Survey reveals India housing retains preferred asset class

V Nagarajan

India’s majority investors continue to opt for real estate as their preferred investment asset class, according to an online consumer sentiment survey involving 1,910 participants by property consulting firm Anarock revealed.

The survey initiated to gauge housing market sentiment amidst COVID-19 lockdown assumes significance with the pandemic disrupting the economic trajectory and slowing down the deal making process.

Out of 1,910 participants, 59% of intending buyers are end-users. The survey also indicates that homeownership is now a compelling priority for millennials facing uncertain times. Out of the total voters favouring real estate investment, 55% are those aged between 25-35 years and 68% are end-users. In a similar survey conducted during the H2 2019 edition, only 42% were in this age bracket.

“The security of owning a physical asset during a coronavirus-like crisis now combines with a rising aversion to high-risk investments. As a result, the demand for residential real estate has increased. Millennials are key demand drivers, their preferences now dictated by the prevailing uncertainties, stock market volatility and recent-past financial sector incidents. Many of them now prefer buying over renting homes. The general home buying sentiment is also guided by cheaper home loan interest rates, which is currently between 7.15% and 7.8%,” said Anuj Puri, Chairman, Anarock Property Consultants.

While fully built homes have been the preferred choice of end-users in the recent past, at least 34% of respondents in the current survey who prefer ready homes are investors, a massive rise from 12% in the previous survey. Investors’ growing aversion to taking risks in the wake of limited construction activity could be a major factor attributed for the change. Besides built units ensure a steady rental income to investors. 

Bangalore, Mumbai and Hyderabad were the most preferred cities for at least 82% of the respondent buyers who had already booked properties either just before the coronavirus-induced lockdown or during the period.

“The preference for reputed, organised developers with the least project execution risk has also risen,” said Puri. “Buyers with this preference have increased to 62% from the previous survey’s 52%. These buyers will pay more for quality rather than settle for projects by smaller developers. Interestingly, 14% of voters preferred homes built by the government agencies like DDA and MHADA” he adds.

Demand for affordable housing has remained more or less stable at 36% despite Covid-19 pandemic dislocation in sales and marketing. In all, 37% of the respondents polled in the previous survey preferred homes in the budget range of Rs4.5 million, close behind mid-segment homes priced at Rs4.5-9.0 million.

In a related survey by Knight Frank, FICCI and NAREDCO on real estate sentiment index for the first quarter, the findings echo the domestic and global concerns on the Covid-19 crisis. Lack of clarity on the timeline for containment of this pandemic has further severely impacted sentiments for the real estate sector and for the economy as a whole.

The government and the central bank have taken a number of measures to alleviate the concerns of the economy and there are expectations of more stimulus measures to revive the economy. However, after the pandemic is contained, the economy and real estate sector may take six months to one year take time to bounce back.

I have authorised my relative in Delhi with a power of attorney to invest in property on my behalf. But I understand a specific power of attorney is needed to handle the situation. Which is an ideal option to entrust the exercise?  Please clarify. Y. Kukreja, Sharjah.

Yes. Time was when a general power of attorney was given by NRIs to relatives or property agents to invest in immovable property. There have been instances where the agents or relatives disposed of the property without the knowledge of the original owners on whose behalf they are authorised to act.  It has been held by the Supreme Court that properties cannot be transferred through a general PoA. It is advisable to use a specific PoA which must be registered in India after the payment of stamp duty. 

I am a citizen of Canada and deputed to work in the Gulf for a specific period.  Can I invest in commercial property in Mumbai? Does it require RBI permission? Apurva Mody, Dubai.

NRIs and PIOs are now put on the same footing from March 2018 by the RBI.  There is no need to obtain permission from the apex bank as for foreign passport holders of Indian origin are allowed under general permission to invest in residential or commercial property in India.