Reverse migration may boost housing demand post Covid-19

Reverse migration can spur housing demand in Tier-II & -III cities after Covid-19, and cities like Lucknow, Indore, Chandigarh, Kochi, Coimbatore, Jaipur and Ahmedabad would be the main beneficiaries of the reverse migration of professionals, who have lost their jobs in the metros, or are likely to lose their jobs, revealed an Anarock report titled “India real estate: A different world post Covid-19”.

Reverse migration is already very much visible among migrant labourers, and this trend can further percolate to skilled professionals, who have been or may be off-rostered. Smaller towns and cities would consequently see a spurt in housing demand. Primary demand may be towards rental housing – purchase demand would initially come from local investors, keen to meet the rental demand, the report said. The returnees will benefit from the cost of living and superior infrastructure that many Tier-II and Tier-III cities provide.

Anuj Puri, chairman, Anarock Property Consultants, said “Many NRIs will also return to India amid dwindling job prospects, particularly in the US and the European nations that account for nearly 70% global cases. For them, the top seven cities would be the best options, but many will consider smaller cities where they can be close to their families. Finding suitable employment for reverse-migrating Indians in smaller cities may prove to be challenging.”
Anarock’s recent consumer survey, conducted during the lockdown period indicated that of the respondents who preferred to invest in Tier-II & -III cities in 2020, 61% are end-users and almost 55% are aged under 35 years. At least 47% of respondents are focused on affordable properties priced within Rs 45 lakh, followed by 34%, who are looking for mid-segment homes priced between Rs 45 and Rs 90 lakh.
The residential segment will see manifold increase in demand for township projects, which offer a controlled environment. In terms of supply, township projects have less than 5% overall share in the top seven cities as on date. Further, market consolidation is expected with the increased preference for branded developers. Financially strong organised players are likely to occupy 75%-80% market share in the coming years, the report said.
In office real estate, social distancing norms may increase the per capita office space allocations even as a segment of employees will work from home. During the last decade, per capita office space allocation reduced from 100-125 sqft to 75-100 sqft, a trend that continued till the pre-Covid-19 period of January 2020. Safety and hygiene will become the top priorities, even as contactless operations and automation will increase. Decentralisation of operations to ensure business continuity will be a trend reversal from prominent consolidations over the past few years.