COVID-19 - MagicBricks...Attractive deals important, but only after price and income stability 6 Price points are still ruling the real estate world Uncertainty in prices emerged as

COVID-19PROPERTY BUYER SENTIMENT SURVEY

What is the Home Buyer looking for?

PROPERTY BUYER SENTIMENT SURVEY | MAY 2020

Table of Content

Executive Summary 2

COVID-19 and Buyer SentimentsPessimism and uncertainty prevail across age groups

3

Changing buying timelines

Buying timelines shifting at least 6-9 months ahead

4

City analysis across buyers' cohorts

Pune and Bengaluru witnessed least decline in buying intent

5

Income stability critical factor in decision making

Attractive deals important, but only after price and income stability

6

Price points are still ruling the real estate world

Uncertainty in prices emerged as the top obstacle in property

buying

7

Magicbricks property price analysis

Price decreased by 2-9% across cities within one month of

lockdown

8

Triggers that can help property market

What buyers are looking for?

10

Survey methodology and respondent profiles 11

Contact Details 12

PAGE 1

Executive Summary

The global, as well as the Indian economy, has started experiencing the adverse effects of the COVID-19 pandemic. Since the post-liberalisation era that began in 1991, this is the first time that most rating and multilateral agencies are predicting India’s GDP growth to be <1% in 2020, with some estimates even suggesting a contraction in annual GDP. However, the projections for 2021 at >4% GDP growth indicates the country’s relative resilience and strong fundamentals.


PAGE 2

The extent of impact on health and on the economy that will be caused by this pandemic still remains fluid. Until an appropriate cure or a vaccine is discovered, the risk to health, as well as social fear, will stay. On the economic front, the Government and RBI have announced a slew of measures to protect the economy, and more steps are expected. Despite this, there remains the risk of severe economic fallouts of this pandemic, more so in the vulnerable sections of industry.

The real estate sector, especially home buying, is expected to face strong headwinds in the near to medium term. There has been a fair amount of literature that’s been published on the financial and supply side impact on the real estate industry. While construction activity is expected to resume shortly, the weakening of demand and consumer sentiment might take longer to recover. In this context, as India’s leading property portal, we’ve attempted to put together a comprehensive study on the ‘mood of the buyer’ aimed at understanding buyer sentiment and the triggers/barriers to home purchase in a post-COVID19 environment.

The key findings of our ‘Property Buyer Sentiment Survey’ are as follows:

• Reflecting the buyer's unease with current conditions, the survey shows that about a third of buyers are wanting to put their purchase plans on hold and as many as 75% respondents are planning to decrease their budget for home buying.

• Price discovery and Job stability emerged as key challenges with more than 50% of the respondents citing these factors as responsible for deferring their buying plans.

• Ready to move, attractive deals and discounts and timely completion of projects are seen to be the primary triggers to revive buyer sentiments and encourage them to buy property.

The study was conducted on a large sample of >1900 respondents. We understand that actions taken by the government, and importantly by the industry, can have a direct bearing on how buyer sentiment trends in future and therefore, we plan to conduct a repeat comparative study in the near future.

Adverse circumstances often get the best out of us. We hope that the enclosed report helps you to better understand, and thereby to better manage, buyer sentiments and expectations. If you have any suggestions or feedback to share, please write in to me.

Stay safe & best wishes.

Sudhir PaiCEO – [email protected]

COVID-19 and Buyer SentimentsPessimism and uncertainty prevail across age groups

There is little doubt that the Indian economy has witnessed a downtrend after a month of national-level lockdown. Overall, consumer sentiment is growing more pessimistic and uncertain with the increase in the number of days of lockdown. Although the depth and breadth of the impact is still unclear, people are actively dealing with the effects of a sharp drop in the economic activity and work from home has become a norm in the country.

Reflecting the overall consumer sentiment, our Property Buyer Sentiment Survey

shows that a one out of three respondents are either keeping their buying decision on hold or dropping their plan for the time being. The survey findings continue to reflect the buyer's unease with current conditions leading to every 3 out of 4 respondents (see Figure 2) planning to decrease their budget for property investment.

Although majority of respondents are decreasing their budget, a significant 67% want to still buy a property albeit with some delay; this highlights the reinforced significance of home ownership which has is the result of time spend by consumers at home, during the lockdown.

