Expectations from the Real Estate Market Index
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RoofandFloor IntelligenceReport MARCH 2020 Covid-19: Expectations from the Real Estate Market Index Introduction 3 Our Users 4 Market segment 7 Chennai and Bengaluru 15 Chennai - Budget preferences 17 - Preference of property type 20 - Zone wise analysis 23 - Top Micromarkets 32 - Micromarket Focus - Poonamallee 34 - Top 5 Projects that will transform Chennai’s Realty Market 35 Bengaluru - Budget preferences 45 - Preference of property type 47 - Zone wise analysis 51 - Top Micromarkets 61 - Micromarket Focus - Electronic CIty 63 Outlook 64 Introduction It 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 Udupa CTO, RoofandFloor RoofandFloor Intelligence roofandfloor.thehindu.com Page 3 Our Users RoofandFloor is India’s fastest growing and most trusted home-buying platform. Launched by The Hindu Group in September 2014, it has quickly grown to influence over 6 Million homebuyers across the country, facilitating over 2 Million connections between builders and high-intent customers. We operate in over 20 cities including Bengaluru, Chennai, Delhi, Hyderabad, Mumbai and Pune. Our website attracts a broad user base looking for property in the cities where we operate (Chennai and Bengaluru for the purpose of this report). Chennai has been divided into 4 major zones, while Bengaluru has been divided into 5 major zones in order to better understand the preferences of our user base. These users come from different backgrounds across various ages, genders and financial capacity which can be found to be reflected in the preferences the users choose when they search for property on our website. Age and Gender Distribution Of all the users looking for residential property in Chennai and Bengaluru in the month of March 2020, 43.75% lie within the 25-34 years age group, while 25.16% 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 and Chennai being densely populated metropolitan cities, are hotbeds of commercial activity and provide a wide array of opportunities to the country’s young workforce. RoofandFloor Intelligence roofandfloor.thehindu.com Page 4 Based on available historical data, our user base mostly consists of young urban male homebuyers usually looking for their first home. This month’s data points to our users being along the same lines. This month’s data however, as noted below in this report, shows a steep decline in the interest usually shown by our users in buying property within the next few months. This can be attributed to the current lockdown imposed on the country and the worldwide slowdown of economic activity resulting in rising unemployment and uncertainty. We have also analysed the effect of this situation on the real estate market and taken a stab at what can be expected by and from the key stakeholders of this market in the near future. 43.75% 33.51% 25.16% 66.49% % of our total users 29.52% 15.35% 70.48% 30.36% 8.08% 69.64% 4.67% 2.97% 68.04% 18 - 24 25 - 34 35 - 44 45 - 54 55 - 64 65+ Age Groups RoofandFloor Intelligence roofandfloor.thehindu.com Page 5 Financial Capacity The extent of commercial opportunity offered by a city can be gauged on various metrics of economic activity and development. The commercial opportunities available in the real estate market in a city can be assessed on the basis of the financial capacity of the buyers entering the market. The budget preferences provided by our users indicate the future of the opportunities being created in the real estate market. We have, through this report, analysed the current range of financial capacity of our users looking to enter the market in different parts of the two cities and looking for different types of residential property. The zones in which our users choose to look for property, depend on various factors such as their place of work, their financial capacity and the type of property they require. In Bengaluru and Chennai, we generally see high interest in areas close to commercial hubs and in areas which show realistic property prices. Unrealistic property prices are often seen in areas which were developed a long time back and have little to no room for new large development. For instance, we consistently see the least amount of interest across the board in Central Bengaluru which correspondingly demands the highest average price per square foot of property in Bengaluru. Unsold inventory in Central Bengaluru reportedly decreased 5% year on year in the second half of 2019 showing that there are few new projects being launched in this area. Central Bengaluru is also quite well developed, leaving little room for new large developments. RoofandFloor Intelligence roofandfloor.thehindu.com Page 6 Market Sentiment As we have highlighted in our previous report, economic activity in the real estate market depends on the overall sentiment of the buyers and their opinion about the market. The buyers’ opinion depends on their outlook of the future, whether of the market or their own finances. Over the last two reports, we analysed how, (i) the government’s actions (or inactions) over the financial year 2019-20 (January 2020) and (ii) the budget announcements by the Union and state governments (February 2020), will affect the market in 2020. We were expecting the demand for real estate to grow this year and in the time to come, but a lot has changed since the Hon’ble Finance Minister of India delivered the budget speech on the 1st of February. We find ourselves in the middle of a global crisis, which if not dealt with properly may have long lasting effects on almost all aspects of our life including the markets. What started out as a local outbreak in what was till then an insignificant wet market in Wuhan, China has evolved into a pandemic and is now killing thousands of people globally every day. At the time of publication of this report, the novel coronavirus or the SARS-CoV-2 has infected 22.7 Lakh people worldwide with COVID-19, of which there are currently 14,800 confirmed cases in India. COVID-19 has been known to be possibly fatal and has so far caused 1.56 Lakh deaths across the world. Data as of 18/04/2020 RoofandFloor Intelligence roofandfloor.thehindu.com Page 7 In order to avoid a great humanitarian crisis similar to the one caused by the Flu Epidemic of 1918 (in which at least 50 million people died worldwide), governments across the world have been forced to impose restrictive measures on their people. Be it international organisations, governments or corporations, everyone has advised people to maintain a distance of at least 1.5 metres from each other. The Indian government brought into effect a21 day long nationwide lockdown starting midnight March 25, 2020 (extended further to May 03, 2020) to counter the first wave of infection which had already started claiming the lives of people in India. While there is wide consensus on the urgent need for such measures to check the spread of the virus, these measures are expected to result in a large economic fallout, resulting from widespread inactivity and loss of human life. While some people may have the privilege and capability to work from the comfort of their own homes during this time, most of our workforce is unable to get any work done. Further, during this nationwide curfew, only essential products and services are available to the people, driving down private consumption and causing further harm to the economy. Regardless of whether one sees this as an opportune transition or not, it is undeniable that this will be seen as a major turning point in the times to come for the real estate sector. In fact, as the world markets become more volatile, it will test the conventional wisdom that investment in real estate increases at times of market volatility. It is difficult to encapsulate the gravity or extent of the economic backlash from this crisis in a few short paragraphs. It is arguable that there are too many variables at play and it might not be possible to accurately predict either the favourable or the unfavourable economic outcomes of the current RoofandFloor Intelligence roofandfloor.thehindu.com Page 8 situation.