As builders seek to reduce apartment sizes to boost affordability, the average area of residential flats has shrunk 27 percent over the past five years in seven major cities, but dimensions in the NCR region have fallen merely six percent, according to Anarock. "The liquidity crisis, changing buyer preferences, and growing concerns about affordability have caused real estate developers to rethink the conventional wisdom of 'bigger is better', and significantly moderate unit sizes across seven major cities," Anarock Chairman Anuj Puri said in a statement.
The property consultant said, the average apartment sizes in the top seven cities - Mumbai Metropolitan Region (MMR), Delhi-National Capital Region (NCR), Pune, Chennai, Bengaluru, Hyderabad, Kolkata - have shrunk by 27 per cent over the past five years from 1,400 sq ft in 2014 to nearly 1,020 sq ft in 2019 so far.
"Surprisingly, NCR - one of the worst-hit residential markets in recent years - has seen the least decline of merely 6 percent during this period," he added. The current average size of flats in NCR is nearly 1,390 sq ft. MMR has the least average apartment size among all top cities, and also recorded the highest drop of 45 percent - from 960 sq ft in 2014 to 530 sq ft in 2019.
Pune registered a 38 percent reduction in sizes during this period, with the average apartment size currently at 600 sq ft. Anarock said that the 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. Chennai, Bengaluru, and Hyderabad have seen size reduction of 8 percent, 9 percent and, 12 percent, respectively, over the past five years.
The current average size of properties in Hyderabad (at 1,570 sq ft) is the maximum among the top seven cities. Similarly, the average size of properties in Bengaluru is also comparatively bigger at about 1,300 sq ft while in Chennai it is about 1,190 sq ft. Meanwhile, Kolkata saw sizes reduce by 9 percent over the past five years to 1,120 sq ft now against 1,230 sq ft in 2014.
"Among the major factors contributing to the escalating 'claustrophobia effect' of shrinking apartment sizes, demand for affordable homes in metros tops the list," Puri said. Also, buyers are increasingly looking to avail the government's credit subsidy benefits for affordable housing. These require a home to be priced less than Rs 45 lakh and not exceed 60 sq mt carpet area or approximately 850 sq ft built-up area (including overall loading). Moreover, the goods and services tax (GST) for affordable housing is one percent as against five percent for mid-segment homes.
"In short, buyers get reduced costs and added benefits but lose out on space. Developers get to attract more buyers," he added. On further analysis, Anarock said that affordable homes priced less than Rs 40 lakhs have seen the maximum decline in sizes over the previous years, while ultra-luxury homes saw the least.
Affordable homes priced less than Rs 40 lakhs saw average sizes reduced by 28 percent - from 750 sq ft in 2014 to 540 sq ft in 2019. Mid-segment apartments priced from Rs 40 lakhs to Rs 80 lakhs saw sizes reduced by 17 percent - to 950 sq ft in 2019 from 1,150 sq ft in 2014.
Premium homes priced between Rs 80 lakhs to Rs 1.25 crore saw a 21 percent reduction in sizes - from 1,450 sq ft in 2014 to around 1,140 sq ft in 2019. Luxury homes priced between Rs 1.5 crore to Rs 2.5 crore saw an 18 percent reduction in average sizes - from 1,640 sq ft to 1,350 sq ft.
Ultra-luxury homes priced more than Rs 2.5 crore saw a mere 8 percent decline in average sizes over the last five years - from 2,400 sq ft in 2014 to around 2,200 sq ft in 2019.
News Source: Economic Times, Url: https://bit.ly/2oO4bVG