Developers Increasingly Deploy Affordably-Priced Homes, Apartment Sizes Shrinking
On the prevailing market sentiment which is averse to overly heavy investments into residential property – apartment sizes in the Indian metros are definitely shrinking as developers increasingly deploy affordably-priced homes for which the demand is currently the highest. In fact, apartment sizes have already reduced significantly enough to justify any and all measures that help maximize the usability of the available spaces.
‘Small is beautiful’ is the new buzzword with Indian millennials when it comes to buying homes in cities like Mumbai. These young professionals are less focused on size and look for homes in locations close or well-connected to their workplaces so that their daily commute is reduced and work-life balance is maintained. Compact homes are also low on maintenance expenses and are invariably very budget-friendly in all respects.
With the ever-increasing rents in a city like Mumbai, buying compact affordably-priced homes is also a very suitable option for several new citizens. Taking a small loan and paying up the monthly EMIs on an investment-grade asset which can be easily resold is seen as preferable to shelling out hefty rents.
The trend of shrinking apartment sizes is by no means limited to Mumbai:
- The average size of new properties in NCR was 1,853 sq. ft. in March 2018, which dropped to 1,323 sq. ft. in the month of April.
- Bangalore too followed this trend with property sizes shrinking from 1,300 sq. ft. in March to 1,160 sq. ft. in April. In fact, if we consider the trend at an annual level, it emerges that flat sizes in Bangalore’s new projects reduced from 1,478 sq. ft. in 2017 to around 1,334 sq. ft. in 2018.
- Other cities like Pune, Hyderabad, NCR and Kolkata also followed suit with average sizes of properties seeing a downward trend over the last two years. Chennai was the only city where average property sizes remained more or less the same over the last two years.
As per ANAROCK data:
- Nearly 77 projects with highly compact units have been launched across Mumbai Metropolitan Region (MMR) since 2013 till date. This supply comprises of homes with carpet areas between 136 sq. ft to 281 sq. ft. 2018 till date saw the launch of 7 projects accounting for about 1,100 compact housing units in MMR.
- The minimum carpet area we have considered for this analysis is 136 sq. ft., while the maximum carpet area considered is 281 sq. ft. The minimum basic cost – excluding registration and other miscellaneous costs – for an apartment with a carpet area 136 sq. ft. is currently Rs. 8.35 lakh, while the overall price can go as high as Rs. 60 lakh, depending on the location, amenities offered and the developer’s brand value.
- The minimum size seen was 136 sq. ft. in a project in Ulwe, Navi Mumbai whose basic cost is Rs. 11.75 lakh per unit. Malad East saw the launch of micro homes of 247 sq. ft. carpet area size priced at Rs. 45 lakh.
- The basic cost of an unfurnished compact housing unit in Mumbai is anywhere between Rs. 8 – 60 lakh, while the prices of furnished homes go up by 15-20% depending upon the exact specifications and other variables.
- The prominent areas that saw the launch of compact homes in 2018 include Neral, Ulwe, Navade, Karanjade and Malad East. Other major hotspots for such homes include Kandivli, Chembur, Malad West, Andheri East and West, and Ghatkopar.
On the back of the various incentives rolled out to developers and buyers of affordable housing by the Government which is fully-intent on meeting its ‘Housing for All by 2022’ agenda, banks readily provide home loans for affordably-priced homes buyers – as do several new housing finance companies that are looking to tap into the growing market of affordable housing. In the past few years, several such companies have mushroomed across the country and are extending loans at relatively decent rates of interest.
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