AFFORDABLE

HOUSING
Know your customer!
Authors:
Sugata Sarkar
Senior Director
Consultancy & Market Research
Knight Frank (India) Pvt. Ltd.
[email protected]

Binita Patel
Vice President
Consultancy
Knight Frank (India) Pvt. Ltd.
[email protected]

Kanika Gorwara
Consultant
Market Research & Advisory
Knight Frank (India) Pvt. Ltd.
[email protected]
 Affordable Housing
Know your customer!

Content
Part I

Need for housing Pg. no. 4

Policy framework Pg. no. 6

Defining affordable housing Pg. no. 11

Housing scenario in India Pg. no. 12

Demand - Supply gap Pg. no. 14

Part II

Customer insight Pg. no. 18

– Profile of the people surveyed Pg. no. 20

– Need gaps in current residence Pg. no. 22

– Purchase drivers and considerations Pg. no. 23

– Brand awareness, perception

and satisfaction Pg. no. 26

– Overall customer satisfaction

with brands – All India Pg. no. 30
 Part I

Need
for housing
With a total population of around 1.21 billion (2011)1,
India is the second-most populous country in the
world. As per Census 2011, more than 31 per cent of
the total population, i.e. about 377 million, is urban
population, living in 7,933 urban centres including
53 cities with populations above one million and
three megacities (Greater Mumbai, Delhi and
Kolkata).

The seventy years of independence have seen many

socio-economic transformations linked to the
urbanisation trend post-colonial rule. As per the
report, Urban India 2011, by Indian Institute for
Human Settlements, there were only five Indian
cities with a population greater than 1 million, and
only 41 cities greater than 0.1 million population in
1951. However, in 2011 there were three cities with a
population greater than 10 million and 53 cities with
populations greater than 1 million.

In 1961, the urban population of India was 78.9

million, that is, 18.20 per cent of the total population.
By 2011, the share of urban population had reached
377 million accounting for 31.2 per cent of the total
population.

With almost 70 per cent of the incremental

employment being created in urban centres, the rate
of urbanisation is likely to continue, which will lead to
almost 40 per cent of the country's population living
in urban centres by 2030.

1
Census of India 2011

4
 Affordable Housing
Know your customer!

Shortage of a ordable living in slums and squatter which was later revised to 102 million
settlements. Further, a rapid increase in 2017. It is estimated that 95 per
housing
in land prices and real estate cent of this shortage is in the
developments in urban areas have affordable housing segment. The fact
The case for sustainable urbanisation
induced the deprived and the that majority of these migrants hail
becomes stronger and acquires
economically weaker sections of the from lower income groups, justifies
greater attention in the context of the
society to occupy the marginal lands the need for creating more affordable
rural to urban migration, changing
typified by dilapidated housing stock, housing units in urban India.
demographics, socio-economic
composition, increase in households, congestion and obsolescence.
Besides those living in obsolescent
formation of nuclear families, and a houses, 80 per cent of these
It is apparent that substantial housing
burgeoning middle class. households are living in congested
shortage looms large in urban India
and a wide gap exists between the dwellings and are in need of new
With most megacities and medium-
demand and supply of affordable houses. The report also highlights
sized cities witnessing high
housing, both in terms of quantity and that nearly 1 million households are
concentration of urban population,
quality. living in non-serviceable katcha (mud
there has been an increasing
and brick) houses, while over half a
pressure on housing as well as basic
The Ministry of Housing and Urban million households are living in
urban infrastructure and services.
Poverty Alleviation's TG-12 report homeless conditions.
Increasing concentration of people in mentioned that the country was
2
urban areas has resulted in an facing an urban housing shortage of Report of the Technical Urban Group (TG-12)
on Urban Housing Shortage 2012-17, Ministry
increase in the number of people about 18.78 million in 2012, a number of Housing and Urban Poverty Alleviation,
September 2012

FIGURE 1 FIGURE 2

URBANISATION GROWTH IN INDIA URBANISATION TREND (1951-2017)

35.0%
2017 440 1338
30.0% 2011 377 1211
25.0% 2001 286 1029

20.0% 1991 217 846

15.0% 1981 159 683

1971 109 548
10.0%
1961 79 439
5.0%
1951 62 361
0.0%
0 500 1000 1500 2000
1951-61 1961-71 1971-81 1981-91 1991-01 2001-11
Urban Population Total Population

Source: Asian Development Bank, Census 2011, Source: Asian Development Bank, Census 2011, Knight Frank Research
Knight Frank Research

5
Policy
framework
The Indian government has National Housing Policy 1994.
formulated many policies for However, the first policy specific
housing especially since the late to urban housing was the
1980s including the National National Urban Housing and
Housing Policy of 1988. Habitat Policy 2007 (Ministry of
Additionally, many bodies like the Housing and Urban Poverty
National Housing Bank (NHB) Alleviation). It focused on
and Housing & Urban affordable housing as a key
Development Corporation objective for sustainable urban
(HUDCO) were also created to development. Subsequently,
facilitate the implementation of many programmes specific to
such policies. affordable housing have since
been incorporated like
Consequently, numerous efforts
Jawaharlal Nehru National Urban
have been made to provide
Renewal Mission, Rajiv Awas
adequate policy support for low
Yojana, etc.
cost housing starting with the

