intelligence roofandfloor · property she wants. we collect over 30 signals for every homebuyer--of...

IntelligenceRoofandFloor

Report

Union Budget 2020-21:Does It Meet Real Estate Expectations?

FEB 2020

Index

Introduction

Market segment

Union Budget 2020-21: Does It Meet Real Estate Expectations?

Demand distribution

Chennai and Bengaluru

Purpose of home-buying

Chennai

- Budget preferences

- Preference of property type

- Zone wise analysis

- Top Micromarkets

Bengaluru

- Budget preferences

- Preference of property type

- Zone wise analysis

- Top Micromarkets

Outlook

3

4

7

10

11

12

14

16

18

26

29

31

34

43

45

IntroductionIt gives me extreme pleasure to introduce RoofandFloor Intelligence, a one of a kind intelligence report on customer sentiment in the real estate segment. Roofandfloor, the online real estate arm of the Hindu Group, has been in this market for the past 4 years. Over the years we have tied up with 1000+ builders and have helped over 1 million home buyers in making a well in formed decision in their home buying process.

Our ability to be a successful matchmaker has boiled down to our diligence in gathering data about home buyers as well as properties, and making sure each home buyer gets the property she wants. We collect over 30 signals for every homebuyer--of her activities, her behaviour, her preference both implicit and explicit, and this allows us the confidence of making appropriate recommendations. It also gives us the confidence to prepare RoofandFloor Intelligence, something that we believe is extremely important intelligence to any decision maker in a business that deals with real estate, even if peripherally.

While most real estate reports give post facto analysis of what has happened in the market, RoofandFloor Intelligence goes one step ahead and gives intelligence that is derived from what the user is doing before making a purchase. In that sense it is predictive intelligence that allows businesses to be proactive rather than reactive when operating in the real estate sector. Using data analytics and visualisation, RoofandFloor Intelligence gives insights into changing user preferences, hot localities in a city, investment vs own use sentiment in the sector and a lot more.

Thejaswi UdupaCTO, RoofandFloor

RoofandFloor Intelligence roofandfloor.thehindu.com

Market Sentiment

The month of February every year marks an annual ritual for our country’s economy. Every year, the entire country holds its breath as the finance minister announces how the government plans on spending the country’s money in the next fiscal. As the announcements are made, reactions start pouring in from every direction and dominate the news, from industry experts to political experts, academic experts to students, workers to farmers. The budget session is closely watched by consumers and industries alike to see and scrutinise how it will affect their lives. It has acquired such a cultural significance that specialists were even brought in last year to discuss the possible effects of the FM carrying the budget in a ‘red bahikhata’ instead of the traditional black briefcase.

Effects of the budget on market sentiment

The markets fluctuate in real time as announcements are made one after the other and expert opinions dominate the news cycles. The fluctuation of the market is no indicator of the effect of the budget on the economy, but it does reflect the sentiments of the people invested in the markets. This shows the importance of market sentiment which holds the power to wipe out thousands of crores in notional currency within a matter of hours.

This clearly does not hold true in the real estate market to the same extent as the capital markets. Does that mean that people’s perception of the budget does not have any effect on the real estate market? When a buyer, whether buying for the purpose of an investment or for self-use, first gets interested in purchasing property, among the many factors that affect this decision is market sentiment. It comes into play in the real estate market as it can have an effect of either


accelerating or slowing down a buyer in its journey, if not stopping it entirely.

How the budget has an impact on the real estate market

The budget announcements can affect market sentiment through many ways, such as:

• Provision of tax relief or a tax holiday to builders

• Provision of tax incentives to homebuyers

• Introducing infrastructure development plans

• Making reforms in the financial sector

• Introduction of new laws or amendments to existing laws aimed at protecting buyers

We saw bits and pieces of these factors in the budget speech which was aimed at providing a positive stimulus to the market. This was the general expectation of the real estate market from the budget to help move the unsold inventory reported to be piling up in big cities across the country. The government provided people the option of foregoing deductions in exchanged for a lower rate of income tax. This might hurt the influx of new buyers into the market who would have otherwise had greater incentive to save tax on ‘income from house property’ under Section 80C of the Income Tax Act, 1961.

On the other hand, the budget extended the tax holiday to builders developing residential projects where the stamp value of units is under INR 45L, which should have a positive effect on the affordable housing segment. This benefit was earlier provided to housing projects developed on a plot of land not less than 2000 square meters in Bangalore, which requirement has now


been reduced to 1000 square metres, just like in Chennai.

We noted in our previous report how south Bengaluru is slowly increasing in popularity among the young buyers and how developers have been responding to this demand in recent times. We see a continuation of this trend in February however with some notable exceptions on the micromarket level as highlighted later in this report.

The FM in her budget speech signalled a green flag to the long-proposed project of developing suburban rail corridors connecting several parts of the city with the Kempegowda International Airport. This should help in assuaging some common concerns of the residents of Bengaluru since horror stories of commute to the airport are now part of Bengaluru’s urban legends.

State budget announcements in Karnataka and Tamil Nadu

Shifting our focus away from the union budget, Tamil Nadu state finance minister, Mr. O. Panneerselvam presented the state budget on February 14, 2020. He announced an allocation of INR 3100 crores to the Chennai Metro Rail Project as share capital assistance, subordinate debt and pass through loan assistance. He also announced a reduction in stamp duty for rental agreements under the new Tenancy Act to 0.25% from 1% and registration charges on such agreements to 0.25% from 1% subject to a maximum of INR 5,000. It remains to be seen how this would affect the market going forward.

