Off late, home buyers are buying/ investing in houses of smaller sizes, and thus these have become very popular as a ticket size. Smaller apartment sizes have been gaining great traction for some time now and this can be recognized as an extension of the old story that most of us have grown up with. Developers today are paying mindful attention to this customer expectation and requirement more than ever. Let us examine a few details around the trend of smaller ticket size apartments.
Is Opting for a Small Ticket Apartment an Emerging New Trend?
Well, the answer is no because small ticket size apartments have been there for decades. One look at Mumbai city, especially the suburban market (North of Andheri and North of Dadar on the Eastern side), and you will know that 80-90% of the people lived in 1 BHK of 350-500 sq ft or 2 BHK of 500-700 sq ft; as 3 BHK's was never the norm earlier. It is important to know that from the 70s to 2005, majority of the homes being developed were smaller homes. This has been the historical way of living for a large number of people.
Upgrade Versus Indulgence
After 2005- 2006, there was a shift towards luxury houses with developers building 3 and 4 BHKs in gated communities with an array of amenities. With the market welcoming this change, many developers believed this was the way forward and found serving people able to afford this lifestyle, a great business opportunity. Thus, the luxury project development kickstarted and became popular. However, the target audience in this category has always been very small as 80-90% of the population continue living in houses with smaller configurations. Resultantly, owing to the low demand for such a product, there was a large inventory that the developers were finding difficult to sell. Although in the last year, with Covid-19, they did manage to sell some of this inventory, the fact of the matter remains that the bulk of the population is still looking for affordable and upgradeable properties and not pure indulgence.
Going for an upgrade doesn’t necessarily mean building a large house. A property upgrade can translate into working towards something achievable and not stretching for what can be a financial mistake, irrespective of the configuration. Some of the upgrades that people aspire for include an additional room, shift from an old type of construction to a modern one or better amenities. For instance, a person staying in a 1 BHK or 400 sq ft valued at Rs 80 lakh and wanting an upgrade is more likely of scouting for a 2 BHK for Rs 1 crore and 10 lakhs with a smaller configuration vis-à-vis a Rs 1 crore 90 lakhs 2 BHK, just because the developer has decided that a 2 BHK will be 800 sq ft.
Another emerging trend noticed is joint families wanting to live the nuclear way. In a couple of projects that have been sold in the last year, 30-40% of people have bought apartments in ‘Jodis’ or ‘pairs’. So, there has been an increased preference in buying a ‘Jodi’ 2 BHK apartments of 650 sq ft each. However, the same cannot be said for a 4 BHK apartment of 1200 sq ft available at the same price.
How this Format is Changing Right Now and How Developers Address This?
This demand for smaller configurations is fulfilled in various ways by the developer fraternity and there is no set formula about what is right or wrong. While there are developers who are constructing a 1 BHK with 300-350 sq ft which may be very small, some are taking the balanced approach of providing a slightly bigger configuration and some continuing to build really large apartments, thus offering homebuyers a plethora of options to choose on what works best for them. So, while for some, a 350 sq ft maybe a small apartment, a person living on rent in Mumbai would rather want it to be a starting point for his realty owning journey here, often considered a big deal. The general mindset of the homebuyers presently is that they would rather start with a real investment on 1 BHK or 2 BHK and not the massive 3 BHK, making the smaller ticket size options more sought after.
Finally, the core population has always been mindful of the ticket sizes. Life is a full circle and what was built for 3 decades back in Mumbai city- the smaller configuration apartments are having a comeback now.