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Need of market research for homebuyers

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Bottom Line: With most of research in Indian real estate from business perspective, it is imperative that research/reports are released for the homebuyers. 

Homebuyers, Happy Homebuyers, Buyers as brand ambassadors, Happy home owners, NRIs, Family in new house, India real estate news, Indian property market, Best news magazine on real estateThe Google search of Ratan Pandit, a prospective homebuyer, for Noida Extension market completely confused him. With various conflicting reports where one of the property consultancy firms endorsing the market as future investment magnet and the other one advising to stay away due to over-supply in this market, this homebuyer could not reach to any conclusion. Even various property listing sites were of not much use in terms of the understanding of the given market.

This school teacher is not the only homebuyer who gropes in the dark in absence of any reliable research in the housing market of India. It is not that there is any dearth of research reports. The problem for an average homebuyer like Pandit is that they are often giving different reports on the ground reality of the given market.

“The biggest problem is that most of these reports have been like market feasibility study from the industry view point. I could not find one single report that has been done from the perspective of homebuyers. What I needed was information about short to medium and then long term prospect of the market and then comparative study and analysis of investment-worthy projects in the given market,” says Pandit.

Analysts seem to agree with the observation of this homebuyer. They maintain that research in any industry, including real estate, is completely misunderstood because research has different parameters. One is the economic side which is to map the demand side.

A lot of developers know their market that this is the demand and they will go with that kind of a project, while others would like to know the psychology of the consumer. But that is the first part of the research.

After this economic research, there is product related research as to what kind of amenities to offer etc and then comes other parameters. So, after one has done the mapping that this area needs a 2BHK with this kind of amenities then comes the pricing. Pricing itself is very misleading because pricing in absolute terms means nothing and it has to be linked with the affordability.

So, if a report suggests the mean affordability of a certain location or the target buyers then one can price the product accordingly. In the absence of a scientific research that could be equally helpful to the homebuyers, what is happening is that even though the demand is three times higher than the supply, there are so many vacant and unsold units.

Naushad Panjwani, Managing Partner with Mandarus Partners admits that there is not enough research on which the end user could rest his decision making. The developers or the HNIs may be having access to the research but for the end users it is often the emotional connect that works. So, the most important consideration today is the economic aspect and one invests close to his work place.

Nikhil Hawelia, Managing Director of Hawelia Group has a caveat here when he says that the challenge is not the absence of research but how to make it available to the target buyers. According to him, most of the market feasibility study that the developers commission to research agencies is meant to assess the market from the standpoint of potential buyers only. Thereafter, it is confined to the developers’ internal team assessment instead of making it public. 

“If only there is a fair competition in the market and the developer is not in a mindset that his feasibility report should not be used by the other fellow developer in the same market, half of the problem is solved. Additionally, the developer must made use of the research to have an open dialogue with the buyers. It is all a question of being honest and transparent with the buyers,” says Hawelia.  

There are many reasons why a homebuyer buys a house. It could economic reasons, emotional connect or a general psychology of being secure if one buys over there. The other reason can be the returns, both capital appreciation as well as rental yield. There can be many other considerations. Till the time the market is transparent and backed by scientific research for both the developers as well as the homebuyers, the chances of demand and supply mismatch would always be high in the Indian housing market.

 

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