Analysis of the residential property rental market in India
The relevance of research
Currently, many markets have felt the impact of the pandemic and the onset of the economic crisis.
The most significant difference between the current crisis and the previous ones is the introduction of quarantine and self-isolation, in connection with which some consumers switched to saving mode, including on renting residential real estate.
Purpose of the study
Analysis of the state of the residential property rental market, assessment of the market size, analysis of competitors, as well as identification of factors affecting the residential property rental market
Content
Part 1. An overview of the Indian residential rental market
1.1. Definition and Characteristics of the Indian Residential Rental Market
1.2. Dynamics of the volume of the Indian residential rental market, 2015-2019
1.3. Market structure by type of service provided in India
1.4. Structure of the residential property rental market by Union Territories
1.5. Assessment of current trends and development prospects of the studied market
1.6. Assessment of factors affecting the market
1.7. Analysis of sectoral indicators of financial and economic activity
Part 2. Competitive Analysis in the Residential Rental Market in India
2.1. Major players in the market
2.2. Market shares of the largest competitors
2.3. Profiles of major players
Part 3. Residential Rental Consumption Analysis
3.1. Estimation of per capita residential real estate rental consumption
3.2. Market Saturation and Estimated Market Potential in India
3.3. Description of consumer preferences
3.4. Price analysis
Part 4. Assessment of factors of investment attractiveness of the market
Part 5. Forecast for the development of the residential property rental market until 2024
Part 6. Conclusions on the prospects of creating enterprises in the study area and recommendations for current market operators
Research excerpt
Part 1. An overview of the Indian residential rental market
1.1. Definition and Characteristics of the Indian Residential Rental Market
Consider the characteristics and features of the residential property rental market in the Indian market.
A lease is a form of property contract in which property is transferred for temporary possession and use to a tenant for rent. A synonym for the word ""rent"" is a property lease. The word ""rent"" itself comes from the Latin arrendare - to rent.
The main reasons for renting residential property are:
- Inability to buy own housing (…%);
- Desire to live separately from parents/relatives (…%);
- Moving for professional/family reasons (closer to work/school/relatives) (…%);
- Improving the quality/level of amenities/area of housing (…%).
The residential property rental market in India consists of commercial (…% of the market) and non-commercial segment (…% of the market). The non-commercial segment includes social rent and rent from relatives and friends without payment for services.
In the commercial residential real estate rental market, the main lessor is an individual – …%, and only …% - legal entities. Most of the rental housing is in the shadow sector of the Indian economy. Apartments are often rented out without a contract, and the terms of the lease do not protect the interests of tenants.
Diagram 2. Structure of the market for commercial rental of residential real estate by types of landlords, %
1.2. Dynamics of the volume of the Indian residential rental market, 2015-2019
There is no official data on the size of the residential property rental market in India. It is quite difficult to estimate how many apartments are currently being rented out, because almost the entire segment of the market is in the shade. According to the data of the Ministry of Construction, in the study period, the share of rented housing was …% of the total housing stock.
According to GidMarket analysts based on data from Rosstat and the Ministry of Construction, during 2015-2019. The residential real estate rental market in India was declining in monetary terms, there was a fall within …% annually. At the end of 2019, the market volume amounted to … billion Rs., which is …% less than in 2015. The average annual growth rate in the industry for 2015-2019. amounted to “minus” …%.
Diagram 3. Dynamics of the volume of the residential property rental market in India for the period 2015-2019 in monetary terms, billion Rs.
1.3. Market structure by type of service provided in India
In the structure of leased residential real estate, the largest share (about …%) is occupied by apartments in high-rise buildings. Private houses and townhouses occupy …% and …% respectively in the residential real estate rental market.
Diagram 6. Structure of the residential property rental market by type, %
1.4. Structure of the residential property rental market by Union Territories
The structure of the residential real estate rental market in the context of federal districts is considered in relation to the services provided by companies. Thus, more than half of the market falls on the Central Union Territories (…%). The second place is occupied by the North-Western Union Territories (…%), the third place in terms of the volume of these services is occupied by the Urals Union Territories (…%). Next comes the Volga Union Territories with a share of …%. The share of other federal districts together accounts for about …% of the market.
