Millennials and metros moving apart, thanks to WFH

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December 27, 2020 6:45 AM

Analysts say with companies looking to have 15-25% of employees working remotely, future homebuyers or even those living on rent will explore peripheral areas for a better lifestyle at lower costs. The trend is gaining more popularity with millennials, or essentially those in the age group of 25-40 years.

Peripheral areas are more affordable both from a rental and purchase perspective.

The pandemic and work from home practice is leading the younger workforce to explore buying or renting houses outside city limits.

Analysts say with companies looking to have 15-25% of employees working remotely, future homebuyers or even those living on rent will explore peripheral areas for a better lifestyle at lower costs. The trend is gaining more popularity with millennials, or essentially those in the age group of 25-40 years.

Anarock Property Consultants chairman Anuj Puri points out that besides WFH, affordability is an enduring concern especially in the backdrop of a faltering economy and job uncertainty. Peripheral areas are more affordable both from a rental and purchase perspective.

The previous gold standard of walk-to-work or short-drive-to-work may shed much of its popularity for several prospective homebuyers, Puri feels, with many preferring to shift to townships, predominantly on the outskirts and self-sustained gated communities, where the entire family’s needs are sufficiently met. These offer a safe and secure environment, while providing amenities that reduce the need to venture out.

Eying the trend, infrastructure major Larsen & Toubro’s real estate arm, recently launched the North Towers at L&T Seawoods residences in Navi Mumbai, which it claims is part of India’s first Transit-Oriented Development (TOD) — Seawoods Grand Central. TOD integrates land use and transport with the aim to develop sustainable urban growth centres, having liveable communities with high density mixed land-use. It has already sold 500 apartments in this project.

As per industry sources, for L&T’s North Towers, around 45% of total walk-ins were people under 40 years. Also of the total expression of interest (EoIs), around 35% were millennials. Experts say in general around 10-20% of the homebuyers are in the age group of 25-35 years depending on the city, while those in the age group of 35-45 years account for around 30-35% of purchases.

Renting too is progressing on same lines. JLL India’s head (west India – residential services), Ritesh Mehta says, “There are a lot of mid-age and youngsters who are in 25-35 years age group and who would not mind changing their location for a temporary period. For instance, those paying huge rents in Mumbai have found small houses in Karjat, Panchgani and Deolali.”

The lifestyle is also better, Mehta noted, adding that with people becoming more aware about health, they are exploring options focusing on physical and mental well being. Professionals in sectors like IT, banking and insurance are comfortable with WFH and can move to smaller cities or satellite towns.

Renting on the outskirts has its own advantages. The impact on this is the rent arbitrage. For instance, if one is paying a rent of Rs 45,000-50,000 per month for a 2-BHK in Mumbai, many are getting a a 3-BHK or a 4-BHK at Rs 15,000-18,000 on the outskirts, he explained.

Mehta cites the example of Pune, which was once a small town, but is now a bustling city with many industries, including IT and automobiles, as it is easily commutable from Mumbai. “Greater Noida also got developed on the same pattern. Then there is the New Town area in Kolkata, which is like Navi Mumbai. Gandhinagar, too, was once was a small town but now it has developed very well,” he added.

Primus Partners and Guesture Co-living in a joint report on rental housing, released in September 2020, said for millennials, owning a house in not relevant anymore. They need greater flexibility, agility and prefer the plug and play model.

In India as a proportion of all housing, rental comprises around 11.1% of the total. As per 2011 Census, the share of households living in rented accommodations was 5% in rural areas, but 31% in urban areas. “Currently, rental Housing is largely unorganised. Therefore, it is important that policies that appropriately support the rental housing sector becomes important and necessary,” the report added.

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