In what can be seen as a push towards making affordable housing more affordable, the Karnataka government has announced a cut in stamp duty on first registration of flats costing not more than INR 20L. It has been proposed to be brought down from 5% to 2%, which will translate into a saving of up to INR 72000 in the hands of the buyer.

Governments seem to be moving towards making affordable housing more accessible to new buyers. It will however be interesting to see how much these moves affect markets in metropolitans where affordable housing does not conform to the same price constraints as in the rest of the country.


In the opening sections of her speech presenting the much-awaited Union Budget 2020, Nirmala Sitharaman stressed that “Everything that the Government does and aims to do is for this pyaara vatan (dear nation)”

Lines that were clearly meant to reassure a country that until early 2019, carried the tag of the ‘world’s fastest-growing economy’ with pride. But this year, the scenario is very different. The Indian economy is desperately trying to get back on its feet after a year of being in the doldrums. Expectations in the real estate sector ran high as it hoped the Budget would lift slowing consumer demand and infuse liquidity with its announcements.

Now that the Budget is out, has it pleased or disappointed the real estate sector?

Incentives for affordable housing

In the previous Budget, the homeowner or builder obtaining income from an affordable housing project that was approved by 31st March 2020 was eligible for a 100% deduction of profits under Section 80-IBA. This year, the deadline for loan sanction has been extended by another year to enable more people to avail of the benefits and provide more incentives for affordable housing projects.

Further to this, any profits availed by developers of affordable housing projects approved by 31st March 2020, now stand to gain a tax holiday. In the previous Budget, the Government had announced a deduction of up to Rs 1.5 lakhs on interest paid for affordable housing home loans. Aimed at giving a fillip to the supply of affordable housing, developers and homeowners can now avail of the deduction until March 2021.

Additionally, “The new personal income tax regime will leave higher disposable income in the hands of taxpayers (those who opt for the new tax regime), which is likely to increase the demand for affordable homes (considering the change in tax slabs in only for people earning less than INR 15 Lakh),” explains Sunil Mishra, Chief Executive Officer – TRESPECT.

But not all were pleased with these proposals. “While we appreciate the Government extending an additional Rs 1.5 lakh tax benefit on interest paid on affordable housing loans to March 2021, we still feel that this incentive should also be provided to the non-affordable housing segment where millions of middle class buyers, especially those living in metros like Delhi, Mumbai and Bangalore, can take the plunge as the cost of even a 2 bedroom apartment in these cities can cost Rs 1 crore and above,” says Amit Modi, Director, ABA Corp and President (Elect), CREDAI Western UP.

Union Budget 2020-21: Does It Meet Real Estate Expectations?


Infrastructure boost

There was a major thrust on infrastructure with the Finance Minister announcing various initiatives worth Rs 1.7 trillion including:

• Setting up five new smart cities

• Allocation of more funds towards transport and warehousing

• Focusing on 6500 projects across sectors under the National Infrastructure Pipeline (NIP) to boost the economy

• Building 100 new airports by 2024

• Faster development of highways

The real estate industry seems to be happy overall with the focus on infrastructure as it is expected to revive the building segment considerably.

“The Government’s proposal for five new smart cities in collaboration with states via the public-private partnership model is a great move to leverage not just the funding potential of private players but also their experience of making cities livable and sustainable,” says Mohit Goel, CEO, Omaxe Ltd.

Agrees Ashish Bhutani, CEO, Bhutani Infra, “Focus on infrastructure and economic growth in this budget will lead to more activity in the commercial segment as the demand for offices will grow.”

Tax relief for real estate transactions

In the past few years, housing markets have undergone extreme price corrections due to the substantial slump in the sector. In some cases, the market value of properties had dipped well below the circle rate, which is the minimum value at which a property can be sold or purchased. To provide relief to homebuyers and sellers, the Finance Minister proposed doing away with tax liabilities in cases where the difference between the actual transactional value and the circle rate of a property is less than 10%. Slated to come into effect by 1st April, 2021, the move is an improvement from the 5% differential that was announced last year.

Says Amit Modi, “One of the major welcome steps in this Budget was that earlier, any taxing income from capital gains in respect of transactions in real estate if the consideration value is less than the circle rate by more than 5% the difference was counted as income, both in the hands of the purchaser and seller. Increasing the limit to 10% now will definitely minimise hardship in the sector and provide relief for both developers and buyers.”


Easing debt recovery for NBFCs

The Budget has a few constructive measures aimed at NBFCs, which were facing numerous struggles with liquidity. A well-appreciated step was the proposal for a reduction in the limit for debt recovery from Rs 500 crore under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002 to an asset size of Rs 100 crore or loan size from the current Rs 1 crore to Rs 50 lakhs. “Liquidity and availability of finance is the biggest issue confronting the real estate sector today. In this context, the assurance given by Hon’ble Finance Minister that NBFCs and HFCs will not face any liquidity crunch will help calm the nerves for sure,” approves Mohit Goel.

Addressing the cash crunch crisis that NBFCs and Housing Finance Companies face, the Finance Minister has also proposed a Partial Credit Guarantee Scheme, which will guarantee securities floated.

