An insightful discussion took place at the NDTV Real Estate Conclave with a team of eminent panelists in attendance. The topic was millennial customers in the real estate sector and whether they prefer renting over buying. Experts opined that people have realized that home ownership is necessary after COVID-19 and the all-time-high sales figures in India’s top7 cities are an indicator of the fact. With increasing transparency in the industry, particularly with RERA and other initiatives, the younger buying demographic has trusted the industry more.
Conversely, the pandemic also exposed the vulnerable side of rental housing with rentals having increased unreasonably in recent times. Most youngsters and millennials now wish to buy homes over the next 1-2 years.
Vivek Agarwal, the CTO and Co-Founder, Square Yards, stated that irrespective of the calculation and the city, rentals will be financially favored over buying. This is even more apparent in a scenario where 2.4% is the rental yield in India while the cost of capital is 9%. At the same time, he stated that owning a home is a personal and special thing which has an emotional aspect. People do not want to keep moving from place to place, they have to deal with rental hikes every 11 months, and so on. Recent rental increases are another factor worth considering according to him, where Gurgaon rentals have gone up by a staggering 50% in the last six months alone.
He also opined that youngsters should have financial discipline in the current scenario. Buying a home may bring an initial burden but it also inculcates financial discipline early on. Thereafter, in 10-15 years, capital appreciation will naturally bring more wealth creation and security alike.
Vivek also stated that with most people find it hard to hold onto financial instruments as investments for 10-20 years or more due to market fluctuations and other factors. Conversely, for real estate, there are examples in every family and close circle where people have built massive wealth over 15-20 years since real estate is illiquid and cannot be sold off easily. He also felt that buyers should consider smaller apartments as per their budgets initially and upgrade later when their salaries/incomes increase.
He also shed light on the growth of proptech where the entire search and discovery process has gone online while the actual transaction procedure is also steadily shifting online. 3D and virtual home tours are gaining traction according to Vivek, as he highlighted their popularity amongst Square Yards’ NRI customers who bring a major chunk of the brand’s revenues. UPI, e-signatures and e-payment mechanisms are also enabling the digital shift for transactions. Vivek feels that in 5-10 years, housing will be simplified digitally with unique SKUs and digitized inventories. It will be as easy to purchase property as e-commerce transactions today. The industry should move towards such models eventually according to him.
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Published Date: Sep 30, 2023
