Ready-to-move-in properties witness demand uptick in 2023

• The demand for ready-to-move-in (RTMI) properties has increased from 78% in 2022 to 85% in 2023.
• In metros areas, an increasing number of purchasers are leaning towards acquiring apartments or houses situated within gated communities.
• Escalating rental expenses are altering behaviours, nudging tenants towards considering home ownership as a viable option.

In 2023, developers have displayed a bullish approach towards new project launches, directly responding to the rising demand for residential spaces and the swift uptake by buyers, according to NoBroker, a property search portal.

During this period, property values experienced their most significant surge in a decade, due to several factors including a scarcity in inventory, buyers' preference for home ownership, infrastructure enhancements, better connectivity, and overall economic expansion in these urban centres. A shift has occurred in the buyer demographic, with a larger proportion of first-time homebuyers entering the market.

Demand for ready to move in properties on a rise

According to NoBroker, the demand for RTMI properties has increased from 78% in 2022 to 85% in 2023. However, supply has not been able to keep up with this increased demand. The Covid years had seen a drop in new project launches (due to all round uncertainty), which has now led to a crunch in the available inventory.

The above has resulted in a significant increase in the price of resale properties in older projects. There has been a marked increase in the speed of deal closure in gated communities, from 58 to 32 days, at prices that are 1.2 to 1.3X of prices just a year back.

This jump in demand for RTMI inventory can be attributed to: people looking to move in immediately (mostly renters) and investors in a buoyant real estate market to capitalise on the wave of higher rental yields. Bangalore and Mumbai have registered maximum demand for RTMI properties for obvious reasons.

Gated communities in demand, even though they come at a premium

In metros areas, an increasing number of buyers are leaning towards acquiring apartments or houses situated within gated communities. These properties come at a higher price due to their ability to offer convenience and amenities that many buyers desire but are generally lacking or difficult to access within the broader social infrastructure.

These sought-after features include enhanced security measures, access to a gym, sports facilities, swimming pools, and various other amenities.

The premium cost is often justified by the comprehensive package of benefits and comforts these properties provide, catering directly to the preferences of discerning buyers seeking a more holistic and secure living environment.

This trend has indeed become evident through the introduction of numerous integrated townships in different cities.

Return to office means more want to buy within city limits

Following the return to office, there's a renewed interest in purchasing properties within city limits. During the Covid years, 42% of customers leaned towards buying homes on the outskirts, a short-term shift in behaviour. However, there's been an increase in the percentage of individuals seeking properties within city limits, rising from 79% in the previous year to 85% this year, according to NoBroker data.

Mumbai and Bangalore stand out as exceptions, where long-term real estate investment strategies continue to push investments towards the outskirts of the cities. These decisions are supported by strong investment rationales.

In Bangalore, the growth of the urban landscape towards the Airport in Devanahalli remains a driving force. For Mumbai, customers priced out of the city are turning to suburbs.

Higher rents makes it tough for tenants, make them consider home ownership

India's rental landscape is proving tough for tenants, grappling with soaring rents that strain their finances, compelling them to cut back on expenses. While gated societies were traditionally preferred for their security and amenities, their steep rents are shifting demand towards more affordable independent houses and floors.

Notably, there's a rising interest in areas slightly distant from office hubs but reachable by metro. This shift is driven by both convenience and a strategic response to sky-high rents. However, regions not neighbouring office complexes or IT hubs haven't experienced a drastic rental surge.

The escalating rental expenses are altering behaviours, nudging tenants towards considering home ownership as a viable option. The desire to secure property has accelerated amidst these challenging rental market conditions, shortening the time span between decision-making and action-taking.