Indian real estate is currently going through a major churn of sorts and developers have had to adjust to several new regulations including RERA and GST. Overall transparency and accountability have increased by a great deal in the housing market and this is better news for buyers. At the same time, millennials continue to be a major target market for Indian developers. Millennials are expected to be the biggest consumer base for a wide range of businesses worldwide and this is a global phenomenon of sorts. Real estate is no different in this regard.
Indian developers are now acknowledging the fact that millennials will naturally make up a large target market for them in the near future. Studies also show that a major section of buyers in the millennial category prefer higher affordability in terms of purchasing real estate. Indian millennials are already at approximately 46% of the overall workforce in the country and their spending capacity is estimated at roughly $3.6 billion. Along with industries like automobiles, retail, consumer appliances and others, millennials are steadily playing a bigger role in spurring real estate demand across the country.
Key trends worth noting in this regard
Millennials have been playing a key role in increasing overall demand for real estate in India. This is even more apparent this since 75% of millennials in India desire to buy their homes over the next 3-4 years. This makes them a huge target segment for real estate developers and brands in the country. Studies indicate that less than 5% of millennial buyers prefer purchasing housing units which have prices exceeding Rs. 1 crore. Approximately 39% of millennials usually prefer purchasing housing units priced within Rs. 40 lakhs on an average. Close to 44% of millennials wish to purchase housing units priced between Rs. 40-80 lakhs.
13% of millennials also desire homes priced between Rs. 80 lakh and Rs. 1 crore as per reports. Millennials are a segment that is growing rapidly over the years and steadily becoming the pivotal demand enabler for Indian real estate. They are also fuelling higher housing demand in several key global markets. The evolution of millennials into a major determining factor for the Indian property market and overall demand is because of several factors. These include high growth in disposable income, shifts in attitude towards home ownership, growth in home financing options and a tendency of this segment to purchase real estate as a hedge against risks in the future. The key target buyer for real estate developers in the affordable and mid-income category is the millennial buyer with an average annual income of up to Rs. 7 lakhs and above.
What developers should keep in mind
The overall Indian real estate market is witnessing a key shift towards higher affordability and greater value creation. Millennial buyers are seen to prefer housing units which give them greater value above all else, in terms of the location (situated strategically near transit points and workplaces), nearby social infrastructure (near retail, educational and healthcare hotspots along with other basic facilities), competitive pricing (they are not averse to buying smaller-sized units) and a better quality of life (security, open spaces, greenery).
Millennials, as stated above, are not averse towards paying a more competitive price for a smaller sized apartment if it is located right and comes with all the amenities that they have come to expect. Their process of property buying has also changed with a majority of buyers in this segment likely to explore real estate options and compare prices online before deciding. This is where Indian real estate developers will have to get smarter in terms of offering more convenience to buyers in this age group, while also offering them greater value or as they call it, bang for their buck!