Increased demand for RTMI or near completion flats helped housing sales to rise
With sales velocity pacing upwards in the last few quarters for compact housing projects, the demand-supply chain seems to be finally working in tandem with each other.
Small is the new big - is a phrase that has become increasingly popular in the past couple of years, particularly in the real estate market. In fact, the need for housing has gained momentum lately due to an increased population density across our urban centres and a growing trend towards rural to urban migration.
Hence, on the back of this trend and the prevailing market sentiment, apartment sizes in the Indian metros are definitely shrinking as developers increasingly deploy compact homes that are affordably priced. Incidentally, the demand for such houses is currently the highest. "In theory, reduction in the size of a house results in the reduction of the price point at which it is sold. And a lower price point means many a 'fence-sitter' will opt to buy the home. Therefore, developers are increasingly focusing on developing projects, which offer compact homes to the potential buyers," says Niranjan Hiranandani, president, National Real Estate Development Council (NAREDCO).
RISING ON THE POPULARITY CHARTS:
The Indian ethos still encourages everybody to invest in real estate. Hence, even today it is a priority for most of us. However, post the global financial crisis, not only has the world market not recovered completely, but also the Indian market, particularly, the real estate sector, has not shown a big spike. Against this backdrop, there has been a series of initiatives undertaken by both, the developer fraternity as well as the government to boost the sector.
"Most developers have understood the pulse of the market and have realised that creating the right-sized homes is the key to ensuring sales velocity as it meets the demand of the customers while creating value for the end-user. Furthermore, the thrust of the government towards accomplishing its 'Housing for All' agenda with a clear policy focus on the affordable housing segment, has resulted in a growth in the number of affordable housing developments across centres. In short, compact homes are creating the right buzz in the market - as these are projects where the ticket size of the house is directly proportional to the price of the home," says Ramesh Nair, chairman, CII Real Estate Conclave 2018.
Also, with millennials increasingly focusing on building a varied asset class, they are eyeing the realty market as they would rather spend their monthly income on paying off the EMI than hefty rents. "Compact housing provides locational connectivity, affordability, ease of maintenance and meets the demand of younger urban professionals. Also, developers are offering innovative designs in these units to ensure that they are aesthetically appealing while addressing the daily needs of the dweller. From mezzanine lofts that double up as a study to a folding Murphy bed; wall panels that can extend into dining tables to mirrors creating an illusion of space, developers are investing in making units lively in their appeal so that compact homes turn out to be the perfect combination of aesthetics and affordability," mentions Shubika Bilkha, director, The Real Estate Management Institute (REMI).
On the back of the various incentives rolled out to developers and buyers of affordable housing by the government, which is fully intent on meeting its 'Housing for All by 2022' agenda, banks readily provide home loans for compact housing buyers. Besides, many finance companies have a loan bandwidth from Rs 5 lakh to Rs 40 lakh and the target audience varies from drivers and domestic servants to youngsters who have started fresh in their career, who wish to tap into the growing affordable market segment.
Under the Pradhan Mantri Awas Yojana (PMAY) too, one gets the additional benefit of a subsidy amount of Rs 2.68 lakh (condition the size of the house is below 1100 sq ft) from the central government if the overall family income is below Rs 18 lakh, with the investment being the family's first home purchase).
"Prices have stagnated in the last couple of years and it is not going to drop any further looking at the current market trends. Also, the realty segment today is being driven by end-users and not investors wherein the focus is on synchronisation between one's income and the house price. And with compact housing showing significant movement, the way forward for developers would be to scientifically plan projects where the ticket size of an apartment will hold the key," says Dr Samantak Das, chief economist & national director, Research, Knight Frank India.
THE DEMAND-SUPPLY DYNAMICS:
According to a recent report released, the trend of shrinking apartment sizes is prevalent across property markets:
• The average size of new properties in NCR was 1,853 sq ft in March 2018, which dropped to 1,323 sq ft in the month of April;
• Bengaluru too followed this trend with property sizes shrinking from 1,300 sq ft in March to 1,160 sq ft in April. In fact, if we consider the trend at an annual level, it emerges that flat sizes in Bengaluru's new projects reduced from 1,478 sq ft in 2017 to around 1,334 sq ft in 2018;
• Other cities like Pune, Hyderabad, NCR and Kolkata also followed suit with average sizes of properties seeing a downward trend over the last two years.