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    Thursday, August 26, 2021

    61% of homebuyers in the Mainstream India Segment expect residential prices to increase in the next 12 months: Knight Frank Global and India Buyer Survey

    The appetite for purchasing property continues with one in five people globally looking to move home in the next 12 months: Knight Frank Global Buyer Survey

    MUMBAI: Knight Frank, a leading property consultancy, today released the Global Buyer Survey which analyses the impact that Covid-19 has had on residential buyers’ attitudes to purchasing homes around the world. The report notes that 19% of respondents globally have moved to a new house since the start of the pandemic; this rises to 25% in Australasia and North America. Of the non-movers, 20% are more inclined to move in 2021 even as the pandemic continues.

    With an objective to closely capture the impact of the COVID-19 pandemic and consequent lockdowns on residential segment consumers in India, Knight Frank conducted a two-part primary survey for the country. Part I of the survey comprised respondents in the high-end income segment, referred to as the ‘Global Indian Segment’. Part II, on the other hand, gauged buyer sentiment in the mid-end income segment and is referred to as the ‘Mainstream Indian Segment’.

    In the Indian edition of the survey, 26% of Mainstream Indians had moved their residences within the pandemic period. These relocations were motivated by factors like want for more open space and proximity to friends and family. For Indian Mainstream non-movers, 32% were more inclined to move residences in the next 12 months. An overwhelming 87% of the respondents who desire to move homes in the next 12 months, favored the suburban neighborhood of their current city of residence, while 13% of respondents who want to relocate, may consider an alternate city.

    Globally, 64% of the respondents expect the value of their primary residence to increase in the next 12 months. In the case of the Global Indian segment, which represents the higher-income segment, 32% expect prices to rise. Reflecting a more optimistic outlook, 61% of respondents in the Mainstream Indian segment expect prices of their primary residences to rise in the next 12 months.

    32% of the respondents from the Mainstream Indian segment expressed willingness to move into a new home in the next 12 months as a result of the pandemic, whereas 14% from the Global Indian segment indicated a desire for relocation. In a price-sensitive environment, more than 50% across all income segments in India cited a lack of willingness to pay a premium for branded residences. Marking a significant citation, 32% of the Global Indian segment expressed willingness to pay a premium for a greener home.

    The report emphasizes that the future of work will play a significant part not only for the commercial sector but also for the residential.  More than half of the respondents in the Mainstream Indian segment expect to be back in the office for the entire workweek once all restrictions are lifted. 47% of the Global Indian segment respondents expect to continue working for 2-4 days in a week from the office once all restrictions are lifted. In the Mainstream Indian Segment, the highest inclination towards 5 days of work from office was shown by professionals i.e. lawyers, architects, doctors, chartered accountants, etc. In the case of the salaried class segment, the preference for work from the office ranged from 3 to 5 days. This is largely due to the impact of tech-firm employees working from home.

    Globally, 59% of respondents envisage working 3-5 days in a week from the office once all restrictions are lifted. In the Middle East and Asia, the figure is 41% and 36% respectively.

    Shishir Baijal, Chairman & Managing Director, Knight Frank India said, “The pandemic has changed the outlook towards ownership of homes. Globally, two trends have stood out in the last few months. Firstly, a growing ambivalence of some buyers when it comes to location provided they can secure a co-primary home that delivers the lifestyle and enjoyment they feel they’ve missed out on. And, secondly given low savings rates and frothy stock markets, buyers are taking a more defensive stance by rebalancing their portfolios with a greater focus on tangible assets such as property.”

    Shishir continued, “The pandemic has changed the outlook towards ownership of homes right across the different income strata in India. Our Buyer Survey confirms that across the spectrum of Indian homebuyers, 32% showed interest in relocating from their pre-pandemic homes. It is observed that apart from the spending propensity and house type that typically govern an Indian home buyer’s purchase decision, factors such as access to open green spaces, healthcare, and proximity to the workplace have also started playing an important role. Energy-efficient homes are also gaining traction as the concept is finding preference amongst home buyers in India.”

    Optimistic outlook for price appreciation in primary residences

    Globally, over two-thirds of respondents expect the value of their current home to increase in the next year with most expecting a rise between 1% and 9% over the 12-month period. This coincides with Knight Frank’s Prime Global Forecast Index which highlights that house prices on average, are likely to increase by 4% in 2021 globally. From India’s context, there is more buoyancy in sentiment from the Mainstream Indian segment than the Global Indian segment.

