5 pro-con­sumer trends re­shap­ing realty sec­tor

GETTING IT RIGHT To keep the price tags of their of­fer­ings at­trac­tive, de­vel­op­ers have been re­duc­ing the av­er­age car­pet area of apart­ments across cities

Hindustan Times (Chandigarh) - Estates - - ESTATES - Anuj Puri ht­es­tates@hin­dus­tan­times.com ■

In India’s highly dy­namic mar­ket en­vi­ron­ment, change and in­no­va­tion have be­come es­sen­tial for the sur­vival of any business. The hous­ing sec­tor, which was in the pre­vi­ous years de­fined by a re­mark­able lack of change, has been no ex­cep­tion. The winds of change are caus­ing as­pects of this in­dus­try that pre­vi­ously seemed ‘cast in con­crete’ to give way. Let us ex­am­ine five fac­tors that stand out in this re­spect: In­creas­ing fo­cus on af­ford

able ticket sizes: Across most In­dian cities, the fi­nan­cial ‘sweet spot’ for home­buy­ers is seen to be in the range of ` 50-70 lakh. In hy­per-ex­pen­sive Mum­bai, ticket sizes of around ` 1 crore are pop­u­lar with buy­ers be­cause of the higher wealth creation and there­fore pur­chas­ing power there. How­ever, as of the third quar­ter this year, there has been a rise in apart­ments priced un­der ` 1 crore in Mum­bai, as well.

The pro­por­tion of in­crease in units launched in Mum­bai in the un­der ` 1 crore ticket size in­creased more than the pro­por­tion of the over­all rise in unit launches. Mum­bai serves as a good ex­am­ple to il­lus­trate the ris­ing af­ford­abil­ity trend be­cause it is the tough­est mar­ket in the coun­try, and yet could see more launches in this seg­ment. Other cities will, there­fore, fare even bet­ter than Mum­bai in terms of de­creas­ing hous­ing ticket sizes.

To keep the price tags of their of­fer­ings at­trac­tive, de­vel­op­ers have been re­duc­ing the av­er­age car­pet area of apart­ments across cities. For ex­am­ple, the av­er­age apart­ment sizes in Mum­bai and Ben­galuru have, in re­cent years, shrunk by 12% and 30% re­spec­tively. Con­fig­u­ra­tions rev­o­lu­tion: When it comes to the most pre­ferred con­fig­u­ra­tions, 1 BHK flats re­main the most pop­u­lar in Mum­bai, while 2 BHKs rule in most other cities such as Delhi-NCR, Ben­galuru, Pune, Hy­der­abad, etc. Of course, af­ford­abil­ity is the main rea­son be­hind the pop­u­lar­ity of smaller flats in Mum­bai. Most of these smaller con­fig­u­ra­tions are priced around ` 1 crore, which is con­sid­ered ‘af­ford­able’ by Mum­bai stan­dards.

More­over, sell­ing these units later on is eas­ier than sell­ing big­ger con­fig­u­ra­tions, as there are al­ways more peo­ple look­ing to buy 1 BHK flats in Mum­bai than there are units avail­able. In other cities, the same logic ap­plies to the 2 BHK con­fig­u­ra­tion. As real es­tate in most cities is cheaper than Mum­bai’s, home­buy­ers can af­ford to and do buy big­ger con­fig­u­ra­tions.

More de­vel­op­ers en­ter­ing af­ford­able seg­ment, PE play­ers will­ing part­ners: The Modi govern­ment’s fo­cus on af­ford­able hous­ing has helped in mak­ing this seg­ment more palat­able to de­vel­op­ers. The erst­while aver­sion to be­ing tagged as ‘low-in­come hous­ing builder’ has waned, and even larger play­ers are openly en­ter­ing this mar­ket seg­ment. There is now con­sid­er­able po­lit­i­cal and so­cial good­will at­tached to such a move, apart from its un­doubted business sense. Play­ers like Mahin­dra Life space, Tat a Hous­ing, Shapoorji Pal­lon­jiGroup, As­setz Prop­erty Group, Pu­ra­vankara Projects, etc. are all en­thu­si­as­tic about en­ter­ing or ex­pand­ing their af­ford­able hous­ing port­fo­lios this year. One player – Emgee Group – is plan­ning an in­vest­ment of ` 1,600 crore into the af­ford­able hous­ing seg­ment over the next five years.

Pri­vate eq­uity play­ers are will­ing to part­ner with de­vel­op­ers op­er­at­ing in this space and fund such projects. Nisus Fi­nance Ser­vices, Brick Ea­gle Cap­i­tal, Av­enue Ven­ture Part­ners Real Es­tate, Car­lyle, Es­sel Fi­nance Ad­vi­sors and Man­agers LLP, Prov­i­dent Hous­ing and In­ter­na­tional Fi­nance Corp are some PE firms help­ing de­vel­op­ers with their af­ford­able hous­ing projects across the coun­try.

India’s chronic dearth of af­ford­able projects is noth­ing short of leg­endary. How­ever, with slow­ing sales in the lux­ury and premium cat­e­gories, af­ford­able hous­ing is now the one seg­ment which shows any kind of real prom­ise to open up rev­enue for de­vel­op­ers. Af­ter the re­cent de­mon­eti­sa­tion move, land prices will plum­met – more so in the tier-II, III cities and the fringe ar­eas of met­ros. This, too, will aid the cause of mak­ing homes more af­ford­able in India. While de­vel­op­ers are al­ready con­struct­ing small­er­sized units on the out­skirts of cities, the govern­ment must step in by im­prov­ing the con­nec­tiv­ity of these out­skirts to re­spec­tive city cen­ters. Ba­sic ameni­ties avail­able, ir­re­spec­tive of project size: Home­buy­ers ex­pect de­cent ameni­ties in their hous­ing projects, re­gard­less of whether they are town­ships or stand­alone build­ings. While town­ships of­fer many ameni­ties, suf­fi­cient park­ing, a small gar­den and play area, good se­cu­rity and power backup are now in­creas­ingly be­ing seen even in stand­alone res­i­den­tial build­ings. Buy­ers are no longer will­ing to set­tle for ameni­ties-starved projects and ex­pect the ba­sic fa­cil­i­ties even if their pur­chas­ing power is on the lower side. With more and more de­vel­op­ers of mod­est-sized res­i­den­tial projects heeding this de­mand, the rest have been left with no choice but to fol­low suit. En­gag­ing on so­cial me­dia: Dis­sat­is­fied home­buy­ers have been us­ing so­cial me­dia ef­fec­tively to de­mand re­dres­sal to their griev­ances. De­vel­op­ers have re­alised the power of so­cial me­dia and many have started re­spond­ing to buy­ers’ posts or queries in real time. They have re­alised the po­ten­tial of tar­get­ing pos­si­ble buy­ers with ad­ver­tise­ments while they are on­line. In fact, most de­vel­op­ers have be­gun to re­alise that in­vest­ing in dig­i­tal mar­ket­ing is nec­es­sary in a mar­ket where buy­ers re­view all their op­tions on­line.

The au­thor is chair­man and coun­try head - JLL India

AF­FORD­ABIL­ITY IS THE MAIN REA­SON BE­HIND THE POP­U­LAR­ITY OF SMALLER FLATS IN MOST IN­DIAN CITIES

ISTOCK

1BHK and 2BHK apart­ments are the most pop­u­lar for­mats in most In­dian cities. ■

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