Simplification of tax

With the aim of simplifying existing tax structures and providing relief to individual taxpayers, the Government has proposed significant reductions in personal income taxes for those who don’t avail of exemptions. The proposal suggests a decrease in the income tax from the current rate of 20% to 10% for salaries between Rs 5 lakhs and Rs 7.5 lakhs. For those in the income bracket of Rs 7.5 lakhs and Rs 10 lakhs, the tax will be reduced from 20% to 15%. For individuals earning between Rs 10 lakhs and Rs 12.5 lakhs, and Rs 12.5 lakhs and Rs 15 lakhs, the tax will be reduced to 20% and 25% respectively from the current rate of 30%.

The Government also hopes to propel growth and facilitate ease of living with these proposals but does not have a targeted effect on housing.

Final thoughts

“Considering the overall health of the real estate sector, it would have helped if the Government had given a little more incentive to both homebuyers and developers,” opines Dhiraj Jain, Director, Mahagun Group.

With its focus on the rural sector, infrastructure, and personal taxes, the Government seeks to augment employment opportunities, consumption, and investments. Real estate activity will spike in parts with the development of smart cities, new infrastructure projects, and data centres. However, the real estate industry continues to wait for resolutions on crucial issues like single-window clearance and land reforms that remain unaddressed.

- Sourced from the Roofandfloor Blog. Can be accessed at https://roofandfloor.thehindu.com/real-estate-blog/union-budget-2020-21-does-it-meet-real-estate-expectations/.


Demand DistributionWe have a broad user base, spread across various ages, genders, background and financial capacity who continue to search for all different kinds of property. The breadth of our user base becomes apparent from the composition of the visitors to our website. In the month of February 2020, of all the users looking for residential property in Bengaluru and Chennai, 42.55% lie within the 25-34 years age group, while 25.23% fall within the 35-44 years age group.

Properties in Bengaluru and Chennai continued to garner the greatest interest from the youth in these cities. Bengaluru attracts a large young workforce every year to work in tech companies, MNCs and start-ups or to provide professional services to these businesses and the people working with them.

Chennai is home to two major ports of India, is well-established as a manufacturing hub and has been growing in its importance as a prime destination for IT outsourcing with many functional tech parks and many more slated to come up over the next few years.

18 - 24 25 - 34 35 - 44

Age Groups

% o

f our

tota

l use

rs

45 - 54 55 - 64 65+

31.33%

68.87%

14.11%

42.55%

25.23%

8.16%6.29%

3.66%

66.89%

33.11%

29.71%

70.29%

67.26%

32.74%

Some of these users also submitted their preferences in the form of parameters of their search, such as budget, property type, locality, time in which they intend to purchase property, and their purpose of buying. These preferences become the foundation of our insights into the real estate market contained in this report.


Chennai & Bengaluru

Chennai and Bengaluru are two of the most prominent real estate markets in south India, being preferred locations for job seekers. With a large number of established and up-and-coming tech parks and improving social infrastructure, Chennai and Bengaluru attract both self-use buyers and investors.

Through this report, we highlight some of the trends that can be seen emerging from the preferences submitted by our users and try to gauge the market sentiment as far as it can be extrapolated from their preferences. In February 2020, around 22,605 users across Bengaluru and Chennai exhibited an interest in buying homes and submitted specific preferences of type of property. 6.32% of our users indicated that they intend to enter the market within the next 6 months.

By the end of this report, we will try to answer a few questions about the market sentiment in Chennai and Bengaluru:

• Who are these buyers?

• Why do they want to buy a house?

• Where do they want to buy a house?

• How much are they willing to spend?

• What factors determine the buyers’ budget?

• Does their budget vary with the location of the house?

• What kind of properties do buyers prefer to purchase and why?


Purpose of homebuyingWe also asked our users if they are looking for property for their own use or if its solely for the purpose of an investment. Some of our users submitted this data and enabled us to distinguish data provided by pure investors from the data provided by users who are looking to buy property for their own use.

We believe that it is important to create this distinction as behaviour of investors and self-use buyers are dictated by different considerations. Self-use buyers concentrate on the day to day challenges associated with the purchase, such as access to schools, hospitals, grocery stores, and most importantly, how long it will take for them to commute to and from work. Self-use buyers do not lay as much emphasis on the proposed long-term development of the area as much as the investors who rely on such development for returns on their investment.

7.52% of our users in Bengaluru and 10.53% of our users in Chennai, who chose to indicate their purpose of buying property, were interested in purchasing property for the purpose of investment.

In both cities, the investors were most interested in purchasing properties in the affordable range.

Properties within the affordable property range were the most popular among investors in the month of February, 2020 in both Bengaluru and Chennai.

Bengaluru Chennai

7.52%Investment

92.48%Self-Use

10.53%Investment

89.7%Self-Use


Chennai

Budget PreferencesOur users in January had shown greater interest in residential property in the mid-segment price bracket than in the affordable housing range. February however the trend shifted towards affordable housing.

In Chennai, 47.72% of our users looked for a house in the mid-segment price bracket (INR40-70L), while 47.07% preferred affordable housing (<INR 40L). This month’s increased demand for affordable housing can be attributed mostly to the high demand for plots in Chennai which drove 52.84% of the entire demand for affordable housing in Chennai. On adding the additional construction costs incurred by some of the plot buyers, we can infer that most of the buyers in Chennai have a total budget falling within the mid-segment price bracket.

