New Delhi: Real estate developers are not leaving any stone unturned to attract homebuyers. High ticket size of buying an apartment is one of the biggest reasons that restrict many homebuyers. But to make the offering look attractive, developers over the years have reduced the apartment sizes, which ultimately brought down the total purchasing price. According to an estimate by ANAROCK Property Consultants, “Recent data indicates that average apartment sizes in the top seven cities have shrunk by 27% over the last five years—from 1,400 sq.ft in 2014 to nearly 1,020 sq.ft in 2019 so far." The seven cities include—Mumbai Metropolitan Region (MMR), National Capital Region (NCR), Pune, Chennai, Bangalore, Hyderabad and Kolkata.
With no surprise, the city with most expensive real estate market in India witnessed highest fall in average apartment sizes. According to ANAROCK’s estimate, “MMR already has the least average apartment size among all top cities and also recorded the highest drop of 45%—from 960 sq.ft in 2014 to 530 sq.ft in 2019. Pune followed with a 38% reduction in sizes during this period, with the average apartment size currently at 600 sq.ft.
Surprisingly, NCR, one of the worst-hit residential markets in recent years, has seen the least decline of merely 6% during this period. The current average size of apartments in NCR is nearly 1,390 sq. ft, pulling ahead of Bangalore where average flat sizes reduced to 1,300 sq. ft. in 2019.
Besides that, the main southern cities of Chennai, Bangalore and Hyderabad have seen size reduction of 8%, 9% and 12% respectively over the last five years, while Kolkata saw sizes reduce by 9% during the same period, the Anarock findings indicate.
The reason behind reducing the apartment size can also be attributed to the incentives the government offers to developers and homebuyers. For instance, goods and service tax (GST) is charged at the rate of 1% in case of under-construction affordable houses whereas it is 5% in case of regular housing projects. Government also provides subsidies and additional tax deduction for homebuyers in the affordable segment.
In short, “buyers get reduced costs and added benefits, but lose out on space. Developers get to attract more buyers, but many have had to shed their cherished 'luxury' market categorization and stoop to conquer," said Anuj Puri, chairman, ANAROCK Property Consultants.