There was no doubt that we would see a big change in the real estate sector once the government eases the lockdown restrictions. Surfaces Reporter found in its survey that the pandemic has affected the realty sector in India in more ways than one. Let’s take a closer look:
Walk-to-work Concept Losing its Sheen
The earlier concept of residential housing in and around the workplace hubs or short drive to work or walk-to-work concept is losing sheen due to the rise of work from home culture.
As Anuj Puri, Chairman, Anarock Property Consultants said “The Work From Home concept may become the next fulcrum for home-buying decisions, where the walk-to-work option had held the longest sway.”
Millennials Moving to City’s Outskirts
Due to the lockdown, many office employees have to leave the city to return to their hometowns to be closer to their parents or other family members. Professionals and college students feel that buying homes in the city’s outskirts is better than paying high rents and this is one among the most noticeable residential real estate trends of this time.
The proprietor of Ahmed Realty, Waquar Ahmed said to Deccan Herald, “Those who resided earlier in PGs or co-living spaces want their own homes because safety and hygiene are priority concerns. In many cases, the parents are helping them make this investment,” he says. And those who can’t afford to buy are looking to rent.
Those who resided earlier in PGs or co-living spaces want their own homes because safety and hygiene are priority concerns. In many cases, the parents are helping them make this investment.
Contrary to the reports suggesting people would buy less, many individuals are leaving the central parts of the city to purchase more spacious houses and a better lifestyle at the most cost-effective rates on the peripheries with a focus on Work from home.
“Location, amenities and facilities matter,” said Mahesh Khaitan, Director, Salarpuria Sattva Group, and goes out to explain that the “key aspect that is often kept aside by homebuyers is the ambience offered with a residential project. With evolving urbanization and the menace of traffic, finding tranquillity has become difficult. In situations like these, it is important to nestle in a setting, which provides a holistic approach for basic living with the garden landscape, community halls, walking pathways, toddlers and play area, guest parking, sports pavilion, and unwinding spaces, among others, along with other seamless connectivity facilities, as per the emerging urban requirements.”
Why Shifting to Peripheral Areas?
WFH environment, big houses at affordable prices on the outskirts, safety and hygiene protocols, high rents in the city and the job loss/insecurity in the backdrop of the faltering economy are a few factors that have stimulated people to shift to the peripheral areas.
According to a study conducted by Anarock, the city’s outskirts are more affordable, both for home purchase and rental perspectives. There is a huge cost difference in India’s three big economic catalysts- NCR, MMR and Bengaluru.
National Capital Region (NCR)
The average price for a standard 1,000 square foot property in the Delhi NCR areas is around Rs88.20 lakhs, against Rs 37.50 lakh in the peripheral areas. So a total of 57 percent cost difference. Whereas average monthly rental outgo for a standard 2BHK house in areas within the city limits is about Rs 22,000, against 9,500 in the outskirts.
Micro-markets within city limits considered include Noida, Vaishali, Vasundhara, Indirapuram, Golf Course Ext. Road, Dwarka Expressway, Sushant Lok, New Gurgaon, Dwarka, etc. Peripheral areas include Faridabad, Greater Noida, Ghaziabad-Rajnagar Extension Sohna, Bahadurgarh, Bhiwadi, etc.
The average price for a standard 1,000 square foot property in Bengaluru within city limits is around Rs 69.80 lakh, which is only Rs 43.50 lakh in the outskirts. So, there is a total of 38 per cent cost difference. If we talk about average monthly rental outgo for a standard 2BHK house in areas within city limits is almost Rs 18,500, against Rs 9,500 in the peripheries.
Micro-markets within city limits considered include Singasandra, Hebbal, Jakkur, Yeswanthpur, Jalahalli, Whitefield, Marathahalli, Banashankari, Kodigehalli, Sarjapur Road, HSR Layout, Kudlu Gate, KR Puram, J P Nagar, BTM, Jayanagar, etc. Peripheral areas include Doddaballapura Road, Attibele, Electronic City, Varthur, Yelahanka, Budigere Cross, Tumkur Road, Kanakapura Road, Kogilu Cross, Mysore Road, and International Airport Road (Bellary Road).
Mumbai Metropolitan Region (MMR)
The average price for a standard 1,000 square foot property in MMR within city limits is approx. 1.85 crore, against Rs 55.35 lakh in the peripheral areas. So there is a total of 70 percent cost difference. And here the average monthly rental outgo for a standard 2BHK house in areas within city limits is between Rs 45,000-46000, against Rs12, 500 on the outskirts.
Micro-markets within city limits considered include Malad, Kandivali, Andheri, Vile Parle, Wadala, Ghatkopar, Vikhroli, Goregaon, Chembur, Powai, Mulund, etc. Peripheral areas include Kalyan, Mira Road, Vasai, Bhiwandi, Dombivli, Virar, Ulwe, Taloja, Thane beyond Kasarvadavali and Owale Panvel, etc.
Reduction in Rents in the Cities
As most of the people have vacated the rental houses and left to their home grounds, most homeowners are not getting the tenants for the homes.
Landlords are now willing to take lower rents as they feel getting less rent is better than leaving the house vacant.
Owner of Roof Makers, Mohammed Jaffar said that the demand for rental homes has totally reduced since the Corona outbreak. He further said that many homeowners are approaching them because their tenants have vacated and left to their hometown. So, there are no renters in most of the homes.
Waquar Ahmed said that the things picked up after May after a complete stillness during the first two lockdowns.
He further said, “Families who used to reside in 3BHKs are shifting to 2BHKs. They may stick to the same area, but this downgrading helps them reduce their monthly expenses.”
Demand for Gated Communities
There seems that the demand for gated communities may also shoot up in the near future due to hygiene and safety aspects. Even when the business was slow in March, people in Bangalore are looking for homes in areas such as Whitefield due to its proximity to vital areas of public interest, seamless connectivity, renowned tech parks, best amenities at affordable prices, reputed institutions, best hospitals and hospitality services.
At this time, small business owners and others who invested all their savings in property are working on liquidating their investments, and are not seeking profits.
Is it a Temporary Setback?
Saqib Ilyas, joint managing director, Trend Shelters on a positive note said it as a temporary setback. According to him, people leaving the cities will come back. ‘People love the city and what it has to offer and that’s why the real estate of this city has thrived and will continue to do so,’ he adds.
Many offices have had to close their shutters temporarily and ask employees to work from home, but it does not mean that the office spaces are shrinking. Many big companies such as Intel, Accenture, Paytm, Google are investing in taking up large spaces. They are planning for the future. While small business owners are looking to acquiring spaces that they would not have been able to afford earlier.
Tough Times Ahead for Real Estate Middleman
During this time when everyone- home sellers, home buyers, landlords, tenants- is trying to save money, removal of the middleman or broker seems to be a right path to them. Homeowners are trying to attract the clients directly. Also, when they have to post an advertisement on a site like No Broker, they would have to pay a lesser amount than the commission they would pay to a broker. And a tenant would also be happy without paying a brokerage fee. So, it’s a win-win situation for both tenants and landlords. However, a really difficult time for brokers.
And during this market slump, people who are approaching agents are also negotiating the commission percentage.