How Attractive Is
Housing As An Investment Today?
-by Mr. Yogesh Mehra, CEO
& Co-founder - YOLO Homes
As we can read in most
news stories about the Indian residential property sector, housing has become
increasingly end-user driven over the last 2-3 years. This effectively means
that it is mostly people who actually intend to use homes for self-occupation
who are buying them today.
In other words, the pride and security vested in
home ownership have not waned one bit in India. However, as an investment class,
housing had certainly taken a nosedive until recent developments transpired to
revive sentiment.
The Return Of The
Property Investor
One factor that helped
on this front was the series of property price decreases which were witnessed
in almost all tier 1 cities of India.
These corrections were driven by market
realities - housing in cities like Mumbai, Delhi, Bangalore, Hyderabad and even
to some extent in Pune was simply not selling at the quoted prices, and
developers had no choice but moderate their price tags. Sensing the market
bottom, residential property investors once again began making calculated plays
in the sector.
In India, investor
demand is driven squarely by end-user demand. In other words, investors will
only pick up residential properties if they perceive that there are actual
buying and renting end-users on the market.
This is in sharp contrast to
speculator demand, which is usually not driven by market realities at all but
purely by vaguely formulated opinions of a future demand scenario. Needless to
say, Indian property speculators had burnt their fingers severely in the last
4-5 years and have entirely vanished as a breed.
Not surprisingly, the
segment of residential real estate that has seen the most decisive return of
investor interest is affordable housing - which has indeed become as affordable
as it can get in most Indian cities.
It is not only price cuts which have boosted
affordability - in cities where even price moderations have proved insufficient
to incite demand, many developers are offering genuinely value-adding schemes
and incentives which have made purchase decisions a lot more attractive to
end-users. And unlike in previous years, these offers will continue well past
the festive season this year.
What Kind of Homes
Make The Most Investment Sense?
To identify the best
residential investment opportunities today, one must understand two things -
one, where the bulk of the existing end -user demand is coming from and two,
what kind of homes this demand is for. Affordability decisively drives demand,
but cheap, featureless flats in far-flung emerging locations are finding no
takers.
This fact was first evinced in Delhi NCR, where entire districts have
turned into veritable ghost towns because of their lack of infrastructure. In
other cases and in many cities, we are seeing even completed buildings standing
empty because of faulty land titles, lack of water and electricity supply and
absence of decent connectivity to workplace hubs.
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| Yogesh Mehra, CEO & Co-founder - YOLO Homes |
The inherent value of
location, developer's brand and availability of decent amenities has come to
the forefront of most purchase decisions today. The most active buyer segment
today is that comprised of young working couples and professional individuals
who are looking for well-located smaller homes in projects which they can
afford, and which offer them a good lifestyle.
For this reason, 'bare shell'
flats are rapidly becoming the least favored category, as such buyers have
neither the interest or bandwidth for starting from scratch on a new home.
Fully-furnished flats
with all the trimmings in projects which have advanced lifestyle features are
now in vogue. Such offerings are in immediate demand both as purchase and
rental options, making them the immediate focus area for today's residential
property investors.
Simultaneously, buyers
are giving equal weightage to location, reputation of the developer and the
affordability of the quoted price. Hidden costs are out, all- inclusive rates
which leave nothing to the imagination are in. Inferior project in
non-performing locations are out, regardless of how attractive the price tags
are, and well-connected suburban locations are in.
End-users looking at
first-home purchases are obvious focusing on the cities they currently reside
in or are relocating to for work. Investors, however, have a much wider playing
field.
The highest investor inquiries are currently emanating from cities like
Navi Mumbai, Chennai, Bangalore and Pune.
All these cities have a very good
saturation of demand drivers, and are generating the highest number of
employment opportunities.
About
The Author:
Yogesh Mehra is
Co-founder & CEO - YOLO Homes, and has over
20 years of real estate industry experience. He has traveled the world to study
contemporary residential living formats, and has worked with numerous leading
brands.
As CEO, he spearheads the YOLO Life franchise of 100% managed and
facilitated convenience homes in India.
For media contact
Jay Kalghatgi
Client Interface - Copyconnect
Mobile: 9320142248
Client Interface - Copyconnect
Mobile: 9320142248
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