The Gera Customer Pulse Report by Rohit Gera MD Gera Developments

The Gera Customer Pulse Report by Rohit Gera MD Gera Developments

The Gera Realty Research team conducted the 5th customer study at the recently held CREDAI mega property festival.  The study was conducted by interviewing 870 visitors to the exhibition. The effects of delays in delivery as well as the imposition of GST has led to tremendous migration of demand from the launch or relaunch stage towards ready for possession homes.  The biggest swing has been seen between January 2015 and December 2018. In 2015, 25% of respondents were looking for homes at the project launch stage and 15% were looking for ready for possession homes.  In stark contrast, in December 2018 only 7% of respondents prefer homes at the launch or prelaunch stage while a whopping 55% are now looking for ready for possession homes.

The Gera Customer Pulse Report by Rohit Gera MD Gera Developments
Rohit Gera is the Managing Director Gera Developments

The government hopes to earn GST on under construction homes but given the fact that the burden of GST is so high, people are not willing to pay and instead choose to buy ready possession homes. The outcome is lower GST collections on these homes as well as a serious dent on the real estate sector as well as GDP growth and employment.

Between January 2016 and December 2018 we attempted to ascertain how much importance people paid to the reputation of the developer. We posed the following question: “Imagine that there are two apartments that have the same budget location, infrastructure amenities and specifications but different in size.  Would you buy a home from a known and reputed developer but of 975 sq ft. or from an unknown and new developer of 1100 sq ft.?” In January 2016, 46% chose the option of the reputed developer whereas 54% chose the larger apartment. In December 2018 the numbers changed substantially where 78% choose the option of purchasing the smaller apartment from the reputed developer and only 22% went with the larger apartment from an unknown or new developer. Clearly, customers are preferring homes from developers with a track record who have built their reputation in the marketplace.

We then asked the same question but instead of size, asked whether they would buy from a known and reputed developer from a further away location or an unknown and new developer in a better location.  In 2016, 35% had selected the reputed developer and worse location, but in December 2018 this number had jumped to 70% preferring a reputed developer at an inferior location. There is clearly a huge shift towards safety by customers. This shift to could explain why so many people are now looking for ready possession homes.

The other area where there has been a shift is in the age of the customers. Buyers have become more concentrated in the 26-35 age category over time suggesting a maturing profile. In 2014, 45% of the buyers were in the age bracket of 26-35 while in 2018, 54% are in this bracket. Almost all this increase has come from a reduction in the percentage of customers below 25 dropping from 19% in 2014 to 10% in 2018. This too indicates people are waiting longer before buying. The demographic shift seen indicates that customer profiles have become more mature and home buying is taking place at a higher age level compared to historical averages.

This shift is also reflected in the marital status of homebuyers as well. In 2016, ~70% of homebuyers were married which has now moved up to ~80%.There also has been a significant increase in the % of buyers buying homes for self-occupation. While majority of Pune homebuyers have always purchased homes for self-occupation, this % has risen even further to 83% in 2018. In 2014, it was 67%. The % of people looking at homes as a form of investment has steadily come down from 15% in 2014 to about 3% now.2BHK (751-1000 Sqft), seems to be the most desired product mix. Of the 770 respondents, 495 of them prefer a 2BHK while 317 of them prefer the size of 751-1000 sqft. This is corroborated by the shift in demographics as it is rational that a mature family will prefer a bigger home subject to their budgetary constraints.

This fact is also reflected in increasing budgets. In 2014, 41% of buyers had a budget of more than 40L. This number increased to 59% in 2018. (Refer to Fig 8) This indicates that purchasing power has steadily increased over time.  This is possibly an outcome of people having deferred their purchases over time.

Conclusion

In summary, the trend suggests that there is a tremendous flight to safety as reflected in the buyers seeking ready to move in homes compared to under construction. In addition, there is also a big shift in preference in favour of reputed, established developers. The other trend that is giving fillip to the above is the maturing profile of homebuyers as reflected in the rising purchasing power over time.

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