consumer behaviour for real estate sector in pune

International Journal of Research in Economics and Social Sciences (IJRESS) Available online at: http://euroasiapub.org Vol. 8 Issue 4, April - 2018 ISSN(o): 2249-7382 | Impact Factor: 6.939 |

International Journal of Research in Economics & Social Sciences

Email:- [email protected], http://www.euroasiapub.org (An open access scholarly, peer-reviewed, interdisciplinary, monthly, and fully refereed journal.)

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Consumer Behaviour for Real Estate Sector in Pune

Prof. Kavita Kamath Dr. Madhura Jagtap

Abstract

Shelter is one of the most basic human needs. The real estate sector helps in fulfilment of this need

by offering built up houses, offices, spaces as per he needs of consumers. It is one of the fastest

growing sectors in India, owing to the fast growing population, increasing income levels, growing

number of nuclear families, etc.

This sector is benefitted by the various initiatives of the Government like Pradhan Mantri Awas

Yojana, Pradhan Mantri Gramin Awaas Yojana, Rajiv Awas Yojna, etc. aiming at providing a house

to all citizens. It is thus, important for the companies in this sector to identify the buying behaviour

of customers looking to buy flats.

This study involves study of consumer behaviour in real estate sector in Pune region. It tries to

gain a complete understanding of buying behaviour in Pune’s real estate sector.

The study is primarily based on primary data collected by distributing questionnaires to walk-in

customers at real estate offices in Pune.

Key words:

Consumer Behaviour, Real Estate, Construction.

Introduction

The real estate sector is one of the most globally recognized sectors. In India, real estate is

the second largest employer after agriculture and is expected to grow at 30 per cent over the next

decade. The real estate sector comprises of four sub sectors - housing, retail, hospitality, and

commercial. The growth of this sector is also affected positively by the growth of the corporate

sector and the demand for office space as well as urban and semi-urban accommodations.

The construction industry ranks third among the 14 major sectors in terms of direct,

indirect and induced effects in all sectors of the economy. It is also expected that this sector will

incur more non-resident Indian (NRI) investments in both the short term and the long term.

Real estate is "property consisting of land and the buildings on it, along with its natural

resources such as crops, minerals, or water; immovable property of this nature; an interest vested

in this (also) an item of real property; (more generally) buildings or housing in general. Also: the

business of real estate; the profession of buying, selling, or renting land, buildings or housing."

The fact that major real estate companies in India are going public proves the potential of the

Indian property market. Starting from infrastructure development to residential complex,

commercial real estate to retail space development, the property market in India is booming with

all kinds of activities. Due to the Government approval of 100% FDI in India, real estate

development and steady capital market, some major investments are being made in the real estate

https://en.wikipedia.org/wiki/Natural_resources

https://en.wikipedia.org/wiki/Natural_resources

http://www.realestateonline.in/

International Journal of Research in Economics and Social Sciences (IJRESS)

Vol. 8 Issue 4, April- 2018

ISSN(o): 2249-7382 | Impact Factor: 6.939



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sector. Buyers from all across the world are showing interest in Indian property and it now

features at the top of the list of the international real estate investors.

Pune Real Estate- Pune’s real estate market over the past few years has been witnessing a steady

slowdown. The market, which normally sees absorption of around 20,000-22,000 units every six

months, has been witnessing absorption of lesser than 15,000 units on a half-yearly basis. While

realtors blame the wait-and-watch policy of buyers and the global slowdown for the trend, buyers

on the other hand blame artificial inflation in the market for deferring their investments.

Most new launches are concentrated in the newly developed and fringe areas of the city such as

Chakan, Pashan, Susgaon, Bavdhan, Talegaon, Khed-Shivapur, Yavat, Pirangut, Lavale, Moshi,

Hinjewadi and Dehu Road.

Literature review

Engel et al. (2005) defined consumer behaviour as ‘those activities directly involved in

obtaining, consuming and disposing of products and service, including the decision processes that

precede and follow these actions’. Moreover, Schiffman and Kanuk (2010) mentioned that

consumer behaviour is ‘the behaviour that consumers display in searching for purchasing, using,

evaluating and disposing of product, service and idea which they expect will satisfy their needs’.