76.20% of our users looking for houses in the mid-segment price bracket in Chennai were interested in apartments and flats while 19.86% were interested in purchasing villas.

Our users falling in different budget brackets also showed a clear preference for a particular type of property. Plots were preferred by half of our users falling in the affordable housing segment (<INR 40L), Apartments were however the clear favourite in the rest of the budget segments. A preference for villas was the highest among our users willing to buy property in the mid-segment price bracket (INR 40L – 70L).

40 - 70 lakhs< 40 lakh

47.07% 47.72%

3.05% 2.16%

70L - 1 Cr >1 Crore

% o

f our

hom

ebuy

ers


RoofandFloor | Feb 2020 | Infographic 04 Source : RoofandFloor Research

Half of all users looking for affordable housing in Chennai prefer buying vacant plots.

Buyers Budget Preference In Chennai

VillasApartments Plots Row Houses

33.82%

52.84%

13.09%

53.93%

44.04%

2.63%

1.32%

76.20%

19.86%

5.08%70.16%

24.13%

<40L 40-70L

>1Cr70L -1Cr

Our users also exhibited minimal interest in buying row houses irrespective of the budget bracket.


We do not see much deviation from the trend over the past few months which showed Chennai to have a greater demand for apartments as compared to row houses, villas and plots. In February 2020, we collected about 15,000 preferences from our users interested in buying property at different locations in Chennai, of which 56.45% were interested in apartments.

Of our users in Chennai who are looking to spend up to INR 40L, having also specified their preference of property type, only 33.82% were interested in purchasing apartments. with most users (52.84%) in this price range exhibiting an interest in buying vacant plots.

While villas are usually more expensive than apartments and users with more money to spend can afford to spend on villas, the highest proportion of our users looking to buy apartments still fall within the mid-segment price bracket. On one hand, our users who can afford houses in this segment seem to value the ease of living, greater value for money and benefits of location offered by apartments.

Our users also see the value of building a row house by purchasing vacant plots in the affordable housing segment (<INR 40L). The advantage to buying vacant plots is that it gives the buyer greater flexibility in terms of his/her budget. Such a user may therefore have a total budget falling within either the affordable price bracket or the mid-segment price bracket.

Buying a vacant plot provides a good opportunity for investors, especially ones who are willing to spend some time and effort into construction and selling of the built-up house. Another major advantage of buying vacant plots is the option of constructing a multi-story building and selling individual floors to subsidize the cost of construction.

In the mid-segment price bracket of INR 40L – 70L, 76.20% of our users, having also specified their preference of property type, were inclined to purchase apartments and 19.86% of these users were looking to purchase villas.

Across all segments in Chennai, the demand for row houses remains lower than the demand for other property types. One exception to this rule is the luxury and ultra-luxury housing market (>INR 70L) where the demand for plots is comparable to the demand for row houses.

Preference Of Property Type


56.45%Apartments

Apartments

17.67%Row House & Villa

25.87%Plots

40 - 70 lakhs< 40 lakh 70L - 1 Cr >1 Crore

Demand For Apartments in Chennai(under each price segment)

33.82%

76.20%70.16%

53.93%

Plots, Villas &Row Houses

% o

f our

hom

ebuy

ers

for

a gi

ven

budg

et r

ange


Zone Wise Analysis

We have divided Chennai into four major zones, namely, North, West, South and Central.

Chennai has witnessed tremendous infrastructural growth over the last few years. It offers a solid transportation network for residents along with excellent physical and civic infrastructure. It also has top notch social infrastructure including landmarks, restaurants, markets, stores, shopping malls, hospitals, entertainment and recreational zones and reputed educational institutions.

Being a major port city, a large amount of cargo flows through Chennai that initially aided the urban development around major roads and highways. Chennai has now developed into a major business hub in South India supported by both services and manufacturing jobs. Chennai’s IT and manufacturing sector has also contributed to greater employment and subsequently greater housing demand. It witnesses an influx of professionals in huge numbers every year from other cities in search of better business and job opportunities. This is a major reason behind the steady growth experienced by the Chennai real estate market.

Homebuying Location Preference in ChennaiThe south zone of the city commands nearly half of the city’s demand for real estate


35.32%

5.47%9.93%

49.27%

North

Central

West

South

of our Chennaihomebuyers preferSouth Chennai


South ZoneSouth Chennai remained the zone that generated maximum buyer interest in Chennai due to the ample number of employment opportunities generated by IT-ITeS companies and robust social infrastructure. South Chennai is well connected with the centre of the city due to the development of OMR and ECR, has varied sectors apart from IT-ITeS which are driving its growth such automobiles, telecom, auto ancillary and manufacturing. Apart from OMR and ECR, it also has ORR and IRR which connect the south zone to the north through west Chennai.

There are also multiple projects in the pipeline such as the expansion of the airport, the Chennai Peripheral Ring Road, and expanded monorail and metro rail corridors.

South Chennai is also host to a large retail industry in numerous shopping malls to cater for the needs of the people living in this area. There are also a lot of prominent educational institutions and renowned hospitals which make South Chennai an attractive destination for families to settle down.