‘Housing for All by 2022’ initiative

The Pradhan Mantri Awas Yojana family a pucca house with water
(PMAY) launched in 2015 connection, toilet facilities, 24x7
provides a fresh impetus – the electricity supply, etc. The
PMAY-Urban (PMAY-U) Mission would be implemented
subsumes all the previous urban between the year 2015 and 2022,
housing schemes and aims at and is expected to provide
housing for all to be achieved by central assistance to
the year 2022. The total housing implementing agencies through
shortage envisaged to be States and Union Territories for
addressed through the PMAY-U providing houses to all eligible
is 20 million. families/beneficiaries by 2022.
All statutory towns as per Census
Pradhan Mantri Awas Yojana –
2011 and towns notified
Housing for All (Urban) was
subsequently are eligible for
launched by the Central
coverage under the Mission.
Government to achieve the
objective of providing every

6
 Affordable Housing
Know your customer!

Implementation methodology

The Mission will be implemented (ULBs) and state governments.

through four verticals giving options These four verticals are as follows:
to beneficiaries, Urban Local Bodies

TABLE 1

1 2 3 4
‘In-situ’ slum Affordable Affordable Subsidy for
redevelopment housing through housing in beneficiary-led
credit-linked partnership individual house
subsidy construction or
enhancement

• Using land as a • Demand-side • With private • For individuals

resource intervention sector or of EWS category
public sector requiring an
• With private • Interest
including individual house
participation subvention
parastatal
subsidy for • Central
• Extra agencies
EWS, LIG and assistance at
FSI/TDR/FAR,
MIG for new • Central INR 0.15 million
if required, to
house or assistance per per house
make projects
incremental EWS house in
financially • State to prepare
housing affordable
viable a separate
housing
project for such
projects where
beneficiaries
35 per cent of
constructed • No isolated/
houses are for splintered
EWS category beneficiary to
be covered

The scheme will be implemented as a prescribes certain mandatory

Centrally Sponsored Scheme3, reforms for easing up the urban land
except the credit-linked subsidy market for housing, to make
component, which will be adequate urban land available for
implemented as a Central Sector affordable housing.
Scheme4. The Mission also

3
Centrally Sponsored Schemes are the schemes by the centre where there is financial articipation by
both the centre and states.
4
Central sector schemes are schemes with 100 per cent funding by the Central government and
implemented by the Central Government machinery.

7
Credit Linked Subsidy
Scheme (CLSS) under the
Pradhan Mantri Awas Yojyna
(PMAY)

CLSS provides for easy institutional households with interest subsidy monthly instalments (EMI). This
credit to Economically Weaker credited upfront to the borrower's scheme should give a boost to
Section (EWS), Lower Income Group account. This effectively reduces the housing projects in the peripheral
(LIG) and Middle Income Group (MIG) housing loan amount and equated areas of metros.

TABLE 2

CLSS – An illustration

Criteria EWS + LIG MIG-I MIG-II

Household/Annual income (INR) Up to INR 0.6 million INR 0.601 - 1.2 million INR 1.201 - 1.8 million

Property area (carpet area) 30/60 sq m 160 sq m 200 sq m

Max loan amount for subsidy Up to 0.6 million Up to 0.9 million Up to 1.2 million

Subsidy % 6.50% 4% 3%

Subsidy amount INR 0.267 million INR 0.235 million INR 0.23 million

Max term of loan (on which subsidy 20 yrs 20 yrs 20 yrs

will be calculated)

Technology Sub-Mission – For ii) Innovative technologies and States to play major roles
materials
faster and better quality ‘Housing for All by 2022’ provides
iii) Green buildings using natural
construction flexibility to states to choose the best
resources
option amongst the four verticals of
A Technology Sub-Mission under iv) Earthquake and other disaster- the Mission to meet the demand of
‘Housing for All by 2022’ was set up resistant technologies and housing in their states. The process
to facilitate adoption of modern, designs of project formulation and approval in
innovative and green technologies accordance with Scheme Guidelines
and building material for faster and are left to the states, so that projects
quality construction of houses under can be formulated, approved and
various geo-climatic zones. The implemented faster. It also provides
Technology Sub-Mission will work on technical and financial support in
the following aspects: accordance to the Guidelines to the
states to meet the challenge of urban
i) Design and planning
housing.

