Five Pro-consumer Trends
Reshaping India's Residential Real
Estate..!
By Mr. Anuj Puri, JLL India
In India’s highly
dynamic market environment, change and innovation have become essential for the
survival of any business. The housing sector, which was in the previous years
defined by a remarkable lack of change, has been no exception.
The winds of change are
causing aspects of this industry that previously seemed ‘cast in concrete’ to
give way. Let us examine five factors that stand out in this respect:
1. Increasing focus on affordable ticket sizes..!
Across most Indian
cities, the financial 'sweet spot' for homebuyers is seen to be in the range of
Rs. 50-70 lakh. In hyper-expensive Mumbai, ticket sizes of around Rs. 1 crore
are popular with buyers because of the higher wealth creation and therefore
purchasing power there.
However, as of 3Q16,
there has been a rise in apartments priced under Rs. 1 crore in Mumbai, as
well.
The proportion of
increase in units launched in Mumbai in the under INR 1 crore ticket size
increased more than the proportion of the overall rise in unit launches.
Mumbai serves as a good
example to illustrate the rising affordability trend because it is the toughest
market in the country, and yet could see more launches in this segment.
Other cities will,
therefore, fare even better than Mumbai in terms of decreasing housing ticket sizes.
To keep the price tags
of their offerings attractive, developers have been reducing the average carpet
area of apartments across cities. For example, the average apartment sizes in
Mumbai and Bengaluru have, in recent years, shrunk by 12% and 30% respectively.
2. Configurations revolution..!
When it comes to the
most preferred configurations, 1 BHK flats remain the most popular in Mumbai,
while 2 BHKs rule in most other cities such as Delhi-NCR, Bengaluru, Pune,
Hyderabad, etc. Of course, affordability is the main reason behind the
popularity of smaller flats in Mumbai.
Most of these smaller configurations are
priced around INR 1 crore, which is considered 'affordable’ by Mumbai
standards.
 |
| Anuj Puri, JLL India |
Moreover, selling these
units later on is easier than selling bigger configurations, as there are
always more people looking to buy 1 BHK flats in Mumbai than there are units
available.
In other cities, the same logic applies to the 2 BHK configuration.
As real estate in most cities is cheaper than Mumbai’s, homebuyers can afford
to and do buy bigger configurations.
Unit
launches
|
Overall
|
Under
INR 1 Cr
|
3Q15
|
77,700
|
41,550
|
3Q16
|
78,600
|
43,400
|
Source: JLL REIS
3. More developers entering affordable segment, PE players willing
partners
The Modi Government’s
focus on affordable housing has helped in making this segment more palatable to
developers.
The erstwhile aversion to being tagged as 'low-income housing
builder' has waned, and even larger players are openly entering this market segment.
There is now considerable political and social goodwill attached to such a
move, apart from its undoubted business sense.
Players like Mahindra Lifespace,
Tata Housing, Shapoorji Pallonji Group, AssetzProperty
Group, Puravankara Projects, etc. are all enthusiastic about entering
or expanding their affordable housing portfolios this year.
One player - Emgee Group
- is planning an investment of Rs. 1,600 crore into the affordable housing
segment over the next 5 years.
Private equity players
are willing to partner with developers operating in this space and fund such
projects.
Nisus Finance Services, Brick Eagle Capital, Avenue Venture Partners
Real Estate, Carlyle, Essel Finance Advisors and Managers LLP,
Provident Housing and International Finance Corp are some PE firms helping
developers with their affordable housing projects across the country.
India's chronic dearth
of affordable projects is nothing short of legendary. However, with slowing
sales in the luxury and premium categories, affordable housing is now the one
segment which shows any kind of real promise to open up revenue for developers.
After the recent demonetization move, land prices will plummet - more so in the
tier-II, III cities and the fringe areas of metros. This, too, will aid the
cause of making homes more affordable in India.
While developers are already
constructing smaller-sized units on the outskirts of cities, the Government
must step in by improving the connectivity of these outskirts to respective
city centers.
4. Basic amenities on the rise irrespective of project size..!
Homebuyers expect decent
amenities in their housing projects, regardless of whether they are townships
or standalone buildings.
While townships offer many amenities, sufficient
parking, a small garden and play area, good security and power backup are now
increasingly being seen even in standalone residential buildings.
Buyers are no
longer willing to settle for amenities-starved projects and expect the basic
facilities even if their purchasing power is on the lower side.
With more and
more developers of modest-sized residential projects heeding this demand, the
rest have been left with no choice but to follow suit.
5. Engaging on social media and increasing spends on digital
marketing..!
Dissatisfied homebuyers
have been using social media effectively to demandredressal to their
grievances.
Developers have realized the power of social media in brand image
management, and many have started responding to buyers’ posts or queries in
real time.
At the same time, they have realized the potential of targeting
possible buyers with advertisements while they are online.
In fact, most
developers have begun to realize that investing in digital marketing is
necessary in a market environment where more and more buyers review all their
options online before actually doing site visits at shortlisted projects and
making their final decisions.
About the author
Mr. Anuj Puri, Chairman & Country Head - JLL India
For media contact
Arun
Chitnis
Head –
Corporate Communications & Media Relations
JLL
IndiaPune
411001.
Tel:
(020) 30930441 Fax: (020) 40196101
Mob:
+91 9657129999
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