49.27% of our users looking for housing in Chennai preferred looking for houses in South Chennai. We have seen in the data collected by us over the past few months that almost half of the demand for houses in Chennai remains consistently in the South zone of the city.

SouthChennai

1.91%more than 1 Crore

40.68%upto 40 Lakh

3.88%70 Lakh - 1 Crore

53.52%40 - 70 Lakh


The demand within the south zone of the city has however moved to some extent from the mid-segment price bracket to the affordable housing segment to the tune of about 10 percentage points. Among the users looking for housing in South Chennai, the mid-segment price bracket (INR 40L – 70L) commands the greatest demand at 53.52% of all interest generated in this zone. 40.68% of the users looking for housing in this area preferred affordable housing (< INR 40L).

It is however also imperative to see how the demand for housing in South Chennai is split between property types. While 58.81% of our users were interested in buying apartments in the south zone, 22.57% of our users were interested in buying vacant plots.

West ZoneWest Chennai is the biggest manufacturing hub of the city; it houses several industrial estates and industrial parks. The difference in the economic profile of the buyers in South and West Chennai is the direct product of the kind of economic opportunities created in the two zones. While the highly industrial west zone creates more blue-collar jobs, south zone has a large number of mid-level IT employees. The west zone does however have a lot of engineering colleges such as Hindustan Institute of Engineering Technology, Meenakshi College of Engineering and Sri Sairam College.

35.32% of users interested in purchasing property in Chennai prefer the west zone of the city. The demand in this zone in Chennai was dominated by the affordable housing segment which constituted 52.24% of the interest generated in this zone. On the other hand, 43.46% of our users interested in the west zone are willing to spend in the range of INR 40L to INR 70L. In this zone, we also noted a shift similar to the one observed in the south zone of the city. About 10 percentage points of our users moved from the mid-segment price bracket to affordable housing in West Chennai.

These shifts in the west and the south zones of the city may be attributed to the news reports of future infrastructural development. The peripheral ring road, metro and monorail corridors are

% of homebuyers in south chennai

Apartments Villas &Row House58.1% 22.57% 18.63%Plots


reported to improve the connectivity of the west zone with the south and the north zone. The Tamil Nadu state budget recently announced the allocation of INR 3100 crores to the Chennai Metro Rail Project as share capital assistance, subordinate debt and pass through loan assistance. A second airport is also being planned in the city to cater to the large amount of cargo flowing through Chennai which should highly benefit West Chennai’s economy.

Out of our users interested in the west zone, about 54.06% were interested in purchasing apartments, while 28.48% were looking to buy vacant plots.

% of homebuyers in west chennai

Apartments Plots Villas &Row House54.06% 28.48% 17.46%

WestChennai


52.24%upto 40 Lakh


43.46%40 - 70 Lakh


North & Central ZonesNorth and Central zones of Chennai have reaped the benefits of Chennai’s ports for centuries. They do not however have the same factors (industrial and IT parks) which drive demand in the South and the West zone. With the city’s plans to improve connectivity between the four zones with better roads and other forms of civic infrastructure, these zones should also see more demand in the time to come.

As of now however, only 15.40% of our users also showed interest in the north and the central zones of Chennai. While 50.70% of the users looking for houses in the north zone preferred houses in affordable range (<INR 40L), 47.61% preferred houses in the mid-segment price bracket (INR 40L – 70L). On the other hand, 61.30% of the users looking for houses in the central zone preferred affordable houses (< INR 40L) while 25.29% of the users in this zone preferred houses in the mid-segment price bracket (INR 40L – 70L).

55.98% of our users interested in the north zone and 51.47% of our users interested in the central zone, were interested in buying apartments. Following apartments, the greatest interest in these zones was garnered by vacant plots which constituted 27.92% of our users in the north zone and 35.12% of our users in the central zone.

NorthChennai

0.70%> 1 Crore

50.70%upto 40L

0.98%70L - 1Cr

47.61%40 - 70L

CentralChennai

10.86%> 1 Crore

61.3%upto 40L

2.55%70L - 1Cr

25.29%40 - 70L


The central zone remains the zone with the highest demand in percentage terms in this segment in Chennai. 13.41% of our users interested in the central zone showed interest in the luxury and ultra-luxury segment (>INR 70L) of the market. This may be attributed with the good connectivity between the central and the south zone, with the south zone being more commercially inclined to produce white-collar jobs.

% of homebuyers in north chennai

Apartments Plots Villas &Row House55.98% 27.92% 16.1%

% of homebuyers in central chennai

Apartments Plots Villas51.47% 35.12% 13.14%


While the majority of the market and correspondingly our users exhibit an interest in buying property in the mid-segment or the affordable range, i.e. < INR 70L, Chennai has a considerable market for luxury and ultra-luxury real estate.

In line with the market at different price brackets, the south zone of the city also generated the highest interest among the users looking to purchase luxury and ultra-luxury properties. 54.17% of our users looking for luxury and ultra-luxury property in Chennai focused on the south zone of the city followed by the west zone at 28.74% of our luxury and ultra-luxury user base.

Luxury and Ultra-luxury housing

North

Central

South 54.17%

3.18%

13.91%

28.74%West

Most of the users looking for luxury and ultra-luxury housingpreferred the south zone of Chennai

Luxury & Ultra-Luxury Housingin Chennai

% of premium homebuyers in Chennai



60.66% of our users looking to purchase luxury and ultra-luxury apartments, having also expressed their choice of property type, leaned towards apartments, with most of the remaining looking to purchase villas.