    Nearly 58% of respondents in Mumbai and Kolkata expected up to a 10% increase in residential prices, while 53% in Pune also have a similar expectation. More than 60% of respondents in Southern cities expect up to a 20% price increase in the next 12 months. Around 19% of respondents in Bengaluru and 18% in Chennai expected prices to increase 20% or more in the next 12 months.

    Primary Residence Price Expectation in Next 12 Months

    % Change in value Global Indian Segment  Mainstream Indian Segment
    Decline by 20% + 2% 1%
    Decline by 10% to 19% 12% 9%
    Decline by 1% to 9% 15% 6%
    No change 39% 23%
    Increase by 1% to 9% 20% 30%
    Increase by 10% to 19% 8% 25%
    Increase by 20% + 3% 6%
    Source: Knight Frank Research

    City-wise: Mainstream Indian Segment Price Expectation in Next 12 Months

    Current Residence Decrease 20% or more Decrease 10% to 19% Decrease 1% to 9% No change Increase 1% to 9% Increase 10% to 19% Increase 20% or more
    Ahmedabad 6% 35% 5% 3% 35% 15% 0%
    Bengaluru 0% 9% 5% 11% 19% 38% 19%
    Chennai 0% 5% 0% 18% 13% 46% 18%
    Delhi 0% 3% 14% 45% 28% 9% 0%
    Hyderabad 0% 2% 8% 11% 20% 57% 3%
    Kolkata 0% 2% 0% 29% 58% 8% 3%
    Mumbai 0% 2% 0% 29% 58% 8% 3%
    Pune 0% 3% 6% 38% 53% 0% 0%
    Source: Knight Frank Research

    Rajani Sinha, Chief Economist, and National Director – Research, Knight Frank India said “It is interesting to observe how home buyers’ preferences have been influenced by the pandemic. With all the pandemic-related restrictions, 26% of the mainstream Indian segment moved houses during the pandemic, higher than the 19% observed globally. Moreover, a good 32% of the respondents in the Mainstream segment in India are looking at relocating in the next 12 months. The pandemic-related changes in living and working styles have induced the need to upgrade homes. Good air quality, access to green space, and healthcare infrastructure have become prominent features influencing home buyers’ preferences.

    Another interesting aspect that came out from the survey is that amongst the Global Indians, a large number expressed no change in their spending propensity for home buying. However, in the Mainstream Indian segment, 43% revealed a reduction in spending propensity, while 38%  expressed an increase in their spending propensity despite the pandemic.”  

    One in three respondents from the Mainstream Indian Segment more inclined to move houses in the next 12 months

    From the global aspect, since the advent of the pandemic, as many as 19% of respondents relocated to a new house. The Global Indian segment, however, remained cautious of relocating during the pandemic, with only 7% have moved to a new house in the past 12 months. In contrast, nearly 26% of respondents in the Mainstream Indian Segment made the move to relocate in the same period.

    Sharing details on the spending propensity to buy a new home, the report cited that 38% of respondents from the Mainstream Indian segment indicated an increase in budgetary allocation towards residential purchase. More than half of the Global Indian segment respondents indicated no change.

    The attitudes of the Mainstream Indian segment buyers in South India are fairly optimistic when it comes to spending propensity for buying new homes. 63% in Chennai, 54% in Hyderabad, and 39% in Bengaluru have indicated an increase in spending propensity.

    Changes in Spending Propensity on New Homes

    Change in the budget by Global Indian Segment  Mainstream Indian Segment
    -10% & more 23% 7%
    -6% to -9% 8% 8%
    0% to -5% 5% 28%
    No change 54% 19%
    +1% to +5% 2% 16%
    +6% to +9% 2% 21%
    +10% & more 7% 1%
    Source: Knight Frank Research

    Expressing intent to purchase a new home in the next 12 months as a result of the pandemic, the Mainstream Indian segment was more inclined to purchase a home as compared to the Global Indian segment. 32% of respondents in the Mainstream Indian segment were looking to buy a home. Of the total respondents looking to buy in the Mainstream segment, 87% of respondents are looking to move within the city. In contrast, respondents from Mumbai and Pune are more inclined to move to another city post the pandemic. One in five respondents is more inclined to move houses within the next 12 months globally, due to the pandemic.