Therefore, knowing the factors which influence the buying behaviour for a product could increase

the sales volume. Same holds true for residential apartments.

In the paper, “Consumer Behavior Applications To Real Estate”, presented at the American Real

Estate Society Meeting April 1998, by Prof. Karen M. Gibler and Prof. Susan L. Nelson, Mercer

University Drive Atlanta, it is stated that, Most real estate study is based on neoclassical economic

theory that assumes that people make rational decisions about renting and buying real estate as

part of their attempt to maximize utility. The study of consumer behavior is the study of

individuals, groups, or organizations in the selecting, purchasing, using, and disposing of goods

and services to satisfy needs and desires.

Decision making are a function of both internal and external influences on behavior, this paper

studies the Internal Determinants of the Consumer Behavior like; Motivation, Perception,

Knowledge and Learning, Attitudes, Self-Concept, Personality and Lifestyle and External

Determinants of the Consumer Behavior like Reference Groups, Culture, Subculture, Social Class

and Family, which influences the demand for different housing Types.

The authors have concluded that, Appraisal attempts to estimate the value of property to

consumers. Market analysis attempts to predict consumer demand for real estate services.

Investment analysis examines the required and expected rate of return to an investor, and finance

analyzes consumers’ mortgage choices and likelihood of repayment. The study of consumer

behavior involves trying to understand complex human beings and the reasons they act the way

they do in the marketplace. It recognizes that consumer decisions take place inside a person who

is distinctive in his personality and attitudes, yet similar to other consumers who have been

exposed to the same external influences of culture and society.

In the article, “What Drives Consumer Behaviour Online in the Real Estate Industry?”(2015) by

Sarah Smith, it is mentioned that, In order to attract a wide audience, real estate agents need to

offer a unique combination of practical and emotional marketing. Purchasing a home isn’t just a

financial investment; it’s a highly emotional one as well.






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One key way that real estate agents appeal to a wide range of consumers is through their emotions.

Families who want to experience a healthy, safe environment will respond to marketing ideas that

include nostalgia, commitment, humour, and happiness. Research reveals that 65 percent of all

consumers regarding the real estate industry are actually married.

Considering this fact, advertisements are specifically designed to connect to a buyer on a

psychological level by showing a happy, healthy family that’s living the quintessential American

dream. In general, most people desire what a home represents, such as security, health, and

general well-being.

But, many potential home buyers are more focused on the practical features of a home. They

generally want to save both time and money along with having easy commutes as well as buying

an energy efficient home and living in a highly-desirable neighbourhood. When developing

advertisements for people in general, real estate agents have to present efficiency and minimalism

in order to be effective.

The findings of the report, ‘Consumer buying behaviour in real estate industry’, conducted by

Vibhor Jain(2017), states that, Maximum number of respondents stays on rental basis and less on

ownership basis. Consumers mostly consider price and location while purchasing the property.

Brand name, facilities and quality of the construction are the main parameters consumers

consider while selecting the residential properties.

The research paper titled, “Consumer perception and buyer behaviour for purchase of residential

apartments in NCR”, published in International Journal of Indian Culture and Business

Management 6(1):56 – 68, (January 2013), by Mansi Misra, Gagan Katiyar and Ajoy Kumar Dey,

represents the motivation for the research was to identify the external and internal factors

considered by buyers of residential apartments in National Capital Region of Delhi (NCR). Internal

factors refer to the specifications and facilities offered by the builders within a township, whereas

external factors refer to easy availability of loan, payment plans, discounts, brand name of builder,

etc. This research also helps in analyzing the differences in perceptions of buyers about the three

important locations for residential apartments in NCR, viz. Gurgaon, Noida and Greater Noida

based on parameters such as business opportunities, law and order situation,

medical/educational facilities, etc. The research further analyze the differences in perceptions

about three major real estate players operating in the area, namely Unitech, Jaypee Infrastructure

and Omaxe group.

