News Point: #Track2Realty pan-India survey finds real estate might be the first choice for government employees post the benefits of 7th Pay Commission but is not the only choice.
Real estate no longer attracts as much share if investment as expected, finds Track2Realty pan-India survey. Facts speak for themselves:
- 44% government employees would invest the benefits of 7th Pay Commission into the real estate
- 34% to invest in financial schemes for retirement gains; 12% to save money for education & marriage of children; and 10% to upgrade lifestyle
- Contrary to the general perception of youngsters driving the property market, the closer-to-retirement officials more inclined to invest in property, as many as 78%
- Metro cities with expats to attract more government officials (68%) into the property market
- Periphery locations & emerging markets to attract more home buyers, as many as 74%
- Lack of affordable housing and possibility of inflation major deterrent for attracting 7th Pay Commission bounty into real estate
Real estate has yet again emerged as the first choice of investment for Indians post the salary hike of 7th Pay Commission. It is nevertheless not attracting majority of the gains, as expected. Close to half of the bonanza of 7thPay Commission in the 20 cities of India would be channelized into the real estate market. Property happens to be the first choice for investment by both the serving government employees as well as those who have already retired.
The degree of property quest is relatively lesser among the young government employees in the urban cities who have multiple things in mind, including real estate, with the new-found monetary bonanza.
As many as 44% government employees across the country wish to invest the entire salary gains into the property market. However, the main city precincts would be less beneficiary compared to the outskirts of the cities. Reasons range from affordability to natural urge of serene living outside city, and appreciation potential to more open spaces. These are the findings of an exhaustive survey on consumer behavior pattern of the government employees post the implementation of 7th Pay Commission, by Track2Realty, the real estate think-tank group.
Contrary to the general perception, the quest of property is more among the older generation compared to the young buyers. The study did a break-up of the age group to classify the choice of investment according to the spending pattern. It finds that while the one fourth of the young generation, as many as 22 per cent, wish to upgrade the lifestyle first and then invest in diversified portfolios, 78 per cent of those above the age of 45 years wish to invest into property market.
It is hence no surprise that the periphery locations are being preferred for the investment. With retirement in mind as many as 74 per cent of those who are investing into the property market would prefer emerging locations than the established markets. Even those who have retired prefer these locations, as majority of them are already living in these locations.
“It is not just the choice of peaceful living post the retirement that is driving me towards Panchkula. But overall the size of the investment also makes sense to invest in emerging locations, as we government employees can not afford the costlier markets. Moreover, the appreciation is always sizeable in new locations once the market settles down,” says Bharat Agarwal, a government employee who would retire in the next seven years.
Another close to retirement Rachit Bundelkar explains his reasons, “All through my life I have been living in this mad rush of Mumbai city. Post my retirement I wish to live peacefully with more greenery and serenity. And the extended areas of Thane not only provide me all this at more affordable price but also the fact that I can get more open spaces over there, both in terms of outside environment and inside carpet area.”
The survey demography was a carefully chosen mix of government employees across the hierarchy to get the true picture of the investment pattern of the lot. The survey was carried in Delhi, Noida, Gurgaon, Ghaziabad, Mumbai, Pune, Nagpur, Nasik, Ahmedabad, Bangalore, Chennai, Hyderabad, Coimbatore, Kochi, Kolkata, Bhubaneswar, Jaipur, Bhopal, Lucknow and Patna.
Majority of the employees were closer to retirement and only a small set of employees were in the below 30 years age group. The respondents were given open-ended set of questions to spell out their investment preferences, choices and aspirations with more money in hand.
While real estate emerged as the first choice of investment, financial schemes with fixed returns post retirement was the next best bet where 34 per cent of the respondents said they would like to invest. Education & marriage of children came next with 12 per cent Indians saving the 7th Pay Commission benefits for that. Rest 10 per cent said they would like to upgrade their lifestyle. The survey noted that nearly all of the respondents wish to avoid speculation, even with their investment in the property market.
“I do not have disposable income like the corporate sector to gamble. It is my hard earned money and I wish to spend it wisely for the security of my retired life. It is precisely this reason why I am planning to spend in a home. It is probably the best social security for someone like me,” says Diwakar Sharma, who has to serve with the government job for the next 12 years.
The survey tried to understand whether the 7th Pay Commission benefits have improved the consumer sentiment as well. Not many feel so, as only less than one-third of the respondents, as many as 30 per cent, agree that it is catalyst to improve consumer sentiment. The point is further validated by the fact that those who wish to invest in the real estate are predominantly first time home buyers.
As many as 74 per cent of those planning to invest in the property do not have a house of their own. 22 per cent are investing in the second property for rental income. Only 4 per cent of respondents said they would invest in a weekend second home.
The survey also tried to understand is there any deterrent that might come in the way of the wish list of government employees to invest in the real estate. Two reasons emerged as the top deterrent that may affect their choice of property market to invest. While 55 per cent blame the absence of affordable housing as disappointing, the rest 45 per cent are apprehensive that the inflation post the implementation of 7th Pay Commission might eat up their benefits.