Interestingly, it has been observed that the Gen Z (people born in the 90s) are the first ones who took a flight away from the property market, with 50% either holding or dropping their plans to invest in property. On the other

hand, people in the age group of 25 to 45 seemed inclined towards buying property with a reduced budget.

Exhibit 1 | Buyer sentiments analysis in the various age cohorts

Figure 3 | 68% in 26-45 age group plans to buy

Source: Magicbricks Property Buyer Sentiment Survey

Plan to hold or

drop

Plan to buy

AgeAge

PAGE 3

Likely to decrease

Likely to increase

*% respondents whose budget is likely to increase or remain constant

Figure 4 | > 65% looking Budget cut across groups


67%

24%

9%

Figure 1 | 67% not changing Buying Plans

Planning to buy Keeping on hold Dropping Plan

50%63% 69% 72%

43%25% 20% 23%

7%

12%11%

5%

<25 26-35 36-45 >45

73%

25%

1%

Figure 2 | 73% likely to decrease the budget

Likely to decrease Likely to keep the same Likely to increase

66% 73% 76% 72%

<25 26-35 36-45 >45

34%*27%* 24%* 28%*

Changing buying timelinesBuying timelines shifting at least 6-9 months ahead

It is a well-known fact that before the COVID-19 crisis, the real estate sector was facing liquidity issues and construction delays (source: PropIndex Apr 2020 Report). But government initiatives such as the introduction of Real Estate Regulatory Act 2016 and relief package of INR 25,000 crore had started building a foundation for long-term recovery in the past six months. Pre-COVID-19, about 56% of our respondents had either shortlisted or were actively looking to buy property in less than six months, but the COVID-19 outbreak has led to most buyers stretching their timelines by a few months.

The graph below demonstrates a shift in timeline of buying by at least 6-9 months. However, only a

minuscule number, out of the total respondents, wish to drop their buying plan, indicating a silver lining.


Magicbricks research analysis shows that the buyers who had already shortlisted a

property before the crisis are likely to be the most active after the lifting of lockdown. On an immediate basis, markets are expected to lose 20-40% of potential buyers, as many are planning to either put their buying decision on hold or dropping the plan. Interestingly, the buyer category which is expected to see the maximum deferment is the one where respondents were exploring to buy discounted or distressed properties earlier. This indicates curtailment of speculative buying for the time being, with the majority of buyers in the market being end users.


Exhibit 3 | Change in buying plan pre and post COVID-19


Shortlisted the Property and planning to buy in 0-3 months

Actively looking and was planning to buy within 3-6 months

Looking to buy within 6 months to a year

Exploring only discount/distress properties

Overall Postponement Plans

0-6 months 20%

6-12 months 17%

More than a year 15%

Pre COVID19 Post COVID19

As planned Postponed Hold DropBuying plans

52% of buyers

looking to postpone their buying plans

PAGE 4

Less than 3 months Within 6 months Within 1 year more than a year

Exhibit 2 | Buying timeline shifting at least 6-9 months

25%

56%

77%

95%

6%14%

25%

37%

49%

Pre COVID19

The graph represents the cumulative percentage of buyers on a timeline

Post COVID19

11%

4%

17%

22%

49%

63%

56%

44%

30%

23%

19%

25%

11%

10%

8%

9%

We also looked at the change in buying preferences basis the ultimate intent of purchase i.e. end use versus investment. We found that while both are affected to an extent because of the pandemic, the

investor community is more likely to defer their property purchase plans.

The survey findings indicate that in general, the end-users are more inclined to buy property in the near term post-COVID-19. Thus, despite the overall expectations of price fall in at least few pockets across the country, it seems the end-users should be the first to return to the market.

Pre

-CO

VID

Po

st-C

OV

ID

23% 26%

22%

33%

18%

20%

37%22%

I N V E S T M E N T S E L F - U S E

<3 months 3-6 months 6-12 months

10% 15%

16%21%

15%

18%19%

15%

33% 21%

6% 10%

I N V E S T M E N T S E L F - U S E

>12 months On-Hold Drop

69% end-

users planning to buy but with a deferment up to a year

0% 25% 50% 75% 100%

Ahmedabad

Bengaluru

Chennai

Delhi-NCR

Hyderabad

Kolkata

Mumbai

Pune

<3 Months 3-6 Months 6-12 Months >12 months On Hold



Exhibit 5 | Change in buying plans - Self-use vs Investment

End-users likely to be the first to return to the market

PAGE 5

Pune & Bengaluru witness least decline in buying intentSignificant difference emerged in buyers cohorts across cities

The buying intent has been temporarily affected for more than 80% of the buyers across TIER I cities. However, the buying intent varied to some extent across geographies.

