Real Estate Emerges As Preferred Investment For Indians

New Delhi, June 17: Despite subdued returns over the last few years, real estate has emerged as the most-preferred asset class for investment by Indians, followed by gold and fixed deposits, a recent survey has found. The findings come at a time when stock markets have seen deep correction due to the COVID crisis even as the real estate products have more or less retained their values despite its struggles.

According to a joint survey conducted by Housing.com and National Real Estate Development Council (NAREDCO), an overwhelming 35 per cent of investors see real estate as the most preferred mode of investment, followed by gold (28 per cent), fixed deposits (22 per cent) and equity products (16 per cent). The report also highlighted that homebuyers were likely to slowly return to the market in the coming six months.

Price-points of residential realty have remained muted for the past few years, but are still a key deterrent, with the perception of being still unaffordable. This was the response from nearly half of the potential homebuyers surveyed, who are currently staying in rented accommodation. 

The first time home-buyers, in the age group of 25-45 years, who are looking for homes for end-use, are inclined to buy a ready-to-move-in-house with 60 per cent saying they would not wait over six months after making the payment for the property. On the other hand, 21 per cent said they were okay with a property with a delivery timeline of maximum one year.

The survey was conducted in April and May 2020, through a random sampling technique involving over 3,000 potential homebuyers.

One important finding of the survey was that  those living in rental homes have realized the importance of being in their own homes while NRIs facing challenging times in their present domiciles are looking at creating a safe haven ‘back home’ in India. Demand for additional space for home offices is on the rise, with need for more efficient layouts and the importance of common amenities, business centers and more open spaces will be an inherent part of the new demand criteria in the post COVID-19 world.

According to NAREDCO National President and Founder-Chairman of Hiranandani Group Niranjan Hiranandani, the pandemic has not only shaken up the economy, but has further added to the distresses of real estate, which was already reeling under pressure post the Tsunamis of economic reforms, including demonetization, GST and RERA. 

“This pandemic has come as a rude setback for our industry and the allied sectors. In the current scenario, we can see a change in consumer behavior and perception, of owning a house with safe and secure surroundings, which will be the driving force for demand. As an industry, real estate needs to adapt to a tech-savvy future in terms of digital platforms for sales and marketing as also adopt enhanced automation at sites, given the obvious challenge of being dependent on migrant labor. As we prepare for opening up the economy in a phased manner, the industry will need enough financial cushioning to deliver homes as also get the industry back on its feet,” he said at the e-launch of the survey report.

Dhruv Agarwala, CEO, Housing.com, said, the survey showed that while potential homebuyers had pressed a pause button for the time being because of liquidity concerns and uncertainty over the COVID pandemic, a majority of them would gradually start returning to the market in the coming months. 

"This survey has established again that credible developers and ready to move in or nearing completion properties are preferred by prospective customers, who are largely end-users. With the significant correction in stock markets and the continued volatility, it is not surprising that real estate has become the top choice as an investment asset class," Agarwala added.

Rajeev Talwar, Chairman, NAREDCO and CEO of DLF, said while the sector recalibrates the approach to stay afloat in these challenging times as the world moves towards a more digitally inclined world,  the overall behavior of the consumer has changed to save more, spend less and invest smart model. He said the real estate had always been less volatile as compared to share markets making it the safest investment available. 

“The preference of the new age home buyer has also changed owing to the crisis and it is imperative for us to adapt to new technologies that will ease the entire home buying process for this new age home buyer,” he concluded.