Amid the COVID-19 pandemic, with work-from-home (WFH) becoming a viable option even after the lockdown, many future homebuyers may prefer peripheral areas for bigger homes and a better lifestyle - at more affordable prices, says a report by real estate consultancy firm Anarock. Usually, central areas of a city are more preferred so they can live closer to their workplace and avoid travel time.
“The previous 'gold standard' of Indian housing - the walk-to-work / short drive to work, by definition only in and around central corporate workplace hubs - may shed some its popularity for the middle class,” the report states.
The peripheral areas are more affordable both from a rental and purchase perspective. In Bengaluru, the average price for a standard 1,000 sq. ft. property in areas within city limits is approximately Rs 69.80 lakh, against Rs 43.50 lakh in the peripheral areas - a 38% cost difference. Average monthly rental for a standard 2BHK home in areas within city limits is approximately Rs 18,500, against Rs 9,500 in the peripheries.
“The work-from-home concept may become the next fulcrum for home-buying decisions, where the walk-to-work option had held the longest sway," says Anuj Puri, Chairman - ANAROCK Property Consultants.
"This, and millennials' new-found preference for buying rather than renting homes, are among the most prominent new residential real estate trends of the COVID-19 era. With the rise of the WFH culture, many may now prefer to live in more spacious and cost-effective homes in less central areas. While sufficient supply currently exists in most of the peripheries, this new demand will eventually also dictate fresh supply. Bigger homes, affordable prices and more generous open spaces in the peripheral areas will draw demand from tenants and buyers alike,” he adds.
In MMR (Mumbai Metropolitan Region), the average price for a standard 1,000 sq. ft. property in areas within city limits is approx. Rs 1.85 crore, against Rs 55.35 lakh in the peripheral areas – a 70% cost difference. Average monthly rent for a standard 2BHK home in areas within city limits is approx. Rs 45,800, against Rs 12,500 in the peripheries.
In the NCR (National Capital Region), the average price for a standard 1,000 sq. ft. property in areas within city limits is approx. Rs 88.20 lakh, against Rs 37.50 lakh in the peripheral areas – a 57% cost difference. The average monthly rent for a standard 2BHK home in areas within city limits is approx. Rs 22,000, against Rs 9,500 in the peripheries.
Anarock data reveals that the 5-year rental outgo for tenants living within city limits is equivalent to 27-52% of the total property cost in the peripheries of the top 3 cities (MMR, NCR and Bengaluru). Therefore, there is a strong rationale for homeownership in the peripheries. Anarock has considered the total annual rental outgo for 5 years + 3.5% annual rental appreciation.
In Bengaluru, the average monthly rental outgo in city-limit areas is Rs 18,500. For five years, this equals nearly Rs 11.57 lakh (including standard rental escalation for this period). This is almost 27% of the total average cost of a property in the peripheral areas.
The average monthly rental outgo in MMR in city-limit areas is Rs 45,800. For five years, this equals nearly Rs 28.66 lakh (including standard rental escalation for this period). This is almost 52% of the total average cost of a property in MMR's peripheral areas.