⏲️Consumer Analysis

In India, the real estate sector is the second-highest employment generator, after the agriculture sector. Real estate sector in India is expected to reach US$ 1 trillion by 2030. By 2025, it will contribute 13% to country’s GDP. Emergence of nuclear families, rapid urbanization and rising household income are likely to remain the key drivers for growth in all spheres of real estate, including residential, commercial, and retail. Rapid urbanization in the country is pushing the growth of real estate. >70-75% of India’s GDP will be contributed by urban areas by 2020. According to India Ratings and Research (Ind-Ra), the Indian real estate sector may stage a sharp K-shaped recovery in FY22. However, the overall sales in FY22 could still be ~14% below the FY20 levels.

As per ICRA estimates, Indian firms are expected to raise >Rs. 3.5 trillion (US$ 48 billion) through infrastructure and real estate investment trusts in 2022, as compared with raised funds worth US$ 29 billion to date.

1. Income / Revenue- The Real Estate Industry in India had a total revenue of Rs 36,500 crore (US$ 5 billion) in 2021, driven by rising interest of investors towards capturing attractive valuations amid the pandemic. Between January 2021 and September 2021, private equity investment inflows into the real estate sector in India stood at US$ 3.3 billion.

2. Age range:

• First-Time Buyers: These are typically young buyers in their 20s and 30s making the leap from renting to owning. They may be single, or they may be young couples, but don’t always have kids just yet. This is likely the largest purchase they’ve ever made, and one of their biggest concerns will be finding a home that fits their budget. In recent months, trends have changed for this audience. Whereas first-time buyers typically valued proximity to work, COVID-19 and work-from-home capabilities have made that less important. Instead, they are looking for homes with extra living space to make room for home offices without cramping their living space. Still, many young professionals prefer living close to the amenities of a big city, so keep this in mind with your development location.

• Move-Up Buyers: These buyers are going to be slightly older and either already have children or have a child on the way. Similar to new-age first-time buyers, they are more concerned with having plenty of space, especially bedrooms for their growing family. They may put more emphasis on features like a yard or a garage and are likely concerned with the safety of the area, nearby recreation, and schools. This audience may value luxury and status more than younger home buyers — they often want their home to make a positive impression on their friends and family.

• Active Adults: These are older couples or singles whose children have moved away and need to downsize. They are concerned about quality over quantity, looking for homes that are comfortable and sophisticated without being too large or difficult to manage. They often want to live in a quiet and safe area, but may also value having a supportive community with friendly neighbors.

3. Lifestyle- Millennials still made up the largest share of home buyers at 38 percent: Older Millennials at 25 percent and Younger Millennials at 13 percent of the share of home buyers. Eighty-six percent of Younger Millennials and 52 percent of Older Millennials were first-time home buyers, more than other age groups. Older Millennials had the highest share of married couples (67 percent), while Younger Millennials had the highest share of unmarried couples (21 percent) buying homes. Older Millennials were the most educated age group, with 79 percent holding at least a bachelor’s degree, followed by Younger Millennials. They were most likely to purchase a previously owned home and a townhouse. Convenience to their job and commuting costs were both more important to this group, and they were most likely to find their home online and to use internet in their home search.

4. Geographic location- Among the fastest growing cities in term of property rates, Chennai holds the first position. According to recent index published by National Housing Bank (NHB), in last 8 years, property rates in Chennai has increased @ 17.53% per annum.

On an average, property rates of residential apartments prevailing in Chennai is Rs 7,000 /sq-ft.

Top 3 costliest areas in Chennai are:

• Alwarpet (Rs 17,000/sq-ft),

• Egmore (Rs 16,000/sq-ft) &

• Raja Annamalai Puram (Rs 15,800/sq-ft).

After Chennai, Pune is the next in the list of fastest growing city in India. In Pune, property rates are increasing at the second fastest rates. According to recent index published by National Housing Bank (NHB), in last 8 years, property rates in Pune has increased @ 12.19% per annum. In Bhopal, property rates are increasing at the third fastest rates. In Mumbai, property rates are increasing at the fourth fastest rate in India. In Faridabad, property rates are increasing at the fifth fastest rates in India.

In 2021, 63 thousand housing units were sold in Mumbai, India's most demanding residential housing market. Furthermore, even in Mumbai sales increased by 29 percent compared to the previous year. Similarly, all of the eight biggest metropolitan areas of India recorded a significant increase in housing sales.

5. Scope (Number of potential customers)- Real estate sector in India is expected to reach US$ 1 trillion in market size by 2030, up from US$ 200 billion in 2021 and contribute 13% to the country's GDP by 2025. Going forward, the trends suggest that the increasing quest of people for shared living spaces would boost the demand in the real estate industry of the metros and other two or three-tier cities too. A surge in the demand for warehousing, e-commerce, and startups are also a positive trend with an anticipated resultant boost in the realty industry. As these segments get more organized, the demand for real estate would surge in leaps and bounds.

However, these trends suggest that the demand is on the climb with a clear indication of an upward influx, which certainly has to be met by the stakeholders of the sector. The industry is already in a liquidity crunch, and the government measures have been relieving it to an extent. The scenario suggests more credit requirement is the burning need of the industry in the coming year.

6. Customer base- The Indian real estate market is thriving and has become a part of many successful investment portfolios because of its high return on investment (ROI) value. As per a report, 77% of the total assets of an average Indian household is real estate.