PlotsVillasApartments Row Houses

60.66%

35.79%

2.63%0.92%

Premium Property Type PreferenceIn Chennai


% o

f pre

miu

m h

omeb

uyer

s in

Che

nnai


Top Micro-Markets

While the demand across the city showed a trend of higher demand for property in the mid-segment price bracket, the demand in the top micromarkets (with the exception of Medavakkam) in the city showed a propensity towards affordable housing (< INR 40L) due to the industrial hub in West Chennai and its contribution to the blue collar job market.

The top 5 micromarkets to look out for in Chennai according to our user demand statistics are:

North

Central

West

South

Poonamallee

Kelambakkam

Medavakkam

Guduvanchery

Avadi

Top 5 micromarkets in Chennai


% o

f hom

ebuy

ers

in C

henn

ai M

icro

mar

kets 7.07%

92.93%

6.32%

77.20%

16.48%

20.29%

79.71%

23.08%

76.92%

12.47%

87.53%


Bengaluru

Budget PreferencesOur users in January had shown greater interest in residential property in the mid-segment price bracket than in the affordable housing range. This month however the trend shifted to some extent towards affordable housing in Bengaluru, just like in Chennai.

In Bengaluru, 59.44% of our users looked for a house in the mid-segment price bracket (INR40-70L), while 34.03% preferred affordable housing (<INR 40L). This month’s increased demand for affordable housing can be attributed mostly to the high demand for affordable plots in Bengaluru which drove 62.86% of the entire demand for affordable housing in Bengaluru. 98.45% of all users looking for plots in Bengaluru indicated a desire to spend a maximum of INR 40L. On adding the additional construction costs incurred by some of the plot buyers, we can infer that most of the buyers in Bengaluru have a total budget falling within the mid-segment price bracket.

94.13% of our users looking for houses in the mid-segment price bracket in Bengaluru were interested in apartments and flats.


34.03%

59.44%

3.90% 2.64%

70L - 1 Cr >1 Crore

% o

f our

hom

ebuy

ers



Users interested in buying houses in the affordable housing space are mostlylooking for vacant plots of land.

Buyers Budget Preference In Bengaluru

VillasApartments Plots Row Houses

36.44%

62.86%

68.91%

31.09%

94.13%

4.56%

64.45%2.37%

33.18%

<40L 40-70L

>1Cr70L -1Cr

A general trend we can see from the preferences provided by our users is that on the lower end of the budget spectrum, our users prefer buying plots and this demand becomes almost negligible as their budget increases. On the other extreme, our users with a relatively larger amount of money to spare prefer buying villas. The demand for villas seems to be increasing with the increase in their total budget and is almost negligible at the lower end of the budget spectrum.


Bengaluru attracts a large part of the labour force working in, or looking to work in, technology focused companies and back-end offices of large multi-nationals. The traffic conditions in Bengaluru are a common point of complaint among the city’s residents and generate a tendency among people to look for accommodation close to their place of work. As discussed later in this report, major tech parks situated in South and East of Bengaluru attract most of the buyers and overcrowd the markets which have an easy access to these parks. North Bengaluru is also becoming a great option for buyers looking to benefit from the future development of this area.

It cannot be denied that the establishment of these commercial hubs in places like Electronic City and Whitefield brought a lot of developers to these areas and will continue to do so in the future. As per the Bengaluru Development Plan 2031, residential area in Electronic City is poised to be increased from 232 Hectares to 490 Hectares. The BDP 2031 also shows residential area in Doddannekundi-Whitefield increasing from 955 Hectares to 1752 Hectares.

With such concentrated buyer demand in these areas among several others benefiting from not only large MNCs but also countless start-ups, such as in Koramangala, it should come as no surprise that in Bengaluru, out of the total 8000 responses collected, 71.91% of the users looked for apartments over plots, row houses or villas.

Preferences Of Property Type


34.03%

59.44%

3.90% 2.64%

70L - 1 Cr >1 Crore

% o

f our

hom

ebuy

ers


A large demographic of our users in Bengaluru are interested in buying apartments under the 70L price tag. These buyers, presumably in their 20s and 30s, are looking to purchase the more cost effective and location friendly apartments, compared to villas and row houses which make more financial sense for the older buyers, who also have the wherewithal for such an investment.

We found that the most popular property type among our users interested in Bengaluru who are looking to spend up to INR 40L was vacant plots. 62.86% of such users were interested in buying plots. This trend shifts almost entirely to apartments in the mid-segment price bracket with 94.13% of our users willing to spend between INR 40L and INR 70L being inclined to purchase apartments.

Younger homebuyers run the risk of a change in job location within or outside Bengaluru or having to move for any other reason. In such a scenario, buying a home can become a huge burden as they would now need to pay regular EMIs along with their own rent. An important consideration in homebuying, at least for most young homebuyers, is the ease with which the house can be rented out.

Apartments, especially ones well located, within range of schools, hospitals, shopping malls, metro stations and commercial hubs can very easily be rented out. This factor might contribute to a large extent to the popularity of mid-segment price apartments among the younger homebuyers.