8
 Affordable Housing
Know your customer!

Other initiatives to promote Timely completion

a ordable housing of projects

The first major push by the Other nancial bene ts A first in affordable housing projects,
government to the affordable housing two parameters play a very important
• To make these projects attractive
sector came in the Union Budget role in the success of a project—the
100 per cent deduction for profits
proposal of 2016-17, where it laid pricing of the project and second, its
was allowed
down the guidelines for housing timely completion. At present, even in
projects to qualify as an affordable • Minimum Alternate Tax (MAT) will affordable housing projects there
housing project. be applicable on such projects have been instances of projects not
• Providing two years time to being completed on time. To ensure
Qualifying criteria developers to pay tax on notional that this anomaly (of delay in timely
rental income on completed but completion) in the real estate is
• Flats/apartments with the carpet
unsold units removed, the government
area of 30 and 60 square metres
• Reducing the tenure for long-term implemented the Real Estate
– Also, the 30 square metres will
capital gains for affordable (Regulation and Development) Act
apply only in case of municipal
housing from three to two years (RERA), 2016 in full letter and spirit
limits of the four metro cities,
while for the rest of the • Reserve Bank of India (RBI) also from 1 May 2017. Among other things,
country, including the initiated series of measures to as per the provisions of this Act,
peripheral areas of metros, promote affordable housing in the players from the supply side will have
60 square metres will apply. country to complete their projects within the
time they specify to the relevant
• RBI defined affordable housing
Timely approval and Authority when applying for
loans as eligible under priority
registration of their housing project.
completion sector lending
Since housing projects where more
– A key • Banks allowed to issue long term
than eight apartments are developed
bonds (of minimum seven years
• The project approvals need to be for the purposes of selling will be
maturity) to finance loans to
received between June 2016 and covered under RERA, affordable
affordable housing. Such bonds
March 2019 housing projects will automatically
exempt from the computation of
• The project needs to be come under the purview of the new
adjusted net bank credit (ANBC).
completed within a period of five legislation, as they are typically large-
• RBI allowed the banks to provide
years from the date of getting the scale projects. This will further ensure
home loans up to 90 per cent for
approval that the players operating in the
properties that cost up to INR 0.3
affordable housing space complete
million
Granting infrastructure status their projects within the stipulated
• RBI modified the provisioning or time. To ensure that developers can
• Union Budget 2017–18 granted the risk-weighted norms for home
do this in an efficient manner, the
affordable housing segment an loans to make them cheaper. The
infrastructure status and thus met government needs to further make
standard asset provisioning on
a long-standing demand of the sure that there are processes in
housing loans lowered to 0.25 per
real estate sector. This initiative place that will provide approvals in an
cent from 0.4 per cent in June
gives banks more elbow room to efficient manner.
2017.
provide loans for houses in this
segment at a much more
competitive rate.

9
10
 Affordable Housing
Know your customer!

De ning
a ordable housing
The term 'affordability' is considered As per the ‘Affordable Housing in • In terms of income level for LIG,
as a relative term which has different Partnership’ scheme launched in annual household income should
meanings depending on the 2009 by the Ministry of Housing and range from ‘Rupees three lakhs to
stakeholders. However, 'Affordable Urban Poverty Alleviation, criterion for Rupees six lakhs’ (INR 0.3 - 0.6
Housing' has been categorised EWS and LIG was categorised in million)
based on certain criteria set by the terms of unit area and repayment
• In terms of unit area for LIG,
government to accommodate capability as defined in the following
carpet area of the dwelling unit
housing for every household in India. points:
should not exceed 60 sq m
According to the RICS report, 'Making • In terms of built-up area, EWS and
Affordable Housing Work in India', LIG category units should not
affordability in the context of urban exceed 300 sq ft and 500 sq ft,
housing would mean provision of respectively
‘adequate shelter’ on a sustained
• In terms of carpet area, EWS and
basis ensuring security of tenure
LIG category units should not
within the means of the common
exceed 25 sq m and 48 sq m,
urban household.
respectively
As per ‘Taskforce on promoting
• Monthly repayment obligation /
Affordable Housing’ with respect to
EMI for housing loan should not
LIG and EWS, area of the dwelling
exceed 30 per cent to 40 per
unit, income level and EMI repayment
cent of monthly income of the
capability were considered as a
buyer
benchmark for defining the
affordability as mentioned below: As per ‘Pradhan Mantri Awas Yojana’,
housing for all by 2022 scheme
• Carpet area of the dwelling unit
launched in 2015 by the Ministry of
should not exceed 300 sq ft for
Housing and Urban Poverty
EWS and 600 sq ft for LIG
Alleviation, criteria for EWS and LIG
• For both EWS and LIG, cost of the was categorised in terms of income
dwelling unit should not exceed level and unit area as defined below:
four times of the household's
• In terms of income level for EWS,
gross annual income
annual household income should
• For both EWS and LIG, monthly not exceed 'Rupees three lakhs'
repayment obligation/EMI should (0.3 million) per annum
not exceed 30 per cent of the • In terms of unit area for EWS,
household's gross monthly carpet area of the dwelling unit
income should not exceed 30 sq m

11
 Housing scenario
in India
India's urban housing shortage is housing segment. Over the last few
being primarily driven by the years, the government has
Economically Weaker Section (EWS) announced a series of measures to
and Lower Income Group (LIG) bring a fresh lease of life into this
categories. However, majority of real segment of the market.
estate private players have
As a supply-side intervention, the
traditionally focused on premium
government launched the 'Affordable
housing owing to its higher returns.
Housing in Partnership' under the
This has led to a build-up of huge
Pradhan Mantri Awas Yojana (Urban)
unsold inventory that has brought the
Programme. Under this mission, the
residential real estate market to a
government provides financial
near standstill.
assistance at the rate of INR 1.5 lakh
The impetus to the residential market per EWS house being built under
has come due to the government's these different partnerships.5
focused attention on the affordable Post the launch of the policy , right-
sizing and right-pricing of new
residential product and improving
FIGURE 3
home-buyer sentiment have led to a
LAUNCHES (TOP EIGHT CITIES) steady increase in supply. As per
Knight Frank Research, the
120,000
residential market of the top eight
100,000
cities in India – Mumbai, NCR,
80,000
Bangalore, Pune, Chennai,
60,000
Hyderabad, Kolkata and Ahmedabad
40,000 witnessed an infusion of 0.57 million
20,000 units in the since 2016. Also given the
- push in the affordable housing sector,
H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 the private sector players have
Launches (Units) participated in the development of
Source: Knight Frank Research the affordable housing programme,
which is visible from the latest set of
numbers that indicate a consistent
5
An affordable housing project can be a mix of houses for different categories (EWS, LIG, and HIG, etc.)
but it will be eligible for central assistance, if at least 35 per cent of the houses in the project are for
high share of less than INR 2.5 mn
EWS category and a single project has at least 250 houses. ticket size since 2016.

