Home sizes shrink in urban India; Mumbai sees 26.4% fall in 5 years
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Bengaluru: The average size of apartments are shrinking across all major cities in India as developers try to make homes more affordable for buyers.
In the past year or so, sizes of apartments in the Mumbai metropolitan region saw the sharpest fall of 5% on an annualised basis, followed by Bengaluru and Chennai 4%, and Pune 1%, says a note by property advisor JLL India.
Mumbai has seen a 26.4% fall in apartment sizes from 2010 till date, while Bengaluru registered a 23.7% reduction in average apartment sizes, followed by Chennai at 22.2% and Pune at 7%.
Average size of an apartment in Mumbai, for instance in 2010 was 1400 sq ft that has shrunk to 1050 sq ft now. Bengaluru, known for its large homes, had an average size of 1800 sq ft five years that has come down to 1500 sq ft. Pune, which has reasonably sized apartments, saw a marginal fall of 7% on an average apartment size of 1200 sq ft.
As home sales remains tepid, real estate developers have tried all possible marketing tactics such as flexible payment schemes and on-the-spot discounts, along with compressing the size of apartments to make it more affordable.
Despite all this, home prices still remain unaffordable in cities such as Mumbai. While mid-income housing projects are getting pushed farther from cities, home buyers wanting to stay within city limits are forced to settle for smaller apartments.
“A possible reason behind this move by developers to reduce apartment sizes could be to better suit buyers’ spending power. Also, many urban buyers are willing to live in newer and smaller-sized homes near their offices,” said Ashutosh Limaye, national director - research, JLL India.
Average unit sizes in Mumbai and Pune have been among the lowest across all four cities. Most developers have kept the apartment configuration same, but reduced the area to make it much more compact. Most developers call it value engineering. Three-bedroom apartments in a project in Gurgaon have been shrunk to 1290 sq ft to keep the budget below Rs1 crore.
“The biggest issue in the market today is the ticket price and we need to make that attractive for buyers,” said a realty firm executive, who didn’t wish to be named.
Last year, Hiranandani Constructions Pvt Ltd sold one bedroom homes of 376 sq. ft carpet area (livable area) for Rs.1.3 crore and upwards in Hiranandani Gardens, Powai.
“Developers can generally change apartment sizes before completing the foundation work on the ground without hassles from the plan-sanctioning city agencies. A price correction, on the other hand, is very market-driven. This is a good move by developers, as they have been able to reduce prices and keep the configuration unchanged, despite rising construction costs, approval and finance costs eating into their profits, by reducing unit sizes,” Limaye said.