Apartments


Demand For Apartments in Bengaluru(under each price segment)

36.44%

94.13%

33.18%

68.91%

Plots, Villas &Row Houses

% o

f our

hom

ebuy

ers

for

a gi

ven

budg

et r

ange


The lower demand for apartments in the affordable segment is owed to the high demand for plots in this range. Our users were mostly interested in buying vacant plots in the affordable housing range as compared to other budget segments.

Apartments remain the most versatile property type with a considerable demand for them irrespective of user budget. It is also relatively easier to find apartments in all budget segments and in most locations in the city. The demand for apartments peaks in the mid-segment price bracket and remains considerably high in the luxury segment. Only about a third of our users interested in the ultra-luxury segment of the market and the affordable housing segment were interested in buying apartments.


Property type demand(under each price segment)

36.44%

62.86v%94.13%

33.18%

33.18%33.18%

68.91%

% o

f our

hom

ebuy

ers

for

a gi

ven

budg

et r

ange


Zone Wise Analysis

Based on the data collected from our users, we have categorised Bengaluru into five major zones, namely, North, East, South, West and Central.


The south zone of the city recorded the maximum interest from our users with 30.19% of our users looking for property listings in this zone. The south zone also benefits from factors similar to the ones benefitting East Bengaluru, i.e. employment opportunities at IT companies located in Electronic City, BTM Layout and Koramangala. Electronic City Phase-I was the most popular market across Bengaluru.

While East Bengaluru and Electronic city house the biggest corporates, Koramangala can quite fairly be termed as the start-up hub of the country. This area has served as the launching pad for multiple unicorns like Flipkart, Ola and Bigbasket. It is still home to a lot of start-ups determined to become the next big thing to come out of this region.

Good living conditions along with a strong civic infrastructure and metro connectivity makes the south zone one of the best places to live in the city. South zone of the city is home to a lot of educational institutions such as Christ College, Jyothi Nivas College, St John’s Medical College and Hospital. Koramangala and some surrounding areas have been well known for its night life and a wide selection of restaurants, cafes and bars for quite a few years. With the closure of a lot of such establishments in Indiranagar, Koramangala has seen a supplemental rise in the number of patrons it hosts every weekend.

The start-up culture, tech parks, colleges and a burgeoning night life makes South Bengaluru the ideal destination for youngsters. Even if a large part of this demographic does not purchase houses, it certainly drives up the rentability of residential properties in this area making it the ideal place for investment.

A large part of the supply in this region comes from the many residential projects located in and around Electronic City and HSR Layout. With further development of civic infrastructure this area in the works and the future land use planning skewed largely towards residential buildings, the demand for houses in this area is bound to increase manifold in the future.

In this region, we observed a relatively healthier distribution of demand between affordable and mid-segment housing. 31.77% of the users interested in this region preferred to look for affordable housing (< INR 40L) while 59.85% of users preferred houses in the mid-segment price bracket (INR 40L – 70L). This can be attributed to this area having perhaps the largest proportion of young people in the city.

South Zone


East Bengaluru is currently one of the most active business zones in the country. This area is home to a large number of tech companies spread across various tech parks and also to the scores and scores of residential buildings which have mushroomed around these parks. While this area is witnessing swift development in both residential and commercial sense, it is still far from becoming a complete concrete jungle due to some interspersed stretches of greenery.

Some parts of this region become a sight to behold in the monsoons with trees such as eucalyptus and coconut showing all possible shades of green. There are also quite a few lakes in this zone such as Bellandur Kere, Vatur Kere, Yellamallappachetty Kere and KR Puram Kere.

With all the commercial activity underway in this part of the city, a large amount of traffic passes through this zone. Hence the need for a developed civic infrastructure along with basic features & facilities. With the proposed expansion of the metro line beyond Baiyappanahalli well under way, this area is poised to be one of the most well connected in the city with a combination of ample roadways, train routes and Metro.

When not commuting for work, one can also find a choice of clubs, movie theaters, markets to visit. Bengaluru’s second Hard Rock café has also recently opened up in Whitefield. Apart from all the avenues for recreation, this area also has a good number of educational institutions and hospitals for catering to all kinds of family needs.

East Zone

SouthBengaluru


40.68%upto 40 Lakh


53.52%40 - 70 Lakh


Coming down from its position as the most sought after zone of the city, in February 2020, East Bengaluru attracted just about 29.20% of our users who provided a preference of location for purchasing property. In our previous reports, we have attributed a high user interest in this region to the high concentration of IT-ITeS companies and realistic property prices. We also witnessed a shift in preferences among our users over the last few months, from affordable housing to the mid-segment price bracket in this zone.

The realistic property prices in this area combined with its potential to rise significantly in the future are providing people enough incentive to expand their budget when buying property, especially if the same is for the purpose of investment.

67.91% of the users interested in the East Bengaluru region were found to be interested in the mid-segment price bracket (INR 40 – 70 L). This month, we witnessed a greater interest in the interest generated by affordable housing (< INR 40L) in this zone, at 25.51% for the month of February 2020.

EastBengaluru


25.51%upto 40 Lakh


67.91%40 - 70 Lakh


The North of Bengaluru benefits mainly from the Kempegowda International Airport which has given a boost to the real estate market in Devannahalli, Thanisandra, Hennur, Yelahanka etc. This along with IT parks such as Manyata Tech Park, upcoming metro and suburban rail projects, premier educational institutions, hospitals and vast stretches of green make it a strong area of interest for real estate developers.

