Unable to sell large apartments in a sluggish market, developers are shrinking the sizes of houses while not reducing costs.
by The Editors | editor@themetrognome.in
Since nobody is buying houses in Mumbai and other cities, developers have hit upon a better idea: sell smaller homes. But don’t go running away with the idea that these smaller homes are more affordable. Their per square foot area rate is still unchanged.
As per JLL India Research’s latest report ‘Is Indian Real Estate Heading Towards A Tectonic Shift?’, ‘among the major trends is how developers have been decreasing apartment sizes to suit affordability of buyers.
‘Builders are exploring innovative ways to make residential housing across major cities more appealing to potential buyers at a time when it is increasingly becoming difficult to sell expensive apartments. Unable to sell expensive homes in a sluggish market, builders across India are making smaller apartments without lowering the price per square feet and compromising on the quality of product. In the last five years, average apartment sizes are falling across all major cities of India.’
The report details the Shrinking House syndrome in Mumbai thus: ‘Mumbai Metropolitan Region (MMR) – including Mumbai, Thane and Navi Mumbai – witnessed the maximum fall in apartment sizes on annualised basis, along with Bangalore, Chennai and Kolkata. Other cities also witnessed varying degree of fall in median apartment sizes.’
As per the report, Mumbai, which ‘already had smaller and compact apartment sizes compared to other cities, saw a decrease of 26.4% in the past five years.’ The report adds, ‘The dynamics of apartment sizes have a tale to tell – that developers are paying conscious attention to consumers’ requirements. The fall in average apartment sizes across all top seven cities [in India] is a clear indication that developers intend to make houses affordable for buyers by reducing average apartment size instead of reducing the capital values.
‘While property prices are not purely a product of developer’s discretion, the decision to alter apartment sizes as per the needs and spending power of buyers is definitely within their ambit.’
Read more about this trend on JLL India’s blog.