With the current realty slowdown, massive, ultra-luxury homes no longer attract home buyers. The trend of small, compact homes is in. Nidhi Adlakha speaks to developers in the city on what fuels the demand for such homes
Mumbai: To boost the sluggish realty market and fuel housing demand, developers across the country have been launching projects with small unit sizes (800-1,200 sq. ft). With the realty market gradually opening up and with a large unsold inventory of projects, the trend is popular in cities like NCR, Bangalore, Mumbai and Chennai. In these cities, there are rising avenues for fund-flow and infrastructure development, says Shushmul Maheshwari, Chief Executive, RNCOS. “As land prices are high in these cities, home buyers are opting for small, compact homes at reasonable prices. Chennai’s residential market has been dominated by end-users with little presence of investors, resulting in lower price volatility as compared to Mumbai, Delhi, NCR and Bengaluru,” he says. Arun Kumar, MD, Casa Grande, who has launched similar projects in Chennai and Coimbatore, says, “Even in non-metros, there is high demand for properties by potential investors who purchase homes as an investment or lease the property out for rent. Most developers are expanding their operations in cities like Trichy, Coimbatore and Mysore.”
While the availability of land, investment is driving the demand for compact homes, another major reason why the trend is picking up is due to a conscious effort by developers to create affordable projects for the middle and lower middle income groups. In Chennai, this trend is common primarily in areas like Perumbakkam, Porur, Mogappair and Medavakkam. “Developers and end users find the South and West Chennai housing market appealing due to numerous vacant lands, affordable prices, and proximity to central Chennai and employment hubs. In the last few years, South Chennai is the most preferred zone for residence in terms of the number of units launched,” adds Maheshwari. Kumar of Casa Grande, who has compact-housing projects in Adyar, Ashok Nagar and Nungumbakam, says, “The demand for compact homes is gaining momentum and most developers launch such projects in central parts of the city due to constraints in acquiring large land parcels.”
Chennai, traditionally, has been a relatively new market for apartments as a majority of people used to live in independent houses or preferred large apartments, says Mallika Ravi, CEO, Lancor Holdings. It is only a few decades ago that the switch to apartments and smaller housing units emerged. “Over the last two years, rising inflation, land prices and construction costs, have reduced the overall size of apartments and to make them affordable, their sizes are being reduced,” she says.
Compact houses will be the future of housing in India considering the population density, land prices, infrastructure, and other civic services becoming major concerns, says A. Shankar, National Director-Strategic Consulting, JLL. “Despite the recent interest, developers and consultants feel there is a huge demand for the mid-segment end user market and hence, create units in small sizes. This trend is bound to increase since land rates in city are high and an increase in floor area increases the unit cost as well,” he says. Speaking of the primary takers for such projects, Kanchana Krishnan, Director – Chennai, Knight Frank (India), says the absorption of a large volume of office space by the IT/ITes sector translates into residential demand. “In this segment, home buyers are below 30 years. As most real estate investments are funded by home loans, when apartment sizes are small, the outflow in terms of EMI gets manageable and buyers will be keen to buy properties than live in rented homes,” she says.
Apart from their affordability, what’s in it for the buyer? Ensuring facilities offered in such projects match up to buyer requirements, is something crucial. “Developers are faced with higher cost of construction as with more units, the requirement for walls, rooms, water and sewage connections will increase.
However, as compact homes are part of larger projects, buyers will enjoy the same amenities. Smaller homes will also have low maintenance costs,” adds Ravi.
Will these homes shape the planned smart cities? Shankar says, “Apart from affordable and compact homes, a number of initiatives are required to shape smart cities. They require city-level social and physical infrastructure, proper connectivity, IT enabled civic services with mass housing initiatives.” Maheshwari of RNCOS, adds, “We expect the development of smart cities to create a great demand for housing units. As the proportion of mid-income group (MIG) households remains higher than their high-income group (HIG) counterparts across India, compact houses will continue to be in high demand.”