12
 Affordable Housing
Know your customer!

FIGURE 4

TICKET SIZE SPLIT OF LAUNCHED UNITS (2016 TO H1 2019)

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019

<2.5 mn 2.5-5 mn 5-7.5 mn 7.5-10 mn 10-20 mn >20 mn

13
 Knight Frank's criteria for • Cost of land – Provision of
incentives to the private
de ning a ordable housing developer for developing
affordable housing projects and
Affordable housing and low-cost
PPP in housing projects as
housing are the most talked about
implemented earlier by the
issues in the real estate sector these
government
days. However, there is a distinct
• Cost of construction –
difference between the two concepts.
Implementing construction
In the absence of an institutional
technology to reduce
rental housing market in India,
construction cost and using
affordable and low-cost housing

Demand
sustainable building material to
denotes ownership and not rental
increase the building
housing.
performance and to reduce the
operational cost
Low-cost housing generally refers to
cost-effective housing that relies on
‘low-cost technology’ that ensures
similar quality and durability as
• Financial support – In spite of
PMAY's CLSS, support from
financial institutes would be
- supply
compared to more commonly used
technologies. In India, low-cost
housing is primarily aimed at EWS
required for encouraging the first-
time homebuyers in EWS/LIG
sectors to avail housing loans by
gap
slashing the up-front payment
and LIG segment and the intervention
either through instalments or
& involvement of the government
through subvention schemes However, the supply intervention is a
authorities is likely to be prominent.
• For the purpose of supply far cry from the actual demand of the
The affordability of a household in analysis, the different categories sector. India's urban housing
each location is an interactive of affordable housing is defined shortage is being primarily driven by
outcome of the house price, as per the ticket size of a units: the EWS and LIG categories. An
household income, spending and analysis of the demand supply shows,
– Budget Housing: Ticket size
saving behaviour and other that on an average, nearly 0.6 million
less than INR 2.5 million
demographic factors like size of the homes are required every year in the
– Affordable Housing: Ticket
household. It is recognised that top eight cities versus a supply of 0.2
size between INR 2.5 to INR
affordability is relative to million units per year.
5.0 million
geographical area, time and income Notwithstanding the demand, there is
– Premium Affordable: Ticket a huge supply gap for urban housing
category. Thus, defining affordable
size between INR 5.0 to INR and more so in the EWS and LIG
housing continues to be a challenge
7.5 million
for major players of the real estate Category category, i.e. houses with
sector in India. – Premium: Ticket sizes greater ticket size less than INR 2.5 million.
than INR 7.5 million Whereas the demand in the EWS and
However, affordability can be defined LIG Category is around 3.4 Lakh
as provision of sustainable shelter homes, the supply is the category is
with basic amenities at an affordable only 44,000 thousand homes only. .
price whilst affordability can be
achieved by tweaking the factors Currently, the biggest factor affecting
affecting the same: sales is the unaffordability of the
homebuyers. After the launch of the

14
 Affordable Housing
Know your customer!

FIGURE 5

TOP EIGHT CITIES HOUSING TOP EIGHT CITIES HOUSING

DEMAND CONCENTRATION SUPPLY CONCENTRATION
~600,000 units ~200,000 units

56%
22%

has received a very good response. In

24% 34%
the MMR, affordable housing projects
have already started taking shape.
XRBIA Chembur Central by XRBIA
5% and Crystal Group in Mumbai is one
20%
such example. Ruparel Realty's
15%
affordable housing project in
24% Kandivali West is another example.

Multi-award winning Provident

Sunworth, one of India's largest
<2.5 mn 2.5-5 mn 5-7.5 mn >7.5 mn stand-alone affordable home
projects involving a scale of 6,000

affordable housing policy, the first and metro cities and in urban homes is a prime example of creating

foremost step that the industry has agglomerations. However, an a socio-economic fabric of

taken is to make houses more affordable housing project is a infrastructure for consumers in the

affordable. Developers have re- volume game and the major mid-income segment. The

looked at the pricing, size and challenge for the Government of India affordability tag is not diminished by

configuration of residential units in will be to facilitate in providing any quality of life enhancing

their planned developments. The suitable land parcels, that too at a amenities including swimming pools,

government must further support this competitive price for the project to be clubhouses, badminton and tennis

move with proactive initiatives to financially viable. It also goes without courts. Provident Park Square, off

develop peripheral locations with saying, the importance of having Kankapura Road, Bengaluru is

required connectivity and systems in place that will help in another example that packs all

infrastructure. getting approvals in an efficient and premium amenities desired for a

timely manner. luxurious lifestyle at a comfortable

As result of the push towards price. Provident is committed to
affordable housing, a structural shift Through a field survey in the Mumbai continue with the vision of providing
will be witnessed from the supply Metropolitan Region (MMR), Delhi affordable luxury homes, keeping in
side. One can expect affordable NCR and Bengaluru, it was observed line with Budget 2017's impetus to
housing projects to come up within that the affordable housing scheme Affordable Housing.

