Investor Preference for Real Estate Grows Over Other Assets

BY Realty+

Investors are optimistic about the real estate market in the current scenario amid sustained job growth and GDP gains, and preference for real estate over other asset classes is only growing, according to the CII-ANAROCK Consumer Sentiment Survey – H1 2022.

Homebuyers’ sentiments are up by 5% compared to last year’s survey results for real estate as the best asset class for investment. In the H1 2022 survey, 59% of respondents voted for real estate as the best investment option in the present scenario, followed by 28% of respondents who consider the stock market as the best option amongst all asset classes for investment.

Asset classes such as gold and fixed deposits continue to be the least-preferred investment options for respondents as seen in the H1 2022 survey and the previous four surveys. Currently, only 7% and 6% of respondents voted for gold and fixed deposits, respectively, as their best investment options.

As per the survey, millennials are emerging to be key homebuyers, both directly and indirectly. In the previous survey, 53% of millennials preferred to buy a home later on from their capital gains while in the H1 2022 survey, this percentage has increased to 56%. The capital gains here refer to the gains earned from other asset classes such as stock markets, mutual funds, FDs, etc.

As expected, Generation Z prefers to ultimately go on a vacation or start a business from their capital gains. However, interestingly, even among this younger age group there is a growing interest in real estate investments. At least 20% of Generation Z respondents are looking to ultimately buy real estate later on from their capital gains. 

End-users continue to rule the Indian residential market with 69% of participants looking to buy a home for self-use. Homeownership has become a compelling reality for many during the pandemic. It not only gives them the utmost satisfaction of owning a physical asset but also offers a sense of security during exigencies such as the pandemic.

Simultaneously, there has been a noticeable shift in buyers’ preferences post-Covid-19. In comparison to the H1 2021 survey, the share of participants looking to invest in property instead of buying for self-use has risen by 2%. Now, at least 31% want to purchase a property from an investment perspective.

Interestingly, long-term investors (with 8-10 years horizon for investment) had the most positive outlook in H1 2022. More than half of these respondents stated that the current residential market is somewhat better for investment than it was 12 months ago. Alternately, one-third (approx. 33%) of respondents feel that the market is about the same as that 12 months ago and investment opportunities continue to be there in the market.

Even while ready homes continue to top buyer demand, the gap between ready properties and new launches is seen to be narrowing down considerably across the cities – its ratio is now at 30:25 in H1 2022. Back in H1 2020, the ratio between ready homes and new launches stood at 46:18.

One major factor for this is the increasing new supply by large and listed developers on whom the prospective homebuyers have higher confidence (in timely project delivery). Previously, since new launches were dominated by smaller players and there were several delays in delivery, homebuyers’ confidence on new launches had faded. They mostly preferred ready homes. As seen now, the large and listed developers entering the fray are reporting significant growth in housing sales in their new projects.

Tags : Investors market scenario job growth GDP asset Anarock Homebuyers real estate investment