The study highlights the gap in the present offerings and helps the builders to design their

offerings according to the changing needs and wants of the customers which will help them to

provide a competitive edge.

In the article, ‘Marketing Real Estate’ the Psychology of Marketing Real Estate is represented in

the following table:






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Brand and

Commercial

Explanation of

Advertisement Demographics Psychological Response Elicited

Coldwell Banker

"The Value of a

Home"

While showing

pictures of homes and

families, a

commentator shares a

formula for a home's

value that includes the

smell of pancakes and

100,000 smiles.

Parents, ages

25-40 years

Comfort and belonging – People

will watch the heart-touching

commercial and think about their

own family. Coldwell Banker is

associated with warm feelings and

the family unit.

Century 21 "The

Path Home"

An animated

commercial that

describes real estate

agents as

“expressways to

tomorrow” and

“internet- listing

gurus”.

Young

professionals,

ages 25-35

years

Trust – This commercial uses a

unique style that appeals to young

professionals. You trust what the

commercial is saying and know

Century 21 will lead you down the

right path.

Remax "What

Moves You?

Empty Nest"

Parents saying

goodbye to their

college-bound son in

front of a large home.

Parents, ages

40-60 years

Achievement – Aging families relate

to this lifestyle change. They have

raised their children and look

forward to the next step. RE/MAX is

there to help.

The research paper, ‘Consumer Behaviour in Real Estate, in India, by Sundrani Deepak, presented

in 21st Annual European Real Estate Society Conference. Bucharest, Romania, (2014), says, An

identical house in a different location is not priced the same. This is because a home-buyer does

not pay only for the physical construction but for a lot of externalities like location, amenities, etc.

Many authors have pointed out that most home-buyers have to make a trade-off, such as location

for the size of the house, etc. In this paper, the researcher has tried to explore which segment of

the urban home-buyers, give priority to which factor. The Hypotheses are that Price is the most

important influencing factor for buyers of a small house ( 1 Bedroom + Hall + Kitchen), Location

is the most important influencing factor for a moderate size house ( 2 Bedrooms + Hall + Kitchen)

and Amenities is the most important influencing factor for a large house ( 3 Bedrooms + Hall +

Kitchen). The study was carried out in Pune ( in India). A sample of 600 home-buyers (200 of 1

BHK, 200 of 2 BHK and 200 of 3 BHK, who had recently purchased a house were administered a

structured questionnaire and the empirical analysis proved that for 1 BHK and for 2 BHK, the

hypotheses were proved correct, but for 3 BHK the Product characteristics were the most

important influencing factor instead of the amenities.

Kotler and Amstrong (2005), Mowen (1995) and Engel et al. (2005) suggest that there is

a generic decision-making process. Rossi (1980), Law and Warnes (1982) and Livette (2006) have

used the same model of decision-making process for evaluating housing options. The buying






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behaviour is influenced by both internal and external factors. Internal factors such as: motivation,

perception, consumer resources, knowledge, attitudes, personality, values and lifestyle exercise

significant effect. Cultural background, social class, personal influence, reference group and

situation also influence the decision.

Connie and Fernando (2001) considered the effects of factors on residential development

in PT Delta, Comoro Permai, and Dilly as a case study. They included following 20 factors that

might influence buying behaviour of a residential dwelling unit: building quality, design, price,

building area, land area, affordable down payment, interest rate, payment period, clean, safe,

aesthetic, electricity, water, telephone, linkage to the working place, accessibility to the market,

short distance to the school, place for worship, sport facilities, investment and public transport.

Martin (2006) found that the majority of retirement housing purchasers undertake

limited decision-making: they consider only the scheme in which a property is eventually bought,

and they are very satisfied with their purchase.

He also identified the reasons given by elderly people for deciding to move from the

former home as: garden difficult to manage, too big, to be close to family and friends, difficult to

maintain, bereavement, stairs difficult to climb, expensive to run, shops too far away, loneliness,

to make new friends, to release equity, something new or different, crime/vandalism in area, lack

of public transport, to live in a better area, health, security, spouses illness, retirement and

distance from doctor. There is a belief among some commentators that because sheltered and

retirement housing can be used in the delivery of care services, the purchaser’s decision and

choice is about housing and care rather than housing alone.