15
 Key locations: A ordable housing

MMR
Key locations:
Palghar, Boisar, Shahapur, Neral,
Vangani, Dronagiri, Badlapur,
Ambernath, Dombivali, Panvel
Key developers:
Tata Value Homes, HDIL, Lodha
Group, Runwal Group, Nirmal
Lifestyle, Godrej Properties,
Mahindra Lifespaces
Key projects:
New Haven, Paradise City, Nirmal
Lifestyle City, Pallava City,
Happinest, Ramrajya

16
 Affordable Housing
Know your customer!

Pune • Faridabad: Palwal, Sector 81, Key projects:

82, 85, 87, 89 Kenworth Homes, Obili Smart
Key locations:
Key developers: Homes, Virgin County, Arcadia,
Wagholi, Wakad, Moshi, Hadapsar,
Supertech Limited, Amrapali Metropolis
Chakan, Hinjewadi, Kharadi, Undri,
Group, Jaypee, Gaursons India,
Talegaon Dabhade
Mahagun, DLF Bengaluru
Key developers:
Key projects: Key locations:
Magarpatta City, Xrbia Developer,
Kosmos, Eco Village, Cape Town, Mysore Road, Yelahanka,
Kolte Patil Developers, Kumar
My Woods, Gulmohar Woods, Red Whitefield, DevanahaIIi,
Properties, Paranjape Schemes
Apple Homez, Tierea, Basera, Thanisandra, Electronic City,
Key projects:
Global Heights Chandapura, Kumbalgodu,
Megapolis, XRBIA Hinjewadi, Kanakapura Road, Magadi Road
Aapla Ghar, Lodha Belmondo, Kolkata Key developers:
Godrej Infinity
Key locations: Provident Housing, Tata Housing,
Rajarhat, Maheshtala, Barasat Shriram Properties, GM Infinite
Ahmedabad
Hatisala, Madhyamgram, Baruipur, Dwelling, New Haven
Key locations:
Sonarpur, Uttarpara, Howrah, Key projects:
Naroda, Changodar, Narol, Narendrapur, Garia Provident Sunwort, Shriram
Changodar, Sarkhej Road, Vadsar,
Key developers: Smrithi, Prestige Falcon, Welworth
Shella Narol, Jagatpur, Bavla
Hiland Group (Kolkata), Siddha City, DLF Woodland Heights, Rising
Key developers: City
Group, Srijan Realty, Shapoorji
TATA Housing, Godrej Properties, Pallonji, Shriram Properties, Merlin
Safal Construction (BSafal), Safal Group, Magnolia Infrastructure Chennai
Construction (HN Safal), Savvy Development, Dharitri Infraventure, Key locations:
Infrastructures, Adani Group PS Group
Old Mahabalipuram Road,
Key projects: Key projects: Sriperumbudur, Kelambakkam,
Swaminarayan Park, Aakash Hiland Greens, Dharitri Universia Oragadam, Pudupakkam,
Residency, Godrej Garden City- Shriram Grand City, Chander Hut, Perambur, East Coast Road,
Affordable Housing Scheme, Sanhita, Genexx Valley, Guduvancheri
Atlantis Park, Kesar City, Shiv Shukhobrishti, Greenfield City Key developers:
Ugati City
VGN Property Developers,
Hyderabad Unitech, Mahindra Lifespaces,
NCR
Key locations: Amarprakash Group, Provident
Key locations: Housing, Akshaya Homes
Miyapur, Manikonda, Kukatpally,
• Gurugram: Dharuhera, Sohna Rajendra Nagar, Gachibowli, Key projects:
Road, Manesar Nallagandla, Chandanagar, Mahindra World City, Today, Cosmo
• Greater Noida - Knowledge Nizampet, Kondapur, Kompally City, Lotus Pond, Uni Homes
Park-5, Yamuna Expressway Key developers:
• Noida: Sector 134, 151, 137, 129 Provident Housing, My Home
• Ghaziabad: NH-24, Raj Nagar Constructions, Aparna
Extension, Indraprastha Yojna Constructions and Estates,
Janpriya Group, Obili Infrastructure

17
 Part II

Customer
insight
Over the years, the real estate North
market for variety of reasons has
• NCR
become more customer driven. End
users have emerged as potential • Chandigarh
buyers of affordable housing • Jaipur
segment and thus their role as
• Lucknow
purchase decision makers is very
important for the success of any
East
project. Measuring their satisfaction
or dissatisfaction have been • Bhubaneshwar
affecting the sales of affordable • Ranchi
housing projects. For example, if • Kolkata
existing customers propagate good
words about their homes/projects
West
among peers, their
recommendation immediately • Mumbai
catches attention of others. On the • Pune
other hand, bad words may fail to • Ahmedabad
attract customers towards the
• Indore
project. Therefore, measuring
customers satisfaction/
South
dissatisfaction are extremely crucial.
• Bengaluru
Knight Frank conducted an
• Chennai
extensive primary research exercise
across 15 Tier 1 and Tier 2 cities in • Hyderabad
India. • Kochi
• Coimbatore
The details of the cities covered
from each of the zones is as follows:

