FICCI-Anarock Survey Reveals Real Estate Investment Trends

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    Real estate continues to be the most favored asset class for investment, with over 59% of Indians prioritizing it, states a recent survey.

    According to a recent report from FICCI-Anarock, more than 67% of buyers are purchasing properties for personal use. However, rising property prices in the top seven cities have led to a 3% decline in investment-oriented purchases compared to last year.

    The findings come from the Homebuyer Sentiment Survey for the first half of 2024, released at the FICCI Real Estate Investment Summit in Mumbai on October 18, as published by the Hindustan Times.

    The survey indicates that the market is predominantly driven by end-users, with key buyer demands focusing on timely project completion (98%), enhanced construction quality (93%), and well-ventilated homes (72%). Notably, there has been a 3% increase in participants seeking properties for end-use compared to the previous survey conducted in the second half of 2023.

    Despite the optimism in the market, affordable housing continues to struggle, as over 53% of homebuyers expressed dissatisfaction regarding issues related to location, construction quality, and unit sizes. The survey also highlighted the influence of home loan interest rates on buying decisions: while rates below 8.5% would have little impact on 71% of respondents, rates exceeding 9% would significantly affect 87% of potential buyers. Approximately 54% expect a moderate influence from rates between 8.5% and 9%.

    The survey noted a significant shift among investors, who are currently taking a breather in purchasing real estate. There has been a 3% decline in the share of participants buying properties from an investment perspective, now accounting for 33% of prospective buyers. However, a notable trend is emerging, with investors increasingly focused on securing steady rental income.

    Rental values in prominent micro-markets across major cities have surged by up to 70% over the past two years. Some investors are leveraging capital gains for future entrepreneurial endeavors, while others aim to build emergency funds or enhance retirement savings. Additionally, some are allocating investment returns toward aspirational travel goals.

    While the budget range of ₹45 lakh to ₹90 lakh remains the most popular among over 35% of prospective homebuyers, premium and luxury homes are gaining traction, with 45% of respondents preferring properties priced above ₹90 lakh. Apartments remain the most sought-after property type at 58%, but interest in residential plots is growing, particularly in southern cities. The survey indicates that 20% of property seekers now prefer residential plots, with Chennai (30%), Bengaluru (29%), and Hyderabad (27%) showing the highest preference.

    The survey gathered responses from 7,615 participants across 14 cities, including MMR, NCR, Bengaluru, Pune, Kolkata, Chennai, and Hyderabad, between January and June 2024. During his keynote address, Pramod Rao, Executive Director of SEBI, emphasized the importance of regulatory frameworks in fostering sustainable growth in the sector.

    “Investor confidence is vital for the industry’s long-term success, and SEBI’s focus on transparency and governance has been key in building this trust,” Rao stated.

    Sandip Somany, past president of FICCI, commented on the notable shift in consumer preferences from ready-to-move homes toward under-construction properties, suggesting growing confidence in developers and regulatory measures such as RERA.

    Raj Menda, Chairman of the FICCI Committee on Urban Development and Real Estate, noted that India’s economic growth is propelling rapid expansion in the real estate sector, projecting the residential market to reach $1.04 trillion by 2029, growing at a 25.6% compound annual growth rate (CAGR). He pointed out that today’s homebuyers, predominantly millennials, are not just seeking shelter; they are looking for larger homes that embody durability, aesthetic appeal, and long-term value, even at a premium price.

    Anuj Puri, Chairman and Founder of ANAROCK Property Consultants, remarked that the FICCI-ANAROCK Consumer Sentiment Survey is timely, as it provides critical insights into contemporary homebuyers’ preferences and significant trends within the Indian residential real estate market.

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