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Indian Real Estate Market Shows Resilience and Shifting Preferences: FICCI-ANAROCK Report
Oct 18, 2024
Key Trends: Demand for Bigger Homes Rises, Ready-to-Move Properties Lose Appeal, and Premium Segment Gains Traction
Mumbai, October 18, 2024: The Federation of Indian Chambers of Commerce and Industry (FICCI) and ANAROCK Property Consultants today released their highly anticipated "Homebuyer Sentiment Survey - H1 2024" report at the 2nd Edition of FICCI Real Estate Investment Summit. The report unveils significant shifts in homebuyer preferences and market dynamics in India's real estate sector.
Key findings from the report include:
1. Real estate remains the most preferred asset class for investment, with 59% of respondents favouring it.
2. 67% of buyers seek property for end use, while 33% invest.
3. Demand for ready homes has declined significantly. The ratio of ready homes to new launches is now 20:25, compared to 46:18 in H1 2020.
4. 51% of respondents prefer 3BHK units, showing increased demand for larger homes.
5. The 45 to 90 lakhs INR budget remains the most popular (35% preference), but there's a shift towards premium properties. 28% now prefer homes priced between 90 lakh and 1.5 crore INR.
6. Apartments are still the most preferred property type (58%), but residential plots are gaining popularity, especially in southern cities.
7. Top homebuyer demands are timely project completion (98%), improved construction quality (93%), and well-ventilated homes (72%).
8. 57% of investors are buying property to earn rental income, driven by surging rental rates in cities.
9. Over 53% of homebuyers are dissatisfied with current affordable housing options, citing issues with location, construction quality, and unit sizes.
10. Home loan interest rates below 8.5% would have minimal impact on buying decisions for 71% of respondents. However, rates exceeding 9% would significantly impact 87% of buyers.
The comprehensive survey gathered responses from 7,615 participants across 14 cities, revealing significant shifts in homebuyer preferences and emerging trends in the Indian residential real estate market.
Delivering the keynote address, Shri Pramod Rao, Executive Director, SEBI, underscored the importance of regulatory frameworks in driving sustainable growth in the real estate sector. He stated, "Investor confidence is vital for the industry's long-term success, and SEBI’s focus on transparency and governance has been key in building this trust." Rao emphasised that strong compliance and better disclosures will be crucial in attracting institutional investments. He also highlighted SEBI’s initiatives, including a single dashboard data bank to streamline processes and efforts to convert real estate investments into tradable financial instruments, boosting liquidity and accessibility.
On occasion, Mr. Sandip Somany, Past President, FICCI and Mentor, FICCI Committee on Urban Development and Real Estate & CMD, Somany Impresa Group, added, "The Indian real estate sector has shown remarkable evolution. The significant shift in consumer preferences away from ready-to-move homes towards under-construction properties indicates growing confidence in developers and the regulatory environment. This trend reflects a maturing market and the positive impact of regulatory measures like RERA."
Mr. Raj Menda, Chairman, FICCI Committee on Urban Development and Real Estate & Chairman of the Supervisory Board, RMZ Corporation, stated, "India’s economic growth is driving rapid expansion in the real estate sector, with the residential market projected to reach USD 1.04 trillion by 2029, growing at a 25.6% CAGR. This growth is fueled by rising demand for ultra-luxury properties and significant investments. The commercial real estate sector is also thriving, supported by 1,600 Global Capability Centers and emerging secondary markets. As the sector evolves, technological advances and interest in alternative assets like REITs and distressed properties highlight the need for diversification and alignment with global trends, positioning the industry for new opportunities.
Mr Anuj Puri, Chairman and Founder of ANAROCK Property Consultants, says, “The FICCI-ANAROCK Consumer Sentiment Survey is timely and important, as it gauges contemporary homebuyers’ preferences in the current market environment and highlights currently significant trends in Indian residential real estate. The survey provides all industry stakeholders with critical insights into the Indian property market from a consumer perspective. Conducted between January and June 2024, it involved 7,615 participants carefully selected to give a fair representation of the overall population demographics in terms of geographical distribution, gender, and age.”
Mr Sanjay Dutt, Managing Director and CEO of Tata Realty and Infrastructure, highlighted the significant evolution of the real estate sector, particularly with the shift from traditional REITs to smaller-scale REITs (SM REITs). He emphasised the advantages of fractional ownership, noting how it allows investors to access high-quality assets with lower capital commitments, democratising real estate investment. Dutt also applauded the government's progressive and forward-thinking approach, commending its efforts to create a conducive environment for innovation and growth in the sector.
Mr Gaurav Pandey, Co-Chairman of the FICCI Committee on Urban Development and Real Estate and Managing Director and CEO of Godrej Properties, stated, "Institutional investors are increasingly focused on wealth creation through the development of better-quality products in the real estate sector. He highlighted the distinct growth stories of various cities, noting that Pune stands out as a frontrunner in this regard. Furthermore, he emphasised that sustainability has become a critical priority for all large developers, reflecting a collective commitment to responsible and eco-friendly practices that will shape the industry's future."
In his address, Mr Vipul Roongta, Co-Chairman of the FICCI Committee on Urban Development and Real Estate and Managing Director and CEO of HDFC Capital Advisors Ltd emphasized the critical importance of investing in skilled labour and workforce development to drive progress. Additionally, he underscored the essential role of the private sector in creating impactful, scalable solutions to meet the growing demand in the industry.
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