18
 Affordable Housing
Know your customer!

FIGURE 6

Chandigarh

NCR

Jaipur
Lucknow

Ranchi
Ahmedabad

Kolkata

Indore

Bhubneshwar
Mumbai
Pune

Hyderabad

Bengaluru Chennai

Coimbatore
Kochi

19
The key purpose of the research was The key target segments for the Interviews with Purchasers and
as follows: primary interactions were Purchasers Intenders were equally spread across
and Intenders of affordable housing various types/categories of
• Customer responses on various
projects, i.e. affordable housing projects, which
factors relating to affordable
are as follows:
housing • End users who have made
• Choices, preferences and need purchases and are residents of • Absolute Budget Housing
gaps of customers affordable residential housing Cost of the house/apartment is
projects less than INR 2 million
• Perception towards dominant
developer brands in affordable • Intenders of affordable housing • Value Housing
housing projects, i.e. people who intend to Cost of the house/apartment is
buy into affordable housing between INR 2 - 3.5 million
The engagement methods primarily
project within 1 to 1.5 years and
used were: • Premium Affordable Housing
are already interacting with
Cost of the house/apartment is
i. Focus Group Discussions (FGDs) multiple affordable housing
between INR 3.5 - 6 million
– Qualitative Research brands for purchase

ii. Structured Questionnaires based

interactions – Quantitative
Research

Pro le of the people surveyed

FIGURE 7

Gender Occupation

27%

79% Male
16% 16%
14%
12%

21%Female
8%
7%
Self employed
professional

professional

non-professional
Salaried

Salaried

- Trading

- Retail
- Manufacturing
Business

Business

Business
Blue collar worker
Salaried

20
 Affordable Housing
Know your customer!

Age

23-25 years 26-35 years 36-45 years 46-55 years 56-65 years 66+ years

6% 45% 33% 13% 2% 1%

Current residence and need gaps

FIGURE 8 FIGURE 9

Details of current residence Type of current residence

Ownership of
13%
house makes
me feel
secured
65%

55% My own house is 26%

32% my own long-
term asset

3%
4%

2%
Owned Leased Parental Apartment/Flat Builder floor Independent House
Row House Gated Villa

Source: Knight Frank India Primary Research Source: Knight Frank India Primary Research

It is observed that more than 50 per cent people in India In India, ‘Apartment/Flat’ is the most popular type of residence
live in their own houses, while almost 30 per cent people followed by ‘Independent House’ concept. Apartment/flat has
live on rent. Living in an own house gives a sense of become deep rooted, at least in bigger cities, which is an
security and content to people as against living in important parameter of affordability, while independent
someone else's house. houses are costly and prevalent only in very few cities in the
country. Builder floor, gated villa, row houses are not so
common in India as compared to other countries.

21
Need gaps in current residence
While engaging with respondents, the following factors were highlighted as major
gaps in terms of their requirements in their current residence.

FIGURE 10

52%

43% 43% 43%

41% 41% 40% 40%

All India

Need gaps Parking Adequate Playground/ Availability Distance The area is Space Water
space security Children's of public from congested constraint/ shortage
play area transport rail/metro Shortage of
station space

At least Security There I just need

parking for should be should be some space
one car is so good CCTV and peace
needed that I can camera of mind
get a good along with
night sleep Security
Guard

Source: Knight Frank India Primary Research

Parking space continues to be a Other missing links with respect to current residence
chronic problem on the residential
Some of the other concerns shared by them with respect to current residence are:
front across India along with security
that also comes out as a major
concern. People feel that there is a Distance from children's Distance from the Distance from market/
need for parking facility for at least school/college workplace shopping centres
one car and open space is required in
the residence which will lead to a
Proper access road Power cuts Distance from airport
sense of comfort at home. Also, they
feel that adequate security measures
should be undertaken to ensure Structure/layout Distance from hospitals, Lack of proper drainage
safety of the residents. of the residence malls, multiplexes

22
 Affordable Housing
Know your customer!

Purchase drivers and

considerations
According to homebuyers and intenders self-use, better
location and expanding family size, amongst others, are the
major drivers for their decision to buy houses.

More than 50 per cent people want to own a house for self-
use indicating growing need for 'independence' and ‘long-
term security’. ‘Opportunity to move to a better location for
access to better facilities’ and ‘increase in family size in
near future' are other major reasons for purchasing
affordable housing in India.

Purchase drivers

FIGURE 11

53%
48%
44%

37%
34%

23%
19% 18%

All India

Need gaps Keen to To move Increase To create To upgrade To move To get a taste Marriage
have own to a better in family an asset my house out of a of lifestyle
house for location size in joint family within gated
self-use for better near future community
facilities

More than 80 It is a 93 per cent It is a ‘Marriage’ as a

per cent people stepping people long-term reason was
in Hyderabad stone to in Lucknow asset which more popular
and Jaipur finer living mention can be among the
mention that expected sold later purchase
they are keen increase intenders of
to have an own in family as affordable
house reason for housing as
for self-use purchase compared to
the purchasers
Source: Knight Frank India Primary Research

23
 Purchase considerations

However, while at the time of purchase

homebuyers tend to put cost as the top
most consideration followed by safety and
security. Homebuyers and intenders are
also categorical that cost-related
transparency like actual cost,
maintenance charges, etc. should be
mentioned right in the beginning to avoid
complications later on.

FIGURE 12

Considerations for purchase - All India

80%

71%

65%
62%

53%

Cost Safety Proximity Vehicle Presence

of the and to office/ parking of civic
property Security workplace infra-
structure
such as
roads,
water
The cost should supply
not be a burden
and there should
be no hidden
charge

Source: Knight Frank India Primary Research

24
 Affordable Housing
Know your customer!

Other missing links with respect to current residence

Availability of Proximity to Playground and related

public transport children's school infrastructure

Distance from market/ Proximity to local/ Proximity to extended

shopping centres neighbourhood markets family/relatives

Gardens and parks Proximity to Distance from the nearest

hospitals and healthcare metro station / rail station

Anticipated growth of the Proximity to multiplexes, Location due to

locality / returns on malls, etc. premiumness,
investment connectivity, etc.