In February 2020, interest generated by properties in North Bengaluru increased to the point where it is almost comparable to the South and the East Zones.

Demand in the north zone was equally distributed between mid-segment price bracket and affordable housing. Affordable housing was preferred by 47.59% of the users interested in the this zone while the mid-segment price bracket generated a 47.11% user interest.

North Zone

NorthBengaluru


47.59%upto 40 Lakh


47.11%40 - 70 Lakh


This zone also recorded the greatest interest in the affordable housing segment in the city. 37.91% of users looking for affordable housing in the city preferred the north zone of the city.


While the west zone is not too far away from Koramangala and correspondingly the entire south region of the city, there is no metro connectivity between these parts which causes a serious traffic hazard for people travelling between these parts on a daily basis. Demand in West Bengaluru is supported by a good metro connectivity and industrial areas. This area is bound to see a growth in investment into civic infrastructure and residential projects from builders in the future due to its connectivity with Mysore.

The west zone of the city mostly comprises of old houses built by long term residents of the city. It has been home to famous actors, politicians, cricketers and artists and even houses the Ranga shankara theatre for arts and the Aurobindo ashram. One can also find a lot of parks in this part of town, along with numerous places suited for recreational activities with the family or just a nice dinner out.

The central zone is mainly characterised by the Central Business District, MG Road and Cubbon Park. This area of the city is replete with commercial buildings, government houses, great restaurants, shopping malls, theatres and museums. It is perhaps because of this reason that there is little room in the central zone real estate market. The average price of property in this zone is more than twice that of the city’s average, making people prefer driving in to this zone for work rather than look for properties here.

The west zone of Bengaluru attracted 12.91% of our users, while only 0.53% of our users expressed interest in purchasing property in the central zone. Housing in the mid-segment price bracket were the most popular among our users interested in these zones. 66.13% of our users interested in buying property in the west zone preferred properties within the INR 40L – 70L range, along with 56.10% of our users interested in the central zone.

West and Central Zones


While the majority of the market and correspondingly our users exhibit an interest in buying property in the mid-segment or the affordable range, i.e. < INR 70L, Bengaluru has a considerable market for luxury and ultra-luxury real estate.

The south zone of the city, commanding the greatest interest across all of our users looking for property in Bengaluru, naturally leads the demand in this segment as well. 39.71% of our users looking for luxury and ultra-luxury property preferred to look in the south zone. East zone of the city was a close second in the luxury and ultra-luxury market among our users with 30.14% of our users looking for luxury and ultra-luxury property preferring the north zone.

Of the users who provided their preference of property type along with their budget, there is a contrast in user preferences between the luxury range (INR 70L – INR 1Cr) and the ultra-luxury range (>INR 1Cr).

68.91% of our users interested in the luxury segment were inclined to purchase apartments with the remaining looking for villas. On the other hand, in the ultra-luxury segment, 64.45% of our users were looking to purchase villas in Bengaluru.

While the affordable and mid-segment market in Bengaluru appears to be heavily skewed towards apartments or vacant plots, as the budget of the user increases, they become quite likely to purchase a villa as compared to an apartment.

Luxury and Ultra-luxury housing in Bengaluru


VillasApartments Row Houses

60.66%

35.79%

2.63%

0.92%

0.92%

Premium Property Type PreferenceIn Bengaluru


% o

f pre

miu

m h

omeb

uyer

s in

Ben

galu

ru

> 1 Cr 70 L to 1 Cr


Top Micro-Markets

In all of the aforementioned micromarkets, most of our users preferred apartments in the mid-segment price bracket (INR 40L – INR 70L). While we saw the demand for affordable housing (< INR 40L) dominate the market in Sarjapur last month, the scale shifted towards the mid-segment price bracket in this micromarket this month.

The top 5 micromarkets to look out for in Chennai according to our user demand statistics are:


48.09%

60.79%

47.88%

36.36%

85.84%

9.04%

76.50%

16.12%

60.79%

39.21%

14.47%11.21%5.74%

4.55%

% o

f hom

ebuy

ers

in B

enga

luru

Mic

rom

arke

ts


Outlook

We noted that in large parts of Bengaluru and Chennai, the demand for houses in mid-segment price brackets decreased in comparison to last month. Correspondingly there was a growth in the demand for the affordable housing available in these cities. We have received a relatively higher number of preferences from our users in both the cities as compared to last month. This could be the reason why we see a considerable shift towards affordable housing in this month’s report.

To talk about market sentiment following from this year’s budget, a greater serious interest in the real estate market may be generated in the coming months. Especially with the union government’s proposed infrastructure pipeline getting underway and state budgets of Tamil Nadu and Karnataka announcing cuts in stamp duty. There is clearly a widespread intent towards affordable housing in both the states. How much it affects the metropolitan cities of Bengaluru and Chennai where property rates are considerably higher than in the rest of the state is yet to be seen.

We have been working towards capturing the sentiment and preferences of our users to develop a picture of the buyers that are looking to enter the market. With every edition of this report, we wish to provide greater insights into our user base and hope that over time it becomes more and more useful to our readers.


intelligence roofandfloor · property she wants. we collect over 30 signals for every homebuyer--of...

Documents