Job creation drives housing demand

An area in which several businesses are generating career opportunities for the people becomes a magnet for demand from home buyers. Such areas also become the focal point of interest for residential property builders.

Employees of such firms always hope to find homes close to their workplace. And home prices in such areas can be very attractive if it is still developing; if it provides good access to an office hub, it will attract a lot of demand. Apart from end-users, investors would also be interested in buying residential properties as a way of generating rental income. In any case, since a substantial number of families could decide to purchase their houses there, developers will line up to buy available land parcels and build residential projects. 

Kishor Pate, CMD, Amit Enterprises Housing Ltd tells DTNext, “Residential property builders put in a lot of research before launching a project in any new area. One of the main factors they will focus on is the kind of demand that is likely to exist. For instance, a place near an industrial area or a BPO hub will see a lot of demand from budget home seekers, while a location around a software development firm is likely to generate demand for mid-income and semi-luxury homes.” 

If a new office hub is generating highly-paid jobs, it becomes a suitable target for luxury home projects as well. However, many developers tend to miscalculate an area’s potential to sustain demand for luxury offerings. However, market dynamics also play a role. “The IT-driven job market is fickle, compared to the manufacturing industry. Industrial jobs in India are largely driven by local demand for manufactured goods, so careers in a manufacturing company can be quite steady even if the salaries are not spectacular,” says Pate. Explaining further, he says, “Infotech jobs, on the other hand, are not as predictable as they may have initially seemed. The demand for such services in India is primarily driven by companies in the US, where policies regarding outsourcing to other countries can have a big impact. We are currently witnessing such policy fluctuations happening in the US, causing a lot of uncertainty to software companies here in India.” 

Not all job categories in the IT/ ITeS sector are affected equally, but developers of residential properties looking at cashing in on IT-driven housing demand must nevertheless be attuned to which level of housing demand is sustainable, and which is subject to sudden change. According to Pate, investors must also be able to gauge where Infotech-driven residential demand is headed. For instance, Bengaluru the previous IT capital, is now rapidly yielding its market share to cities like Pune, which are attracting more and more IT companies with their burgeoning workforces and cost-effective property rates.”