Distance from the airport Other families who are

Presence of amenities such
staying / neighbourhood
as swimming pool, etc.
profile

Need gaps in uencing purchase considerations

Interestingly, a close linkage has been

FIGURE 13
observed wherein need gaps
mentioned by most of the people in
their current residence emerge as
Water top considerations too while looking
shortage,
Parking Adequate area is at the affordable housing property.
space security congested

Top need gaps in current residence

Top considerations for purchase of
residence

Vehicle Safety Presence

parking and of civic
Security infra-
structure
such as
roads, water
supply

25
Apprehensions while selecting an a ordable housing project

Safety of the residents is the top ‘Construction quality’ and ‘Timely affordable housing property across
most apprehension that people have delivery’ come out as other major most of India.
while choosing a place to stay. apprehensions while selecting

FIGURE 14

73% 71%
65% 64% 64%
56%
49%

23%

All India

Apprehensions Safety Quality of Timely delivery Reliability of Return on Quality of Maintenance Other owners
and construction of property the developer investment electrical, of property who would
Security bathroom occupy the
fittings used building

Do not want I can wait for

anything a maximum
China-made period of six
months for
possession
of property

Brand awareness, TABLE 3

perception and Unaided awareness Aided with the help of a list

of brands
satisfaction TOP OF MIND AWARENESS SPONTANEOUS AWARENESS AIDED AWARENESS:
(TOM): (Spontaneous): Here, a person is aided with a
Human expressions towards This is the first brand The bunch of brands list of brands by the
mentioned by a person mentioned after the first brand interviewer and the ones that
brand familiarity
when multiple names come are the ones that a person is he is aware of (other than the
to mind spontaneously aware of ones spontaneously
When an interviewer questions an mentioned) form a part of the
interviewee about brands, then the aided awareness
expression towards brand familiarity Source: Knight Frank India Primary Research
of the interviewee can be categorised
as follows: This study has been able to identify affordable housing segment.
135 brands through the eyes of However, only TOP brands have been
home-buying consumers in the considered for this analysis.

26
 Affordable Housing
Know your customer!

Top brands – All India

FIGURE 15

32%

31%

25%
24%
23%
20%

20%

18%

18%
15%

11%
10%
9%
5%
5%

5%
5%

5%

4%

3%
3%
3%

3%
2%

2%

2%
1%

1%
1%
Ashiana ATS Godrej Lodha Mahindra Prestige Provident PS Signature TATA Value
Brands Group Homekraft Properties Group Lifespaces Group Housing Group Global Homes

TOM Spontaneous Aided

I think big brands Provident Housing provides Tata is a well-known

are expensive good homes at affordable brand. All facilities in
hence prefer to prices. Their prices do not the home will be
interact with the differ by area. They are assured and it will be
local players. reliable. value for money.

Source: Knight Frank India Primary Research

At a national level, Tata Value Homes has the highest level of recall and visibility.

Reliability and trustworthiness – Leading to higher conversion rate

FIGURE 16

24%
Provident Housing
22%

provides good homes at

affordable prices. They are
reliable. Almost everybody 17%
15%

who interacts with them

14%

14%

ends up buying.
10%
9%
9%

9%

8%
7%

6%

6%
6%
5%

4%
4%

2%
1%

Ashiana ATS Godrej Lodha Mahindra Prestige Provident PS Signature TATA Value
Brands Group Homekraft Properties Group Lifespaces Group Housing Group Global Homes

Brand interaction for purchase Bought/ Strongly consider

Source: Knight Frank India Primary Research

Provident Housing though not as strong position as a reliable and generic and household names like
visible as generic brands like Tata, trustworthy brand. Interestingly, there Tata, Mahindra, Godrej, etc. but have
Mahindra and Godrej, it holds a are many brands which are not also made a mark in the minds of
consumers of affordable housing.

27
Key in uencing parameters while purchasing a ordable housing

FIGURE 17

77%
72%

56% 56% 56% 55% 55%

49%
44%
38% 36%

Rank 1 2 3 4 5 6 7 8 9 10 11

All India Product Brand Brand Quality of Transparency Features Delivery No. of Pre-sales Regulatory Assistance
quality name visibility completed and clarity and track completed service compliance by developer
projects in pricing amenities record projects such as to seek
provided RERA, etc. loans
The product quality is I go by
revealed by the brand reviews
name. If the brand and decide
name is good, it is whether to The mention of features/amenities, delivery track
understood that they go with the record and pre-sales service is significantly higher
have used good quality brand or among purchasers of affordable housing as
products. not. compared to intenders.

Source: Knight Frank India Primary Research

At a national level, ‘Product Important factors considered for purchase and corresponding
quality’ and ‘Brand name’ are brand scoring (among purchasers of a ordable housing) – All India
the prime factors considered
while selecting affordable
TABLE 4
housing. Other prime factors
related to visibility of the brand, Ashiana ATS Godrej Lodha
Group Homekraft Properties Group
past experience, project
amenities and pricing are also Brand name 71 67 93 50
important. Delivery track record 29 56 74 33
Brand visibility 88 61 63 33
Regulatory compliance 24 39 19 50
Product quality 100 70 74 67
Quality of completed projects 65 84 67 50
Features and amenities provided 47 74 70 33
No. of completed projects 29 47 56 33
Transparency and clarity in pricing 24 58 44 67
Pre-sales service 6 37 44 50
Assistance by developer to seek loans - 49 37 33