Profile of Pune City

Pune has become one of the most sought after cities in the realty market. It has the

advantages of being a stable market with consistent demand coming from a number of strong and

dependable business sectors.

The main reasons for growth of real estate sector in Pune are:

Proximity to Mumbai, the commercial capital of India.

Relatively cheaper rates.

Forthcoming infrastructure (Metro rail, international airport, etc)

Preferred IT/ITES hub.

Significant presence of both manufacturing & service sectors.

Reputed educational institutes.

World class medical & healthcare facilities at economical rates.

One of the greenest urban areas in India.

The following are the major locations within Pune:

The real estate space in Pune can be classified into five distinct zones – Central Pune, North

Pune, East Pune, West Pune and South Pune.

Central Pune: Apte Road, Bhosale Nagar, Deccan, Model Colony, Prabhat Road, Shivaji

Shivaji Nagar

North Pune: Akurdi, Bhosari, Chakan, Chinchwad, Moshi, Pimpri, Pradhikaran, Talegaon






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East Pune: Hadapsar, Kalyani Nagar, Kharadi, Koregaon Park, Manjri, Wagholi, Viman

Nagar

West Pune: Aundh, Balewadi, Baner, Bavdhan, Hinjewadi, Kothrud, Pashan, Pimple-

Saudagar, Wakad

South Pune: Ambegaon, Katraj, Kondhwa Budruk, Mohammadwadi Road, NIBM, Parvati,

Salisbury Park, Sinhagad Road, Warje, Wanowrie.

SIGNIFICANCE OF THE STUDY

The study of consumer behaviour (CB) is very important to the marketers because it

enables them to understand and predict buying behaviour of consumers in the marketplace.

Consumer behaviour is concerned with what customers buy, how they buy it, where they

buy it, why they buy it and from whom they buy it. It also studies how they consume and dispose

of the products. Consumer behaviour is studied by focusing on every phase of the consumption

process: before the purchase, during the purchase, and after the purchase. Research shows that

different buyers buy the same product for different reasons; pay different prices, use it in different

ways, have different emotional attachments towards the things and so on.

According to Professor Theodore Levitt of the Harvard Business School, the study of Consumer

Behaviour is one of the most important in business education, because the purpose of a business

is to create and keep customers. Hence, knowledge & information about consumers is vital for

developing successful marketing strategies because it helps in creating and maintaining

customers and building customer relationships.

OBJECTIVES

To study customer behavior towards purchase of flats in Pune.

To understand what are the customer preferences while purchasing property.

To understand the buying process for property.

The main objective of this study is to know the perception of customers about various factors

affecting their choice of residential apartments. This study will help real estate developers and

agents to focus on the parameters demanded by the buyers for enhancing the buying appeal for

the properties. It will also help them in deciding which factors to be highlighted while promoting

residential apartments in Pune.

RESEARCH METHODOLOGY

1. Research Method – Descriptive Research design

2. Sampling :

a. Sample size- 50

b. Sampling method- Convenience method

3. Data collection :

a. Primary data- Data was collected from respondents who came to the sites for

buying process.

b. Secondary data- Website, journals, company brochures etc.

4. Tools of data collection :

a. Primary data - Structured questionnaire






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b. Secondary data – Internet

5. Data Analysis: Tables, graphs & charts were used to analyze the data.

DATA ANALYSIS

General information-

Interpretation: Out of 50 respondents, 28 are male & 22 are female.

Interpretation: Out of 50 respondents, 10 families are having 1 kid, 18 families are having 2 kids,

No family is having 3 & 4 kids, & 22 families are having no kid.

28

22

0

5

10

15

20

25

30

Male Female

Gender

0

5

10

15

20

25

1 2 3 4 No

Children in Family






624

Interpretation: Most of the customers were looking for flats for over 3 months, followed by 2-3

months, 1-2 months respectively. Very few had started looking from one month or so. This shows

that decision making process or searching for a good flat is a lengthy process and may take time.