Pre-COVID-19, Pune and Bengaluru markets had the highest immediate buying intent among TIER I cities, and post COVID-19 also, the buying intent in these cities is somewhat less affected as per the survey. National Capital Region (NCR) and Mumbai Metropolitan Region (MMR), had sluggish market sentiments before the lockdown and comparatively lower consumer buying intent. The survey indicated that both these markets are likely to be slightly less affected by the lockdown when compared to cities like Ahmedabad and Kolkata.

Exhibit 4: Expected delays in home purchase due to COVID-19


Price/Income stability emerged as critical factorsAttractive deals important, but only after price and income stability

The emergence of COVID-19 crisis has made price of the project and income stability as the most critical factors influencing the buying decision. A substantial number of respondents of the Property Buyer Sentiment Survey also listed discounts and payment plans as major deciding factors in the property-purchase decision.

Price of the Project emerged as the most critical factor influencing the property buying

decision. With people entering a phase of cautious spending, most buyers have already reduced their budget for buying a property.

Job/Business Stability was identified as the second most important factor influencing the

buying decision. The fact that experts are predicting a recession as a result of this crisis is making buyers more concerned about the security of their jobs and businesses.

Attractive deals and discounts are the third top factor which affects property buying

decision. Buyers consider the time of crisis as the most suitable to seek additional deals and discounts over the pre-crisis pricing, from the developers.

Timely completion of projects has taken fourth spot as about 84% buyers are looking for a

completed property. COVID-19 crisis has halted construction activity and led to reverse migration of labour force to their home states. The fact that various RERA authorities have given moratorium to builders too has made buyers more concerned about timely delivery.

Return on Investments (ROI) has taken a complete backseat in the buyers mind because

of the overall uncertainty around the market. The prolonged stagnation of the broader property price is already keeping the investor away from the market.

Availability of cheaper loans, generally considered as a supply side push for property

market and back-to-back cut in the repo rates by the RBI, has resulted in all-time low home loan rates but this factor will take some time to trigger the property buying.


Fiscal challenges emerged as more prominent factors in decision making in comparison to ROI and cheaper loans during the crisis.

1 Price of the Project

Job/Business Stability

Timely Completion of the projects

Attractive deals and discounts

Availability of cheaper loans

Return on Investments (ROI)

2

3

4

5

6Key

factors

PAGE 6


Exhibit 6 | Key deciding factor in property buying in order of preference

Timely handover of the project

Visiting property sites

Getting loan from banks/financial institutions

Registry and documentation of the property

Price Uncertainty

Exhibit 7: Top 5 challenges to property buying post-COVID-19



The crisis loomed at a time when the residential segment of the Indian realty sector was already struggling with low sales, delays in project completion and challenges of adapting to regulatory changes. The highest number of Corona impacted hot zones are identified in Delhi NCR, and Mumbai resulted in a complete halt in construction activities. Thus, it is not surprising that Delhi-NCR and Mumbai turned out as the markets with the highest percentage of respondents having price uncertainty.

Exhibit 8: Percentage of respondents feeling uncertain about prices by city

5

4

3

2

1

PAGE 7

Even post-COVID-19

visiting property site,

loan disbursement,

documentation

remained as secondary

concerns

Price points are still ruling the real estate world Uncertainty in prices emerged as the top obstacle in property buying

Most industries across the country are likely to face a new set of challenges once the lockdown opens. We asked the buyers to rank their top obstacles in property buying. An overwhelming 50% of the buyers expressed ‘Price uncertainty’ as the top challenge to property buying post lockdown.

In our opinion, price discovery should be challenging post-COVID-19 as there is likely to be a

lack of consensus between buyers and sellers regarding prices in the negotiation of property deals.

Also, the delay in construction due to the flight of labour force to their native places has left the respondents feeling uncertain about the timely handover of projects, making it the second biggest challenge for homebuyers. Most of them are planning to buy ready-to-move property to mitigate this risk.

Other challenges such as human interaction now considered to be unsafe after the pandemic, visiting property sites which impede buying a property in the short term, documentation and paperwork are regarded as secondary by the respondents.