Source: Knight Frank India Primary Research

28
 Affordable Housing
Know your customer!

Mahindra Prestige Provident PS Signature TATA Value Tata Value Homes, Godrej Properties
Lifespaces Group Housing Group Global Homes
and Mahindra Lifespaces have high
93 80 76 54 100 90 brand awareness, as well as visibility,
considering their presence across
80 47 92 46 17 57
many business and product verticals
73 60 64 54 17 66
beyond real estate.
7 40 40 46 50 36
While brand awareness is an
93 67 76 100 83 80
important parameter in all consumer
73 33 68 8 83 48 products (housing not being an
87 67 76 46 50 57 exception), delivery track record
67 40 80 100 50 56 which is an important parameter
exclusive to real estate is very strong
80 33 64 8 50 49
for Provident Housing as compared
60 33 84 92 - 56 to other brands.
67 27 56 - 17 48

29
Overall customer satisfaction with brands
– All India

To understand the overall customer crucial factors, such as lifestyle of the Customer satisfaction score
satisfaction level, Knight Frank has targeted population, preferences and
TABLE 5
interacted with purchasers of choices of the end users and
affordable housing projects across corresponding customer satisfaction,
cities. These homebuyers were end residential environment, etc. 9.5 Provident Housing
users who had purchased the generally take a back seat. However,
property of the brand and over a period of time the market has
experienced living in their respective been gradually evolving in which
properties. These customers have affordable housing is more linked with 9.5 Mahindra Lifespaces
also interacted with at least 2-3 other meeting the aspirations of India's
brands before purchasing their home. growing middle class than only driven
Therefore, they are in a position to by cost.
assess the performances of these
9.4 PS Group
Consequently, the intensity of
brands right from pre-sales to post-
competition among the suppliers has
sales stages on various parameters
sharpened, which is quite evident
already analysed above. 9.3 Prestige Group
from the mean satisfaction scores of
Reliability, trustworthiness, brand all the above-mentioned brands.
awareness and visibility as well as Developers who have taken a more
past track record have played a very holistic approach while developing 9.0 Lodha Group
important role in deriving the brand their affordable housing projects have
satisfaction score by the scored high on the 'Quality of Life'
homebuyers. index by blending socio-economic
infrastructure facilities such as 9.0 ATS Homekraft
Higher satisfaction scores indicate
schools, offices, shopping and leisure
that brands have met the need and
activities within the projects. Top
expectation of the customers.
brands like Provident Housing,
Mahindra Lifespaces, PS Group and 9.0 Signature Global
Due to the recent policy push by the
Prestige Group have recognised the
government, as well as rising demand
changing expectations of the
in the market place, many developers
customers and thus recorded a
have either already forayed into the 8.6 TATA Value Homes
higher satisfaction score among the
‘Affordable Housing’ sector or are
end users.
seriously exploring the possibility of
entering into this segment of the real
estate sector. 8.4 Godrej Properties

Till date the typical approach towards

any affordable housing project has
always focussed only on one key 8.0 Ashiana Group
element – cost reduction. Other
Mean satisfaction score

30
 Affordable Housing
Know your customer!

Reading customers mind:

Extremely critical for future sales

Real Estate market is changing for a Therefore, reading the customers’ developed expertise in creating
variety of reasons. It is increasingly minds will be key to future success customer centric market research-
evident that the market is becoming and there are various methods and based products like those mentioned
more customer oriented. Actual end tools to track customer behaviour on above. Such studies help in
users have started playing a key role a regular basis. Market research measuring customers minds deeply
in the marketplace than ever before. based products are available to track and create customers insights.
Customers have been increasingly and gauge customers at regular Knight Frank India has in-house
taking purchase decisions based on intervals. Some of them are: expertise and have been undertaking
various factors like product quality, such studies on regular basis.
price, brand credibility, features and Customers Satisfaction Mr. Sugata Sarkar, with long
amenities, services offered by the Analysis – for measuring experience in Market Research, is
developers etc. Even post purchase satisfaction/ dissatisfaction of leading the team. His contact details
issues like post-sales services existing customers and are as under:
including execution of promised reasons thereof.
features and amenities are Sugata Sarkar
influencing future sales and thus Measuring Net Promoter
Senior Director
businesses of developers. Score (NPS) – to understand
Consulting & Market Research
whether existing customers
[email protected]
Such transformation will continue are promoting the brand /
+91 (022) 6745 0101 / 99992 66076
with customers becoming more developers among their peer
discerning and intensify the market group.
as end users start to see real estate
as a service, contrary to the hitherto Lost Customer Analysis – for
practice. In this context it will be measuring satisfaction/
extremely important for developers to dissatisfaction of lost
understand the thought process of customers and reasons
their existing customers (both pre thereof.
and post sales levels) as well as the
lost customers. Satisfaction and Conducting research-based studies
dissatisfaction of customers will will not only influence businesses
influence the future sales of directly in terms of sales
properties significantly. Whether augmentation, but also help in
existing customers are happy or strengthening brand perception,
unhappy and corresponding reasons, improvement of services and reasons
whether they are promoting the brand for losing potential customers to
of their developers among their peer competitors. Interactions with
group, why customers have not customers can be conducted through
bought a property will help various methods like online,
developers in designing future telephonic and face-to-face.
strategies and making corrective
Realising this fundamental change of
actions.
the market, Knight Frank India has

31
About RICS: About Knight Frank:

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