Realtors cut flat sizes in weak market

MUMBAI:Market realities of ongoing liquidity crisis, changing buyer preferences and growing concerns about affordability have forced real estate developers' to reconsider their product strategies and prompted them to significantly reduce apartment sizes across seven important property markets.


Average size of apartments has shrunk 27% over the past five years from 1,400 sq ft in 2014 to nearly 1,020 sq ft in 2019. Mumbai, the country's most expensive property market, has seen the highest decline in apartment size by 45%, followed by Pune with 38% reduction in average unit size, showed data from Anarock Property Consultants.


Surprisingly, National Capital Region (NCR), one of the worsthit residential markets in recent years, has seen the least decline of merely 6% during this period to 1,390 sq ft, pulling ahead of Bengaluru where average flat sizes reduced to 1,300 sq ft in 2019.


“Among the major factors contributing to the escalating claustrophobia effect of shrinking apartment sizes, demand for affordable homes in metros tops the list. Also, buyers are increasingly looking to avail the government’s credit subsidy benefits for affordable housing. These require a home to be priced below .`45 lakh and not exceed 60 sq metre carpet area or 850 sq ft built-up area including overall loading,” said Anuj Puri, chairman, Anarock Property Consultants.


The reduction in sizes, particularly in the affordable segment, helps buyers to avail of the subsidies. Moreover, buying an affordable home also comes with GST benefits. The GST for affordable housing is 1%, against 5% for mid-segment homes.


“Home buyers are not interested in any space wastage and need more efficiency. Ticket size is proving to be a game changer, but liability also needs to be given importance while designing. We have reduced the sizes of our 3-bedroom apartments at two projects by 15-20% and it is supporting in sales conversion well,” said Rajat Khandelwal, CEO-Mumbai, Ozone Group.


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.


Mumbai Metropolitan Region (MMR) has the least average apartment size among all top cities at 530 sq ft now from 960 sq ft in 2014. Average sizes in both MMR and Pune are calculated on the carpet area while for the remaining cities it is based on the built-up area.


The main southern cities of Chennai, Bengaluru and Hyderabad have seen size reduction of 8%, 9% and 12%, respectively, over the past five years. What also makes these cities unique is that the prevailing average sizes of apartments are among the highest, Puri said.


On further analysis, it emerges that affordable homes priced less than .`40 lakh have seen the maximum decline in sizes over the previous years, while ultraluxury homes saw the least.


Bengaluru has seen maximum reduction in average affordable property sizes. In 2014, average size of an affordable unit was 1,070 sq ft area — this fell sharply to around 710 sq ft in 2019. Though the city has high demand for mid-segment properties, affordable homes are also attracting contemporary homebuyers.


Pune, India’s other IT hub, has seen the least reduction in sizes of affordable units at 20% in the past five years. This coincides with the fact that within the city, affordable homes have maximum demand and builders are wary of tampering with sizes.