57% of the respondents in Delhi-NCR uncertain about prices


57%

52%50% 50%

49% 48% 47%

45%

Delhi-NCR Mumbai Kolkata Hyderabad Bengaluru Ahmedabad Pune Chennai

Pe

rce

nta

ge o

f re

spo

nd

ents

Exhibit 9 | Propensity of price changes post-COVID-19

3%

NCR

6%

Kolkata2%

Mumbai -4%

Pune

15%Hyderabad

4%

Bengaluru7%

Chennai

8%

Ahmedabad

Price change post lockdownYoY price

change

-3%

-7%

-2%

-2%

-4%

-9%

-5%

-4%

Note: 1. The YoY change represents the price movement between March 2019 and March 2020 on Magicbricks website2. The change post lockdown represents the price movement between March 2020 and April 2020 on Magicbricks

website

Magicbricks property price analysis Price decreased by 2-9% across cities within one month of lockdown

Real estate sector dynamics operate at a local level, and property prices and price changes usually vary across localities and cities. Hence, we analysed the price changes within the month of lockdown and observed that the prices have decreased by 2-9% across cities. Cities like Hyderabad and Ahmedabad, which witnessed high YoY growth, were most impacted by COVID.

“Magicbricks research analysis suggests that prices have rationalised in most of the cities and reached to the same level as they were one year

back.”

We analysed the historical price data during major disruptions like demonetisation, and our findings indicated a trend where prices are usually remaining stagnant during significant disruptions. Any price decline was also recovering soon after but COVID-19 lockdown can be considered a severe disruption, with a complete halt in economic activity and even human movement.

The eight TIER I cities of India, witnessed an average price decline of around 4% during the lockdown (15 March to 15 April), with cities seeing decent price increment during the last one year being the hardest hit (Exhibit 9).

Given that the prices had already rationalised due to the recent price decline in April 2020, when lockdown was strictly enforced, more price decline can be expected. The desired price discounts by the respondents post COVID-19 mostly varied between 10% to 25% as per the survey

Contrary to popular beliefs in price fall, real estate market held ground in the past

Source: Magicbricks Property Buyer Sentiment SurveyPAGE 8


72% looking for discounts and relaxed financial terms

Magicbricks survey asked respondents about the key areas in which the developers could facilitate buyers in purchase of property post lockdown. Less human interaction and online paperwork were sited as important by one fourth of the respondents but most of them listed decrease in prices as a priority while 3/4th of the respondents felt that relaxed financial terms like a moratorium period and lower down-payments, were the most critical areas to help buyers make a purchase. Respondents also felt that in a post-lockdown environment, they may face difficulty in getting ‘upgrade-works’ in the property like creating a modular kitchen and woodwork. About 43% of the buyers felt that developers should provide furnished properties to lessen the post-buy hassles.



84% of the survey respondents want ready-to-move in properties

PAGE 9

New launch project

Under-constructio

n (UC) project

Ready-to-move in partly

completed project

Ready-to-move in

completed project

64%20%9%7%

Exhibit 11: Purchase preference by construction status

Exhibit 10 | Ranking of Buyer’s expectations from developers

1 Decrease Price

2Relaxed financial terms for down payments

3Woodwork and kitchen fittings to minimize post-purchase efforts

4Minimal property visits by facilitating videos and photographs

5 Online paperwork and documentation

6 Online registry without going to courts

Triggers that can help property marketWhat is Home buyer looking for?

In a post-lockdown scenario, given the changing buyer preference, we asked respondents what they are looking for from the perspective of their choice of developer, construction status, price discount, amenities, and location.

The real estate sector is already facing construction delays. It has become even more prone to uncertainties and the buyer community has expressed its desire to favour ready properties (Exhibit 11), the percentage of buyers preferring a property type increases, as construction progresses. An overwhelming 2/3rd of buyers are only interested in ready projects, while another 20% are willing to buy ready properties in about to be completed projects.

Only 16% of the buyers are looking to buy under-construction/ new launched properties post the

lockdown. Hence, from the perspective of developers and property owners, properties which are

‘ready to move in’, and available at a discount of 15-20% or more, are likely to be

the most attractive to buyers.


