Searching post-Covid real estate landscape in India

Highlights

Indian millennials are now in favour of buying homes. This is a significant change in their previous outlook, which largely favoured renting almost everything

In a world drastically changed by Covid-19, the Indian real estate industry must move on, rebuild, reinvent and reimagine its future.

Thanks to a microscopic virus, the world has become more connected, but the business landscape ahead is opaque and uncertain at best.

Across industries, research teams have had to change gears quickly to help industries navigate this strange new world. Data-led research is no longer just an option - it has become a core necessity.

The lockdown period itself saw a scramble for informed insights into how the real estate would behave in the months - and perhaps years - ahead.

More than raw data, the requirement now is for research-based conclusions, predictions and advice.

Across the real estate value chain from developers to banking institutions and from government agencies to private equity players, industry stakeholders are investing heavily in such research.

Their prime focus areas - how to navigate a marketplace which will no longer behave as accustomed, and how to harvest a new and potentially fertile field of opportunity.

New data -the light in a dark tunnel

In the post-Covid-19 world, real estate research must go beyond real estate supply and demand parameters.

In an unprecedented epoch of change where most old business formulae go out of the window, new business strategies specifically geared to decipher this strange new landscape must come in their place.

Today, historic data has limited utility. For instance, Anarock ran two consumer sentiment surveys in a space of three months.

The first showed customer preferences before Covid-19 struck, while the second one was conducted during the current lockdown period. There were some profound differences.

What new data Reveals

Comparing the results of these pre-and-post-Covid survey editions throws up interesting insights:

Millennials: Indian millennials are now in favour of buying homes. This is a significant change in their previous outlook, which largely favoured renting almost everything.

Suddenly, tech-savvy millennials have become the new target audience for real estate marketing. This is a tremendous change, especially since it came about in less than three months.

In the pre-CovidD-19 survey, millennials accounted for over 40 per cent of aspiring homebuyers. This has now increased to 55 per cent.

Risk-aversion: Most respondents now favour risk-free investments, so demand for properties by developers constituting the least execution risk has risen - even if such properties cost more.

Real estate back as investment priority: The coronavirus pandemic has caused a massive change in investment temperament, especially after stock market volatility and the previous turmoil in financial markets.

In the lockdown survey, the share of respondents who prefer real estate over volatile asset classes rose by 8 per cent over the previous survey.

Pre-Covid data is still useful to understand what has already happened - such as how much supply exists - but only more recent numbers can reveal how exactly this supply will be absorbed in this completely transformed marketplace.

However, such data, and the inferences that can be drawn from it, will help us understand how the real estate market will behave going forward – and how the industry needs to respond.

(The writer is Director & Head - Research, Anarock Property Consultants)