Diagram 8. The structure of the provision of services in the field of rental of residential real estate in India by Union Territories, %
1.5. Assessment of current trends and development prospects of the studied market
Consider the main trends in the residential real estate rental market.
Currently, no more than …% of the total housing stock is rented in India, which is by … p.p. lower than in 2017
Renting until retirement is a strategy typical of the younger generation in Western markets. In India, this way of solving housing problems is an indicator of insolvency in the issue of acquiring one's own housing.
Maria Zhukova, Managing Director of Miel-Arenda, is also sure that renting in India has always been and remains a temporary solution to housing problems on the way to buying an apartment.
However, there is a generational change going on. The average age of a tenant is 32,9 years (…% - up to 35 years, including …% - up to 25 years), that is, the generation that is commonly called millennials today. One of his features is a skeptical attitude towards property. They value more the convenience that comes with being close to work and the freedom from mortgages that allows them to travel the world. Also now generation Z is becoming solvent, i.e. those born in the 2000s
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1.6. Assessment of factors affecting the market
Social (demographic)
During 2012-2018 India's population is on the rise. The increase in the population in 2015 was not only due to migration and natural increase, but also due to the formation of two new states of the Federation - the Republic of Crimea and the city of Sevastopol.
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Economic
GDP is a macroeconomic indicator that reflects the market value of all final goods and services (that is, intended for direct consumption) produced per year in all sectors of the economy on the territory of the state for consumption, export and accumulation, regardless of the nationality of the factors of production used.
Chart 12. Dynamics of India's GDP, 2015-2020 (Jan.-Sept.),% of the previous year, trillion Rs.
The fall in India's GDP in September 2020 is estimated at …% in annual terms after declining by …% in August, by …% in July. The recovery in September was supported by a gradual improvement in the indicators of the mining complex and the transport complex.
technological
The location of the office does not matter much, because. meeting with clients takes place mainly at the objects that the client inspects. And the office is designed for the preparation and signing of documents. In this regard, there is no need to choose an office in the city center.
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Political
The legal aspects arising from the rental of residential premises are regulated by Chapter 35 of the Civil Code of India. A lease agreement can only be concluded between the owner (or his representative) and a citizen, that is, an individual.
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Table 2. STEP analysis of factors influencing the residential rental market
1.7. Analysis of sectoral indicators of financial and economic activity
Consider the financial and economic indicators of the residential property rental market for 2015-2019.
Gross margin is gross profit divided by sales revenue (excluding excise taxes and VAT). Gross margin shows how much gross profit falls on a unit of revenue. Gross profitability serves as an assessment of the economic efficiency of an enterprise, which reflects the rational use of labor, material, monetary and other resources.
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Return on profit
Profitability indicator during 2015-2019 was oscillatory, leaving in 2015, 2017 and 2018 in the negative zone. At the end of 2019, the value of the indicator is …%, having increased compared to 2018 by … p.p. Regarding profitability in all industries of India, the indicators in 2019 are higher than the indicators of the Indian economy as a whole by … p.p.
Diagram 15. Profitability of profit before tax (profit of the reporting period) in the sphere of rental of residential real estate in comparison with all sectors of the Indian economy, 2015-2019, %
Current liquidity
Values of current liquidity in the industry in 2015-2019 were in the range of ... times. The higher the value of the current liquidity ratio, the higher the liquidity of the company's assets. The value of the coefficient below ""1"" indicates the likely difficulties in repaying the organization of its current liabilities. Too high current ratio (above “2”) is also undesirable, since it may reflect insufficiently efficient use of current assets or short-term financing.
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Part 2. Competitive Analysis in the Residential Rental Market in India
2.1. Major players in the market
The state's efforts to bring the apartment rental business out of the shadows and create a civilized rental housing market have not yet led to noticeable results, and therefore, large business is skeptical about the prospects of the segment.
At the moment, the official, legal market player in the residential real estate rental market in India is Dom.India JSC. Note that the company's market share is …%. Olga Shirokova, director of the consulting and analytics department at Knight Frank, emphasizes that at present the share of organized rental housing in India, which, in addition to apartments purchased by Dom.India, includes apart-hotels (service apartments), such as YE'S or Vertical, is critical is small and does not exceed …%.
