We examine what buyers are likely to look for in a property, when they come back to the market after the COVID-19 pandemic
The Coronavirus pandemic is likely to bring about a sea change in the future of residential real estate in India. As nations announced sudden lockdowns to stem the numbers of infections, the impact of these measures may be particularly telling on the rental population, who may be forced to change their non-committal approach towards home ownership. The question now is: What will buyers look for in a property, when they come back to the market in the post-COVID-19 world?
Following the lockdown, a majority of the workforce has been forced to work from home. Many people would have been forced to make quick changes in their homes, to accommodate this new lifestyle. However, others may have been faced with space constraints.
Consequently, the demand for larger homes may grow significantly in mega cities, along with the ticket size of these purchases. Thankfully, factors like record low home loan interest rates, stable property prices and easy availability of ready housing stock in India’s prime residential markets, could ensure that buyers do not have to postpone their home purchase because of monetary constraints.
Data available with PropTiger.com show that over 3.14 lakh housing units were sold during the financial year 2019-20. Two-bedroom, one-bedroom and three-bedroom homes had the biggest share in sales, in that order. A similar trend was seen, in terms of new supply, which was restricted to over 2.13 lakh units during the year.
In future, one can expect the supply and demand for 3BHK homes to increase. The demand for villa-based projects may also rise, in India’s big cities. In tier-2 and tier-3 cities, we could also see more buyers investing in independent homes. This could also impact land prices in these cities, which will rise in-sync with infrastructure updates.
Homes with open spaces and balconies
For millennials, stepping out of their homes for entertainment or leisure, was an integral part of their daily lives. The absence of open spaces, such as a balcony or a courtyard, within the house was never an issue. Moreover, in space-constrained cities like Mumbai, people often covered the available open spaces, to make use of every inch of space.
This is likely to change and even after the lockdown is lifted, people will seek open spaces to relax and rejuvenate. The lockdown will make people realise that open space is just as important as storage space.
Project amenities in a post-COVID-19 world
A house in a project with a swimming pool, a Jacuzzi and a gymnasium will cost more than a house in a society without these amenities. Aside from the one-time payment, these amenities also cost buyers regularly in the form of monthly maintenance charges.
In a post-Coronavirus world, buyers are likely to judge housing projects, based on the kind of amenities they provide. The presence of medical shops, hospitals and grocery stores, may be judged more favorably than the presence of, say, a swimming pool or a Jacuzzi. Similarly, a housing project with more open and spaces, in the form a park, or a footfall court, or badminton court, may attract more buyers than a project with restaurants and cafés.
“People will be ready to spend extra if they get facilities that help them preserve their lives better. Developers will focus more on accommodating health facilities like jogging tracks, gyms, sports arenas, etc., in their projects to gain immediate acceptability of the projects,” says Dhiraj Jain, Director, Mahagun Group.
Expressing similar sentiments, Vijay Verma, CEO of Sunworld Group, says: “After the lockdown is over, we could see the real estate sector modifying projects, with amenities and services (such as walk-to-work and infrastructure that enables work from home) that help in providing a healthy lifestyle to the residents.”
Preferred localities after the lockdown
While some city localities could be more vulnerable to the spread of COVID-19, because of its population density, poor living conditions and lack of accessibility to healthcare, others may have better facilities and hence, be resilient against such disasters. As awareness towards their own wellbeing grows among people, this will reflect in people’s home-buying choices and preferences towards various locations. Housing projects in suburbs that have less population density and more green spaces, will have more takers than projects in the city centre with higher population density. This change will also reflect in pricing.
Average values of property in Mumbai’s peripheral areas may grow more than those in residential markets within the city. The same could be said about the NCR market.
What is the potential of the second home segment?
The second/holiday home and senior housing segments in India could also witness a lot of activity, as owners who already have a property that does not meet their newly defined parameters of safety, would start planning to make a second purchase. This trend will make housing markets in Goa, Shimla, and Dehradun more popular and fuel price growth in these centres.