This is especially true as Flats are specialty products.

Interpretation: Nearly half the respondents were living in owned house, 16 lived in rented & 10

lived in Family house.

0

5

10

15

20

25

up to 1 month 1-2 months 2-3 months 3+ months

Period Since When Customer Has Been Looking For Flats

0

5

10

15

20

25

30

Owned Rent Family Other

Ownership Status of Current Residence

23

23.5

24

24.5

25

25.5

26

26.5

Yes No

Flat Purchased for the First Time






625

Interpretation: Half of the respondents were purchasing flat for the 1st time. Remaining had

already purchased property before.

Interpretation: Most of the respondents were purchasing for flat for residence purpose, few were

looking for investment purpose & only 1 respondent was looking for other purpose (e.g. resale).

Interpretation: 35% respondents selected the particular location due to proximity to work, 38%

respondents selected it due to good investment opportunity, 10 % respondents selected the

location due to low rates, 17 % respondents selected the location due to convenience to family.

0

10

20

30

40

Residence Investment Other

Purpose Behind Purchasing Flat?

Proximity to Work

Good Investment Opportunity

Low Rates

Convenience to Family

Reason for Selection of Particular Location for the Flat






626

Interpretation: 36% respondents were expecting ready to move possession, 32% wanted

possession within 6 months & 28% respondents were expecting possession after 1 year & 4%

respondents were expecting possession after more than 1 year.

Interpretation: Most of respondents wanted Swimming pool & Club house in amenities followed

by Pathways, Some of respondents wanted Amphitheater followed by guest parking. Also some

of respondents didn’t want any amenities as their purpose was investment only.

18

16

14

2

Ready to move Within 6 months After 1 year Others

Expected Time For Possession Of Flat

0

5

10

15

20

25

Amenities Preferred

Series 1






627

Interpretation: Most of the respondents arrange finance with self-capital + loan, followed by old

property. Some respondents prefer loan & some of them prefer self capital.

0

5

10

15

20

25

30

Self Capital + OldProperty

Loan+Self Capital Loan Old Property

Arrangement of Finance

19%

47%

19%

15%

9. Which bank loan do you prefer?

International

Public

Co-operative

Bank tie-up with builders






628

Interpretation: 47% respondents prefer Public bank, 19% respondents prefer co-operative

bank, 15% respondents prefer bank having tie-up with builder, 19% respondents prefer

International bank.

Interpretation: Most of the respondents (30%) collected information about project through

Internet, 3% respondents collected information about project through Agents, 22% respondents

collected information about project through Hoarding, 16% respondents collected information

about project through Newspaper ads, 13% respondents collected information about project

through Property Exhibition, 16% respondents collected information about project through

friends or family.

Public Bank

Cooperative Bank

Private Bank

International Bank/Finance

Companies

Preferred Bank for Home Loan

Internet

Agents

Hoardings

Newspaper

Property Expos

Friends, Family etc.

Source of Information






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Preference while Purchasing Flats

Interpretation: Most of the respondents preferred Proximity to work or school while selecting

property followed by connectivity & rates. Some respondents preferred commercial availability

& size of apartment also some respondent preferred others i.e. Quality or Builder while selecting

property.

FINDINGS

It was found that out of 50 respondents looking for property, 28 were males & 22 females.

Out of those looking for flats, 10 families were having 1 kid, 18 families were having 2 kids,

No family is having more than 2 kids, & 22 families were having no kid.

It was found that maximum respondents were looking for property from more than 3

months.

It was found that maximum respondents live in Owned house (either bought on their own

or inherited) yet want to buy a new house.

It was also found that maximum respondents were purchasing flat for the 1st time.

It was found that most of the respondents were looking for flat for residence purpose.

It was found that respondents selected Baner location due to proximity to work & good

investment opportunity.

It was found that more no of respondents are expecting ready to move possession whereas

others are ready t wait for a longer duration for getting possession of the flat.

Swimming pool & Club house were the most sought after amenities followed by Pathways,

Some of the respondents wanted Amphitheater followed by guest parking. Also some of

respondents didn’t want any amenities as their purpose was investment only.

