When small turns big for real estate players

With inventory pile up in the real estate sector hitting record levels, developers seem to be favouring smaller units to whet the appetite of buyers.

Reducing apartment size helps to make the ticket size affordable to a larger segment of buyers.

Players like Radius Developers, Hiranandani, Godrej, Puranik Developers, Paramount and Arth Developers are some who are now offering either one bedroom or studio apartments in their mixed development projects.

SquareYards, a real estate transaction platform, in its latest report said that smaller units such as studios and one-BHK are gaining popularity with end users as well as investors.

The report indicates that Studios and 1 BHK that were once popular in Mumbai, are increasingly becoming popular across the country. Smaller units range from 350 sq feet to 650 sq feet and priced between ₹25 lakh and ₹75 lakh.

“We have sold over 1,500 such units in NCR and Bengaluru alone. The whole idea is to make the product affordable to the fence-sitting buyer. Also from a rental point of view in cities like Mumbai, NCR and Bengaluru, smaller units offer high mobility to a young working population.

“This makes it a lucrative investment for the investors as well,” Hitesh Singla, Principal Partner, Squareyards told BusinessLine .

Singla added that the rising trends could also be attributed to young buyers, who prefer smaller units as it fits their budget and are convenient to maintain.

Radius Developers, which launched its township in the Chembur, in Central Mumbai, said the township will consist of studio suites, 1BHK, 1BHK Premium & 2BHK and priced at ₹43 lakh onwards. “Mumbai as a city attracts a large chunk of urban migrant population. Many youngsters have the desire to buy a property but affordability is a challenge as large developers rarely do smaller homes. Our aim is to offer all the facilities of a gated community at affordable prices,” said Ashish Shah, COO, Radius Developers.

Echoing the sentiment, Shailesh Puranik, MD, Puranik Builders, says the socio-cultural dynamics are changing.

“More families are going nuclear: there is also a large working population with double income and no kids. For such families, the need is to stay in a centrally located with good amenities which overtakes the need for big spaces.

“A smaller apartment offers them that scope without biting into their wallet,” he said.

Puranik said in a typical project, the one, two and three BHK apartments are in equal proportion.

“The smaller flats sells the fastest,” he notes followed by the larger ones.

A 2015 JLL report also noted that builders across India are making smaller apartments without lowering the price per square feet and compromising on the quality of product.

As per the report, Mumbai’s apartment sizes, which were already smaller than those in other Indian cities, have decreased the most over the last five years with a 26.4 per cent reduction.

In Bengaluru, there has been a 23.7 per cent fall in average apartment sizes, followed by Chennai at 22.2 per cent and Pune at 7 per cent.

Ashwani Prakash, ED, Paramount Group, says, “Studios & 1 BHK when compared in the NCR real estate market can well be termed as safe and low budget investments for individuals, companies and investors.

“Individuals and the companies mostly use these studios / 1 BHK as their transit houses in the Delhi–NCR region

“These properties are mostly located near or within the industrial/IT hubs of NCR. The price range is between ₹4,000 and ₹4,500 per sq ft.”

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