According to the estimates, approximately 600 million people are expected to make urban India their home by 2031. Simultaneously, the current housing deficit in India, which currently stands at 19 million units, is slated to double by 2030 in the absence of any meaningful intervention.
[authorimages]Although a lot is going on in terms of uncertainties in the real estate market due to the outbreak of COVID-19, people have now begun looking for houses online. People using the internet in 2015 were 259 million, which went up to 331 million in 2017. It has been predicted that the number of internet users will double by 2022. So, let us first understand who is a residential customer.
Who is the housing customer and what does he/she want?
Given the large-scale urbanisation over the next few decades, it becomes crucial to identify and evaluate the needs of urban housing consumers. Hence, it is appropriate to define affordability in an FMCG way; wherein the housing has three main parameters, i.e. the monthly household income, the size of the dwelling unit, and the affordability of the homebuyer. The customer of affordable housing usually seeks a strong value proposition because of the limitations in income. Moreover, it is difficult to get access to credit. Hence, a well-constructed home with all the essential resources and services in the vicinity holds significant aspirational value for this customer within a planned development. Also, due to the increasing volatility, the market will witness changed interest-from investing in mutual funds or SIPs to investing in an asset which they can call their own. In such cases, affordable housing players can play a major role. Since the incidence of COVID-19 has brought into limelight the volatility of the share market; the customers will be keen now to invest in affordable housing. Connectivity to places of work in urban centres and the presence of social infrastructures such as schools and hospitals are added factors that will become the key drivers in the decision making.
Opportunity sizing and need for financial dynamism
The National Real Estate Development Council (NAREDCO) has recently introduced Housingforall.com, which is an online platform to address the unsold inventories in the country. This platform will soon be available for the public. Keeping in mind the lockdown situation and the need for social distancing, such platforms will provide personalised online home buying experience to the homebuyers who are unable to purchase offline due to these uncertain times. The limitations only exist in mind, and hardships can be overcome by sheer will and logic. Implementation of RERA has already increased the customer confidence, which in turn, has facilitated volumes in domestic markets. In the absence of equity funding and high loan costs, this is still progressively moving towards the appropriate direction. While the market is slowly recovering, there is a need to select the right ticketing size and an end-to-end financial solution provider. The strain of the liquidity crunch in the market is being handled by a prudent mix of equity and debt. Therefore, it is relevant to say that real estate must be treated as FMCG.