Consumer demand is getting modified owing to many factors, leading to a rise in demand for larger homes.
The global pandemic has brought to fore the importance of real estate, especially residential segment. It is not that in the pre-COVID era, people were not purchasing homes. In fact, there was an upsurge in the younger generation showing interest in home buying than ever before. Millennials, who favour rental rather than self-owned homes, started looking for freedom from a lifelong rental trap.
According to reports, housing sales improved 13% in the first three quarters of 2019 combined as against the corresponding period in 2018, and by 23% in that period two years ago. ANAROCK data revealed that the three quarters of 2019 collectively saw sales of nearly 2.02 lakh units in the top 7 cities (during the same period in 2016, it was 2.07 lakh units).
So, what changed after the start of the pandemic? There was an enhanced realisation of the importance of a real estate asset. Fence-sitters, who were waiting on one pretext or the other, came forward after witnessing problems in non-gated communities; people also saw that real estate is a financially sound asset compared to numerous other financial investment tools.
The realisation meant that the real estate sector, predicted to incur huge losses after the pandemic, bounced back within months, with sales reaching pre-COVID levels within a few months of the first Unlock. A report by ANAROCK in September 2020 revealed that the Indian housing sector made a strong comeback in Q3 2020, with sales and new launches rebounding to 65% and 79% of the pre-COVID-19 levels (Q1 2020), respectively. The report said, “Sales were significantly higher than the preceding quarter when the coronavirus pandemic had brought sales down to just 12,730 units.”
The report has highlighted the highly resilient nature of the affordable and mid-segment housing in the face of the Corona pandemic. Most of the people living in rented accommodation faced challenges and decided on buying their own home. Considering the buyers’ preference towards soon to be available homes, we are trying to deliver 8-10 projects in the coming two years. It has been noticed that more and more people want to opt for more spacious and independent residential options in this pandemic. Signature Global has offered Independent Floors in under DDJAY in Sohna and will come up with similar options in Gurgaon as well. The government’s progressive policies on both supply and demand side are giving boost to this segment. I am sure that despite setbacks, affordable and mid-segment will be driving the realty revival.
Another pandemic-induced change is the demand for larger spaces where people can have a separate place inside the house for various tasks. The demand for larger homes – 3 BHK and up – has risen since the pandemic hit India. As everyone is stuck at home for extended periods due to the pandemic, the situation necessitated a large enough home to support activities such as office work, study area, and entertainment.
Now, people want to live, exercise, and enjoy in new ways. Consumer demand is getting modified due to these factors, leading to a rise in demand for larger homes. According to PropTiger Data Labs, 15,998 units in the 3BHK category were sold in Q1 2020, rising to 17,200 units in Q1 2021, indicating that sales in this segment were on the rise.
However, the rise in demand for larger homes is not limited to India; according to a Knight Frank analysis, the price of prime real estate, notably in Asia, grew by an average of 4.6 per cent in the first quarter of 2021, the largest quarterly gain since Q4 2017. Los Angeles (No. 8) had the largest price change among American cities, with a 12.6 per cent increase from Q1 2020 to Q1 2021.
Furthermore, nuclear families are considering not their immediate requirements but those that will arise in the coming years; so, they are looking for larger and spacious units. Even those on the fence have begun to buy and seek larger homes than previously considered due to budget constraints. Also, the contribution of low home loan interest regime cannot be denied in boosting the buyer sentiment.
(By Pradeep Aggarwal, Founder & Chairman, Signature Global Group, and Chairman, ASSOCHAM, National Council on Real Estate, Housing and Urban Development)