It was observed that most of the respondents opt for loan along with self-finance, i.e. some

amount of the price is raised on their own, and they opt for a home loan for the remaining

amount. This is followed by old property capital, wherein old property is sold to raise

0

5

10

15

20

25

30

35

40

Proxmity towork/School

CommercialAvailability

Connectivity Sze ofapartments






630

capital for buying new property. Fewer respondents prefer to not take loan at all and use

capital from own funds and old property together. The least number of respondents

depend on only loan without any sort of self-financing. They may take home loan for major

part of the amount, and personal or mortgage loans for the remaining amount.

It was observed that respondents preferred Public banks. However, those without TP

Certificate(Town Planning) or proper documents have to opt for other banks.

It was observed that Internet was the largest source of information while searching for

properties, followed by Hoardings, Friends and family and newspaper advertisements,

property exhibitions and agents respectively.

It was observed that most of the respondents preferred Proximity to work or school while

selecting property followed by connectivity & Rates.

CONCLUSION

It can be concluded that most of the customers purchase flats for residence purpose. Some also

purchase for investment reasons. They prefer taking loans from public sector banks. After they

realize the need for a flat, information is collected, internet being the main source of information.

The parameter which is considered most important is the size of the flat. While shortlisting the

location, proximity to work is the main reason considered followed by connectivity & rates.

Customers expect various amenities like Swimming pool & Club house in amenities followed by

Pathways, Some of the respondents wanted Amphitheater followed by guest parking. Some

customers don’t expect amenities as they purchase flats for investment purpose.

Builders and Real Estate companies should therefore make use of the Internet to reach the

customers and advertise their products. They should tie up with Public sector banks which are

preferred by customers. They should also focus on amenities desired by customers and offer these

to the customers.

REFERENCES

1. Connie, S. and Fernando, B.A. (2001) ‘Motivation and perception factors influence buying

home behaviour in Dilly, East Timor’, PRRES 7th Annual Conference

2. Howard, J. and Sheth, J.N. (1969) The Theory of Buyer Behaviour. New York, NY: Wiley.

3. Hoyer, W.D. and MacInnis, D.J. (1997) Consumer Behaviour. Boston: Houghton Mifflin,

ISBN 0395665922.

4. Philip Kotler Marketing Management

5. Aaker (1991) Building Strong Brands

6. C.R.Kothari (1985) Methods of Data Collection: Research Methodology- Methods &

Techniques.

7. Wikipedia and internet

8. Real Estate-Peter J. Danaher

9. Friedman, J. (1980) ‘A conditional legit model of the role of local public services in

residential choice’, Urban Studies, Vol. 18, pp.347–258.

10. Karen M. Gibler, Consumer Behavior Applications To Real Estate, Paper presented at the

American Real Estate Society Meeting, April 1998.

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.198.6732&rep=rep1&type=

pdf






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11. Consumer perception and buyer behaviour.

https://www.researchgate.net/publication/264837304_Consumer_perception_and_buy

er_behaviour_for_purchase_of_residential_apartments_in_NCR.

12. http://www.marketing-schools.org/consumer-psychology/marketing-real-estate.html

13. Mansi Misra, Gagan Katiyar and Ajoy Kumar Dey, Consumer perception and buyer

behaviour for purchase of residential apartments in NCR”, International Journal of Indian

Culture and Business Management 6(1):56 – 68, (January 2013).

14. Sundrani Deepak, ‘Consumer Behaviour in Real Estate, in India”, 21st Annual European

Real Estate Society Conference. Bucharest, Romania, (2014)

15. Philip Kotler, Markeitng Management- A Sout Asian Perspective, 13th Edition, 1994.

https://www.researchgate.net/publication/264837304_Consumer_perception_and_buyer_behaviour_for_purchase_of_residential_apartments_in_NCR

https://www.researchgate.net/publication/264837304_Consumer_perception_and_buyer_behaviour_for_purchase_of_residential_apartments_in_NCR

http://www.marketing-schools.org/consumer-psychology/marketing-real-estate.html

consumer behaviour for real estate sector in pune

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