move in projects as majority of them are purchasing for self-use. Whereas a declining trend is seen in the buying of under-construction and near-completion projects not only in metros but also in tier-ii cities due to project delays and increased project cost. However, around 3 investors in Bengaluru, Hyderabad and Kolkata are hopeful that RERA implementation will eradicate these issues and investing in near completion & under-construction projects will reap the maximum monetary benefits and rate of interest.
Consumers are looking to buy property for Self-use in 2018 10 1 11% 6% 9% 2% 7 8 81% 8 8 91% 89% 86% 88% Self-use Rent/Lease Investment As per Quikr Homes survey, a staggering 8 of participants have shown inclination towards buying property for self-use across all metros and tier-ii cities. In the year 2017, only 59% of the participants fell in this category. This huge shift can be seen as many first-time buyers are looking to buy homes for self-use in 2018 as compared to 2017 where overall 59% participants preferred buying property for end-use purpose. As more and more consumers are looking to buy property for self-use due to their trust in RERA, a shift in property preference can be noted with a mere 1 and participants opting for investment purpose and rental purpose respectively.
Affordable homes are more popular and in demand 10 7 8% 2% 8% 11% 9% 21% 2 26% 46% 38% 4 29% 41% 56% 4 5 41% 4 6 16% 16% Below 25 lac 25-50 lac 50-75 lac 75 lac-1 cr More than 1 cr Affordable housing projects were granted infrastructure status by the central government in early 2017, providing access to lower financing costs and tax exemptions. The supply of newly constructed affordable homes in India increased 27 percent year-on-year in the first three quarters of 2017 to some 26,000 units. The market here is seen as a low to mid income proposition due to low margins which has no appeal to investment funds. Consumer survey sentiment is clearly dominated by the preferred budget range below 50 lakh ticket price as more than 7 buyers are looking for properties in affordable range. Bengaluru and Mumbai MMR are showing signs of a healthy mix amongst the rest with as much as buyers going for the more than 1cr ticket price for homes.
Home loans as a financing option continue to dominate 10 7 8% 2 2% 8% 1 8% 18% 8 76% 8 76% 7 82% 92% 82% Home Loan Personal Loan Loan against Property Self-Finance The survey results clearly indicate home loan as the primary and easiest finance medium amongst buyers with more than 7 preferring it over other options. In addition, inflation rates appear to have stabilized and lending rates have started to come down. With innovative pricing schemes, such as possession-linked payment plans and subsidy schemes, buyers are also considering self-finance as their second most preferred option with 2 potential buyers in Chennai and Kolkata. Affordable housing and stable property prices have slashed unreasonable ticket prices and made self-financing prospect look brighter.
Online Property Platforms are most preferred search channel for consumers 10 7 2 26% 26% 1 16% 1% 21% 1% 22% 6% 8 78% 6 6 6 7 6 68% Online Property Platforms Print ads Offline (Brokers and Network) Property Event/ Exhibitions Future of real estate is digital as more people search for their property related needs online. Online property platforms have evolved to provide a data-backed analysis of wide range of properties with minute details. They are now emerging as a one-stop destination for not only buying property, but also advise on getting finance and preparation of rent agreements. As per consumer survey, online property platforms are gaining highest popularity amongst buyers with atleast 6 participants preferring them over other channels. Second most preferred search medium amongst buyers is offline i.e. through brokers, customer referrals and other networks. Print medium has seen a decline with 4- buyers relying on the ads via print communication. In Quikr Homes builders survey builders expressed the need to market their properties through exhibitions/events as a key channel to educate their customers on the aspects RERA.
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