by admin | May 25, 2021 | Investing, Property
By Ankit Kansal,
India’s housing sector has always been a favorite amongst domestic investors. As an asset, housing has enjoyed high capital growth backed by high demand in major Indian cities.
Besides, easy leverage and recurring rental income further piqued investor interest in the housing sector. However, post the 2014 market slowdown, real estate, which once attracted investment by volumes as high as 40 per cent, saw a gradual dwindling in investor interest.
But, by the end of 2017, the markets started to recover, instilling end-user confidence and stabilisation of property prices in most markets. The bounce-back was eventually followed by expansion in investor activity. As per our recent quarterly consumer sentiment survey, investment activities in five major Indian cities (Mumbai, Gurugram, Noida, Pune and Bengaluru) currently account for around 24 per cent of the market. This is a notable improvement from the previous quarter’s 17 per cent.
The spurt can be attributed to three factors — anticipated property price growth in major Indian cities, high buyer confidence and availability of light-weight investments.
After a prolonged period of price compression, housing markets have started to stabilise in most of the major markets. Going forward, notable growth in housing prices is expected, backed by an upbeat macro-economy and growth in the job market. In fact, early signs of an upward thrust are already visible in some of the popular micro-markets. As prices start going up, this is one of the most conducive times to make an investment.
At the onset of the current FY, reforms such as RERA and GST have finally started to come out of policy contours and play a prominent role in the market. When these policy makeovers were proposed, there was visible distress in the market due to possible uncertainties. However, as the dust settled, the market looked much more mature. Once known for being highly unstructured and unorganised, Indian realty finally seems to be taking emboldened steps towards becoming an organised industry.
A higher degree of order and structure becomes a natural pull for the investor class. As policies such as RERA stipulate transparency in every deal closure, both end-users and investors are gaining confidence.
Numerous light-weight investments such as 1 BHK, studios and micro-homes are gaining a foothold in the Indian housing landscape. Such small units are slowly growing in popularity in many Indian metros, backed by high demand from young, working millennials. In the foreseeable future, the demand for such units will move further up the curve, due to the young demographic dividend in Indian metros.
These units are not just popular amongst the end users, but even investors are gravitating towards them in sizeable numbers. Besides being in high demand, such units offer a lower barrier to entry. Coupled with attractive payment plans, it augurs well for capital investment. As risk appetites are still low and there is a growing propensity towards risk-adjusted returns, small residential units are the perfect sweet spot.
Going forward, investors will continue to expand their foothold in the Indian housing market. On the face of high demand and better organisation, Indian real estate will continue to be an inviting field for investors and end users. However, the market is expected to be largely speculation free and only serious long-term investors will play out in the current scenario.
(Ankit Kansal is Founder and MD of 360 Realtors real estate consulting company. The views expressed are personal. He can be contacted at ankit.kansal@360realtors.com)
—IANS
by admin | May 25, 2021 | Opinions
Representational Image
By Ankit Kansal,
The hitherto unorganised brokerage space began witnessing massive changes in the latter half of the previous decade when numerous search and discovery platforms emerged on the Indian realty landscape. Equipped with super-powerful algorithms and high-end analytics, these websites assimilated large databases of real estate information on integrated platforms. Coupled with easy and attractive user interfaces, users could access large chunks of data with a few clicks.
However, they were still unable to solve one of the biggest challenges in the real estate transaction cycle — to enable end-users purchase properties. At the onset of the present decade, a host of consulting companies began to facilitate this and offer a wide range of other services under one umbrella. Besides advanced technologies, these advisories had high-quality manpower that helped in handholding the buyer throughout the transaction cycle.
Modern real estate consultants connect the dots across the entire value chain. They take special care to conduct due diligence before entering into an agreement with developers. This ensures that they seal deals only with developers who have a strong track record of on-time delivery and regulatory compliance.
Modern transaction advisories invest a lot in developing state-of-the-art user interfaces to showcase properties in a digital manner. They also give importance to analytics while developing benchmarking tools that help users navigate across numerous properties, compare them and identify the right project fit.
The contribution of the digital interfaces is augmented by the efforts of an on-ground sales force that helps buyers map their property requirements and identify suitable projects. The team comprises seasoned property experts who have an in-depth understanding of their respective local markets. Acting as relationship managers to individual clients, they assist them in mapping their individual needs, arranging iterative site visits, evaluating numerous options available and finally zeroing in on the best property fit.
However, the role of property advisors does not end here. To ensure consumer convenience, dedicated CRM (customer relationship management) teams are set up to handhold buyers through the documentation and legal process, thereby ensuring a hassle-free experience from start to finish. Advisories are also helping buyers in securing home loans, as they have tie-ups with banks and other financial institutions.
As the real estate sector becomes more organised, the advisory space will gain further momentum. Currently, the primary residential brokerage space in 10 major Indian cities is valued to be around $3 billion (Rs 212 billion). More than two-thirds of the market share is controlled by individual brokers, whose number is estimated to be slightly over 200,000 in these cities.
In the light of policy overhauls such as RERA, the demand for professional advisories will continue to grow. In the next five years, it is estimated that nearly half of the transactions will be facilitated through organised consultants.
New-age consultants are embarking on active channel partner programmes, wherein they are empanelling individual brokers on their platforms. In the newly-evolving symbiotic relationship, while brokers will share their contacts with the bigger advisories, the latter will offer professional support to individual brokers in the form of access to deals with larger developers, marketing support and training programmes, etc. As RERA compliances are becoming mandatory, smaller brokers will further try to align themselves with bigger advisories to stay afloat in a dynamic market.
(Ankit Kansal is Founder and MD of 360 Realtors. The views expressed are personal. He can be contacted at ankit.kansal@360realtors.com)
—IANS