    Willingness to Relocate in the Next 12 Months as a Result of the Pandemic

    % of Respondents Global Indian Segment  Mainstream Indian Segment
    More inclined 14% 32%
    Less inclined 19%                                 26%
    No change 67% 42%
    Source: Knight Frank Research

    Globally, one-third of the respondents are more likely to buy a second home. Nearly 40% of respondents across income segments in India are more likely to buy a second home due to the pandemic. Outdoor space and the need for greater privacy have pushed homebuyers in the Global Indian segment to evaluate second home purchases in India, UK, and the US, followed by Singapore and Australia. In India, a study from home and work from home demands have made homebuyers in the Mainstream Indian segment lean towards second home purchases.

    Second Homes – a More Likely Priority for All

    Inclination Global Indian Segment  Mainstream Indian Segment
    More likely 40% 37%
    Less likely 28% 32%
    No change 32% 31%
    Source: Knight Frank Research

    Kate Everett-Allen, Head of International Residential Research at Knight Frank said, “Besides economic fundamentals, the home buyer psychology is also seen as an influential element in formulating the home price dynamics. There is an optimistic expression from global homebuyers in terms of expecting an incremental value in the prime residential asset class in the next year. We believe residential demand will strengthen and we expect market fundamentals to gain prominence in bringing an equilibrium in real estate economics which got impacted by the fury of the pandemic last year.”

    Global Indians willing to pay a premium for energy-efficient homes

    In the global context, energy efficiency ranks high in priority for people evaluating a home purchase in the future. Around 57% of Global Indian respondents indicated energy efficiency in new homes as a very important feature for purchase consideration. Around 32% of respondents from the Global Indian segment expressed a willingness to pay a premium for greener homes.

    Importance of Energy Efficient Homes

    % of Respondents Global Global Indian Segment
    Very Important 42% 57%
    Important 42% 33%
    Not very Important 12% 8%
    Irrelevant 4% 2%
    Source: Knight Frank Research

    While features such as good air quality, proximity to green areas, and access to good healthcare have become more important, factors such as being within walking distance to a public transport hub have slid down in the order of ranking for the Global Indian segment. Residents of cities like Ahmedabad, Bengaluru, Pune, Hyderabad, and Mumbai have rated accessibility to green areas as the most important feature.

    Location Features More Important than Before

    Rank Global Indian Segment  Mainstream Indian Segment
    Rank 1 Good air quality Access to green areas
    Rank 2 Access to green areas Access to good healthcare
    Rank 3 Access to good healthcare Proximity to workplace
    Source: Knight Frank Research

    About 52% of the Global Indian segment indicated that they are more likely to move to a waterfront residence when it came to property type preference. In line with the responses globally, 46% of the Global Indian segment buyers would want to live in a detached home/villa. However, for the Mainstream Indian segment, the comfort of a suburban home followed by a city center apartment was of importance.

    Preferred Property Type for Future Home Purchase

    Global Global Indian Segment  Mainstream Indian Segment
    46% want to live in a detached home/villa 52% more likely to move to a waterfront residence 53% prefer a suburban apartment
    42% more likely to move to a waterfront residence 46% want to live in a detached home/villa 33% prefer a city center apartment
    Source: Knight Frank Research

    Branded Residences Unlike their Global counterparts, homebuyers in India have very limited access to branded residence inventory due to which respondents had an extremely limited experience of this concept. Overall, 47% of respondents in the Mainstream Indian segment expressed willingness to pay a premium to purchase a branded residence. Willingness to pay a premium for branded residences was reported to be high in Mumbai (87%) and Pune (84%), and lowest in Hyderabad (11%).



    source https://nrinews24x7.com/61-of-homebuyers-in-the-mainstream-india-segment-expect-residential-prices-to-increase-in-the-next-12-months-knight-frank-global-and-india-buyer-survey/
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    Item Reviewed: 61% of homebuyers in the Mainstream India Segment expect residential prices to increase in the next 12 months: Knight Frank Global and India Buyer Survey Rating: 5 Reviewed By: Aadil Sayed

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