27%

18%

55%

Tier 1 developer with track record of delivering on time

Any developer with track record of delivering on time

Most economical option/best dealirrespective of developer

Indifferent to discounts

10-15% discount

15-20% discount

20-25% discount

More than 25% discount

Gated projects in proximity to schools, local markets, and work-places

ranked higher

The lockdown situation has suddenly made people realise the importance of a protected and secure environment, with access to essential amenities. While security has always been one of the top criteria for making a purchase, buying in a gated community is seen even more critical by the respondents, who felt the need to manage their habitation environment, once situations like pandemics stuck.

Respondents also felt that proximity to schools and local markets is the second most important criteria for selecting a property to purchase. Proximity to offices and availability of amenities like gym were seen as essential criteria for purchase by 40% of the respondents.

Exhibit 13: Top preferences for property purchase

Source: Magicbricks Property Buyer Sentiment Survey PAGE 10

Despite emerging uncertainties in the post-COVID-19 environment, along with expected delays in the purchase decision, and other expectations, majority of the respondents expressed their willingness to make an immediate buying decision post-COVID-19, if a specific discount on price is available on the properties. However, only 2% of the respondents expressed their willingness to make a quick purchase if prices fell by 10% or less.

Another 10% of the buyers were willing to make a purchase as long as the net discount is between 10-15% of the property value. Surprisingly, the desired discount did not vary depending on the construction status of the project or the choice of developer. On an average, 20% discount was found to be a sufficient trigger for property buyers.

15-20% price discount seems to be an immediate trigger for buying

Exhibit 12: 67% respondents wish for more than 15% discount

1 Gated Community Proximity to schools and local markets2

Proximity to workplace3 Amenities such as club/gym/open area4

Proximity to hospitals5

Source: Magicbricks research Property Buyer Sentiment Survey

9% 2% 10% 9% 27% 31%


Less than 10%

Exhibit 14: Respondent profile of the survey

Survey methodology and respondent profiles Property Buyer Sentiment Survey

The Magicbricks’ Property Buyer Sentiment Survey (during COVID-19 crisis) is designed to understand buyer’s updated outlook of the real estate market during the crisis, the current deciding factors for purchasing property and the new property preferences and consumption patterns. These factors are expected to lead to the emergence of significant trends in the Indian real estate industry.

The survey aims to provide all the stakeholders with a more in-depth insight into the property market from a consumer perspective during the COVID-19 crisis.

1 Age profile of the respondents

Employment profile2

First time buyer3

Property investment objective4


2%

36%

31%

31%Below 25

26-35

36-45

Above 45

76%

24%

Salaried

Self-employed

56%First TimeBuyer

81%

19%

Self-use

Investment

Ahmedabad

Delhi-NCR

Mumbai

Chennai

Hyderabad

Kolkata

Pune

Others

Bengaluru

• Survey was conducted in the second half of April 2020. The online survey received 1900participants responding to it via email campaign

• The sample were carefully selected from the users of the Magicbricks who have recently conducted property search on its portal/app. We target to give a fair representation of the overall population demographics in terms of geographical distribution

• Thereafter, the responses which were collected were analyzed inhouse, and the data correlated to the present economic conditions

• Not all figures may add up to 100%, as a result of rounding percentages and excluding ‘neither/ nor’ and ‘don’t know’ responses from exhibits.

• The survey was undertaken by Magicbricks Research and the views expressed in the report are completely unbiased


21%

15%

10%

4%

4%

5%

6%

22%

PAGE 11

Total Respondents - 1900

13%

Magicbricks: India's no 1 property site

Magicbricks is India’s No.1 property site. With monthly traffic exceeding 20 million visits and with

an active base of over 1.4 million+ property listings, Magicbricks provides the largest platform for

buyers and sellers of property to connect with each other in a clear, transparent manner. With

this in mind, Magicbricks has innovated several product features, content and research services,

which have helped us, build the largest audience pool.

CEOSudhir Pai

AuthorsSurabhi Arora | Head of [email protected]

Devendra Lohmor | Chief [email protected]

Suneet Saxena | Assistant Manager [email protected]

Disclaimer: This report has been prepared using the data compiled by Magicbricks from multiple sources. The report is for general information only and Magicbricks gives no warranty, express or implied, as to the accuracy, reliability, and completeness of any information within the report, and does not accept any liability on the information which may or may not be subject to change from time to time due to Governmental or non Governmental regulations/direction

© 2020 magicbricks.com

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COVID-19 - MagicBricks...Attractive deals important, but only after price and income stability 6 Price points are still ruling the real estate world Uncertainty in prices emerged as