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2.2. Market shares of the largest competitors
As of 2019, the market is represented mainly by private individuals. JSC “DOM.India” accounts for about …% of the market.
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Part 3. Residential Rental Consumption Analysis
3.1. Estimation of per capita residential real estate rental consumption
In 2019, the volume of rental of residential real estate per capita amounted to … Rs./person, which is …% less than in 2018 and …% less than in 2014. The average annual growth rate of the indicator value in 2015-2019 amounted to “minus” …%.
Diagram 19. The volume of consumption of residential property rental per capita, 2014-2019, Rs./person
3.2. Market Saturation and Estimated Market Potential in India
In terms of the life cycle, the residential rental market is in the stage of maturity.
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List of diagrams
Diagram 1. Dynamics of the cinema market volume in real terms, 2015-2019, units
Diagram 2. Dynamics of the cinema market volume in value terms, 2015-2019, billion Rs.
Diagram 3. Structure of the cinema market by type in 2019, %
Diagram 4. Structure of the cinema market in India by Union Territories in 2015-2020, %
Chart 5. Dynamics of India's GDP, 2012-2019, Q1, Q2, Q3 2020, % to the corresponding period of the previous year
Chart 6. Monthly dynamics of the US dollar against the rupee, 2015-2019, Jan-Nov 2020, Rs. for 1 US dollar.
Diagram 7. Population dynamics in India, as of 01 Jan. 2012-2020, million people
Diagram 8. Dynamics of real money income of the population of India, 2012-2019, Q1, Q2 and 3 sq. 2020 % to the corresponding period of the previous year
Diagram 9. Dynamics of the consumer confidence index, 2017-2019, Q1, Q2, Q3 2020, quarterly, %
Chart 10. Share of the population with access to digital cinema services in India, in % of the total population in 2015-2019
Diagram 11. Total revenue of online video services in India in 2016-2019, million Rs.
Diagram 12. Profitability before tax (profit of the reporting period) in the field of cinema in comparison with all sectors of the Indian economy, 2015-2019, %
Diagram 13. Current liquidity (total coverage) for the film industry, 2015-2019, times
Chart 14. Business activity (average receivables turnover period) in the film industry, 2015-2019, days days
Diagram 15. Financial stability (security of own working capital) in the field of cinema in comparison with all sectors of the Indian economy, 2015-2019, %
Diagram 16. Shares of the largest competitors in the cinema market in 2019, % 27
Diagram 17. Volume of cinema consumption per capita, 2015-2019, Rs./person
Chart 18. Likely ways or places to spend free time, 2019, %
Chart 19. Forecast of the number of Indian films released in 2020-2024, units
Diagram 20. Forecast of the cinema market volume (revenue of filmmakers) in 2020-2024, billion Rs.
List of tables
Table 1. Dynamics of films released with government support in 2015-2019, units rev.
Table 2. The structure of the cinema market (films produced with the support of the Ministry of Culture) in India by category in 2019, units, %
Table 3. Overseas distribution of Indian films, units rev.
Table 4. Main indicators of Indian film distribution in 2015-2019, units rev.
Table 5. Dynamics of urban and rural population in India, 2014-2019, million people, %
Table 6. Dynamics of the main indicators of the provision of the population with film screening infrastructure in India in 2015-2019, units rev.
Table 7. The volume of financing of film production in India at the expense of the state budget, million Rs.
Table 8. STEP analysis of factors affecting the film market
Table 9. Gross margin of the film industry in comparison with all sectors of the Indian economy, 2015-2019, %
Table 10. Absolute liquidity of the film industry in comparison with all sectors of the Indian economy, 2015-2019, times
Table 11. The main companies participating in the film market in 2019, units rev.
Table 12. Comparison of indicators in the TOP-5 European countries by cinema attendance in 2018-2019, units rev.
Table 13. Frequency of cinema visits by viewers in 2019, %
Table 14. Audience satisfaction from watching movies in 2019, units rev.
Table 15. Average film production budget in India in 2015-2019, million Rs.
Table 16. Consumer price indices in the cinema market in India in 2015-2020, %
Table 17. Average prices on the cinema market in the Union Territories in 2015-2020, Rs./ticket
Table 18. Assessment of factors of investment attractiveness of the cinema market
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