to buy or rent the big in­dian De­bate

‘The Realty+ Show’ on Repub­lic TV first episode of the se­ries fea­tured the de­bate on the hot topic of buy­ing or rent­ing a house.

Realty Plus - - Reality + Show -

The pri­mary ben­e­fit of owning a home is that your home eq­uity will grow as home prices rise. But, owning a house also car­ries an emo­tional at­tach­ment for some. Also, homes can take time to sell or rent out, so re­lo­cat­ing for a job be­comes more com­pli­cated. But as an owner, the home is yours to paint and re­model as you wish! So, how does one make a de­ci­sion?

Amit B Wad­hwani, Founder, Sai Es­tate Con­sul­tants Chem­bur Pvt Ltd (SECCPL) while as­sur­ing a prag­matic ap­proach to a sub­ject con­sid­ered clichéd, asked Dr. Anurag Ba­tra, Edi­tor-in-chief of BW Busi­ness­world of his views. Ba­tra said, “Since the numbers of home­buy­ers has shrunk, reach­ing out to the right tar­get group is cru­cial for de­vel­op­ers. Arnab Goswami, Manag­ing Di­rec­tor & Edi­torin-chief of Repub­lic TV ques­tioned that as homes are part of peo­ple’s lives, can they in­vest in a prop­erty while keep­ing their safety nets on? A buyer needs to know when and where to in­vest.

Bharat Dhup­par, Group CEO, Ra­iaskaran con­curred the there is a need to com­mu­ni­cate about real es­tate in the right man­ner so as to reach the right set of peo­ple and cre­ate the right im­pact. Vinod Ro­hira, Manag­ing Di­rec­tor & CEO, K. Ra­heja Corp com­mented that with pol­icy re­forms, real es­tate sec­tor is be­ing cleaned of its clut­ter and is be­com­ing more re­fined in terms of prod­uct of­fer­ings.

Sh­weta Shalini, En­tre­pre­neur, Govt Pol­icy Ex­pert & ED Ma­ha­rash­tra Vil­lage Trans­for­ma­tion Foun­da­tion

em­pha­sized that for In­di­ans buy­ing a house is an emo­tional de­ci­sion. It show­cases their iden­tity. “I be­lieve each house­hold has at least once de­bated on whether to buy or rent. I think the de­ci­sion is very in­di­vid­u­al­is­tic and very much de­pends on a fam­ily’s in­lay vs. out­lay. There are plenty of as­pects in­volved such as ‘will I be work­ing in this city for­ever?’, ‘can I pass it on to my kids? Etc.”

Ac­cord­ing to Dhup­par the eq­uity mar­kets present a projection that real es­tate is a bad in­vest­ment. Wad­hwani con­sid­ers real es­tate as a long term in­vest­ment and not for a quick ROI. Point­ing to­wards the con­tra­dict­ing be­hav­iour of mil­len­nial gen­er­a­tion Ba­tra said “The young gen­er­a­tion is buy­ing their first home and to put on Airbnb for rental re­turns but ma­jor­ity of In­di­ans buy be­cause prop­erty is a hard as­set and serves as their fi­nan­cial sav­ings.”

There’s a strong case to be made for rent­ing a home too. As Goswami puts it, “Home­buy­ers to­day are much younger and buy­ing a home can be a dif­fi­cult process, thus mak­ing rent­ing a more con­ve­nient op­tion for them.” Ba­tra

con­curred that buy­ing a home in metro cities make sense only if one is based in the city for a long time.

Ro­hira brought to no­tice a very valid fac­tor that even for rent­ing, some­one is buy­ing a flat. “De­vel­op­ers don’t

per­son­ally rent out apart­ments. In­vestors buy to rent. Young In­di­ans are buy­ing as the ur­ban en­vi­ron­ment has com­pletely changed with im­por­tant life mile­stones like mar­riage and hav­ing kids are get­ting post­poned”

af­ford­able hous­ing Mantra

‘Af­ford­able hous­ing’ has been the lat­est buzz­word. Ro­hira was of the opinion that the word af­ford­able has been much abused. He said that real es­tate af­ford­abil­ity is de­pen­dent on in­fra­struc­ture drives real es­tate and so­cial in­fra­struc­ture churns out new mi­cro-mar­kets. “In Mumbai Metropoli­tan Re­gion (MMR) up to 70 to 80 per cent of buy­ers are end-users. RERA and GST have also helped stream­line the sec­tor but, the prices will in­crease in the next few years due to de­vel­oper’s ad­di­tional cost for more ap­provals and meet­ing qual­ity & time­lines.”

Ba­tra likened the no­tion of ‘af­ford­able hous­ing’ to ‘Parle G’ – some­thing that ev­ery­one can af­ford and ev­ery­one wants to have! In his view the prices are likely to re­duce in 3-4 months and prospec­tive buy­ers can wait for the right op­por­tu­nity. Goswami main­tained that In­di­ans are not only price-sen­si­tive but also price-aware. “Mil­len­nial are very pru­dent with their choices and they study the mar­ket very closely. They are aware of the price trends and the de­vel­op­ers need to be hon­est in their pric­ing.”

Wad­hwani putting the onus on de­vel­op­ers said, “De­vel­op­ers need to take peo­ple in con­fi­dence and tell them hon­estly about the pros and cons of an af­ford­able hous­ing unit of 300 sqft.” Shalini in­ter­jected that af­ford­able hous­ing seems to be tar­geted only at the ur­ban seg­ment and ne­glects the need for slum re­ha­bil­i­ta­tion and pro­vid­ing in­ex­pen­sive homes to those who re­ally need it.

the con­clu­sion

The panel con­cluded by men­tion­ing that both buy­ing and rent­ing mar­kets are growth mar­kets in In­dia. There are enough con­sumers for both prod­ucts. They ad­vised prospec­tive buy­ers to buy only when they can af­ford to and choose to rent in the mean­time. Rent­ing is a log­i­cal choice for those on short-term stays in a city and buy­ing is a great de­ci­sion and a lu­cra­tive as­set for those who are now based in a par­tic­u­lar city.

Ba­tra’s in­sights were that buy­ing for self-use is a good op­tion and re­it­er­ated his pre­dic­tion that prices will re­duce in the coming months, pro­vid­ing an op­por­tune time for buy­ing. Wad­hwani wrapped up the episode on a note of en­cour­age­ment, “The fi­nal word on this is that if you have to con­sume for the long-term, such as in case of a fam­ily home or as cap­i­tal in­vest­ment, then do go ahead and buy your dream home’

(L-R) Bharat Dhup­par; arnab Goswami; amit wad­hwani; DR. an­nurag Ba­tra; Vinod Ro­hira; sh­weta shalini

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