The beginning of the year 2017 ushered a whole lot of changes in the real estate sector. Various initiatives announced in the Union Budget 2017-18 talked about magnifying infrastructure, improving connectivity and providing affordable housing. With so much action in the market, real estate has yet again grabbed the top position by attaining 70% votes in the QuikrHomes Consumer Survey 2017 and thereby it has become the asset class that is dominating investors’ mind.
An overwhelming response has been received by NRI investors, and the survey depicts the real estate sector as the best asset class for investment in 2017. There has been a marginal variation in secondary and tertiary preferences of the respondents. Overall, mutual funds and stocks got neck-to-neck votes, with mutual fund being the second preference for Pune, MMR and Bangalore, followed by stock deposit as third preference in these cities.
The respondents of NCR and Tier 3 cities prefer fixed deposit as their second choice after real estate as it is considered to be a safer investment option and offers liquidity. In Chennai and Hyderabad, gold continues to be the second preferred investment option despite efforts by the government and the RBI to curb demand for the yellow metal.
End-use was the major motive behind buying properties among Indian residents with 64% of votes casted in favour of end-use and over 36% votes for investment purpose. On the contrary, what is worth observing is that 93% of NRI respondents are willing to buy property for investment purpose over a meager 7% who were interested for end-use. As per the survey, overall 59% participants have shown inclination towards buying property for end-use purpose.
As the real estate industry is gradually heading towards transparency and becoming more organized, the present generation’s well-informed buyer’s expectation from realty investment has become more realistic. Similar to international investors in western countries, they no longer aspire for high returns from their property. Overall, 32% of the participants expect up to 10% annual return from their real estate investment. Considering the current market situation, annual returns in the range of 9-14% are relatively healthy. It is interesting to note that respondents in all Tier 3 cities along with Pune and Hyderabad markets continue to remain too optimistic about the high return on investment. This may also be due to the fact that the prevailing prices in these cities are relatively lesser than their other metro counterparts.