Millennials flock to ‘Ready-To-Move-In’ properties for high rental yields

India's real estate sector has witnessed a major transformation post-Covid pandemic with more millennials purchasing Ready to Move-In (RTMI) houses for high rental yields across metro cities.

While the real estate sector is grappling with an inventory crunch in the RTMI, proptech unicorn NoBroker said that demand for such properties has surged as it involves less interior cost and almost negligible waiting time. "People who want to settle quick and don't want to wait too long in taking possession like 3-4 years are the ones that are causing the increase in demand of the resale properties," Saurabh Garg, Co-founder & Chief Business Officer, NoBroker.com said.

According to Lucy Roychoudhury, CEO Runwal Bliss, the preference for ‘Ready to Move-In’ homes in key Indian cities among millennials and young professionals has reshaped the real estate market. NoBroker's 2023 annual survey revealed that 86% of landlords are looking to buy a second property to earn a steady income from it due to high rental inflation.

Millennials have majorly shown interest in RTMI houses because the high rent yields in such properties will help in their monthly EMIs, bills other expenses, Garg said.

"Young professionals, working in IT sectors or government jobs value the reduced risks associated with ready-to-move homes, such as construction delays. Additionally, the avoidance of rental expenses during construction, coupled with the stability of dual-income households, makes ready-to-move options more feasible", Roychoudhury said.

Dhaval Ajmera, Director, Ajmera Realty & Infra India Ltd stated that the demand for such properties can be primarily attributed to "hassle-free homeownership with no construction delays".

Anuj Puri, Chairman – ANAROCK Group said, "Post the pandemic many millennials also preferred to buy over rent as living in their own homes gave them a sense of security. Thus, gradually we saw the ready unsold stock across cities decline post the pandemic and presently we have only limited ready stock available for sale. Besides security, buying a home became a growing trend among millennials because rentals across cities also saw a significant surge. Thus, many consider ‘buying’ and paying EMIs a more viable option than spending high amount on rents".

As per the NoBroker's annual report, the demand for RTMI has increased from 78% in 2022 to 85% in 2023. Bengaluru and Mumbai have registered a maximum demand for the RTMI properties, according to the proptech firm. Last year, resale houses were short in supply due to Covid-induced slowdown launches and quicker absorption of the RTMI properties.

Another noteworthy aspect contributing to the attractiveness of RTMI is the jump in property prices. 

More than 50% of the house owners increased their property prices last year to get better returns on their real estate investment.  Ready homes in Delhi-NCR have seen capital appreciation of at least 29-30% since 2020-end till date. In the Mumbai Metropolitan Region, the appreciation would be at least 32% while Bengaluru saw at least 35% appreciation in the given period for Ready to Move-In (RTMI) homes, as per ANAROCK data trends.

“High rental yield in the ready-to-move category is a function of increased demand for homes post-pandemic and a consequent rise in rental of such properties. Rental growth is a function of demand exceeding supply for ready-to-move-in houses the strength of economic activity in the market and increased return to office intensity at workplaces. Also, with economic resilience, income levels have gone up thereby providing the cushion to purchase affordability, and moderate price appreciation expectation is keeping the ownership sentiment buoyant among aspirants. Hence, investors prefer such properties with higher rental yields and appreciation possibilities," Vivek Rathi, National Director of Research, Knight Frank India said.