Demand for 1BHK apartments growing in Mumbai
A large section of Mumbai's population, particularly the middle-class group, is still looking at affordable homes with location being an important criterion. Considering the various payments involved, high interest rates and increasing costs, the home-buyers cannot even look at buying a luxury home, given the current scenario.
Dilawar Nensey, joint managing director, Royal Palms India Pvt Ltd, says, "There is a demand for affordable housing, especially, in a densely populated and an expensive city as Mumbai. The other option that home-buyers are looking at and where we see a demand is: 1-BHK apartments. At present, the prices are not regulated in the city and the buyer has only one option and that is to invest in smaller properties, which are affordable in nature."
Those under the age group of 35 years constitute nearly 65 percent of the population and their needs and budget both are limited, so when they buy their first home, they typically tend to go in for one or two bedroom apartments rather than high-end luxury apartments. Vikram Goel, CEO, HDFC Realty, points out, "It is generally observed that the demand for one, two or two and a half BHK apartments is among young professionals such as those working in IT and ITeS sectors."
Hiral Sheth, director-marketing and sales, Sheth Creators, agrees, "This trend is being seen due to the change in buying patterns of consumers. More and more young professionals are opting for studio apartments, which typically consist of a living room, bedroom and kitchenette in the same space along with various amenities under one roof. While young corporates, especially outstation migrants normally prefer living near their workplace and hence, opt for 1-BHK apartments, the trend is also catching up among nuclear families looking for economical options. Easy maintenance is another big reason why owning or renting a 1-BHK apartment is hassle free."
Even if one is looking to make an investment, it makes more sense to invest in small apartments. Besides, it is not advisable to expect high rates of return on your investment just because one has invested in a high-end apartment. Experts are of the opinion that in the current scenario, buyers are looking for value for money and are willing to forego the add-on attractions of luxury housing in favour of affordable pricing.
Anuj Puri, chairman and country head, JLL India says, "From an investment perspective too, luxury homes do not provide the same returns as mid-income housing. As of now, prudence is the name of the game and the highest demand is for homes, which correspond to the actual end-user demand."
Also, because of the constant demand from homebuyers, property investors are also focused on smaller homes. Apart from the fact that smaller homes are always the most affordable and the easiest to sell once they have appreciated enough, the rental demand for smaller homes is also steady in cities like Mumbai. Arvind Jain, managing director, Pride Group, says, "Many home seekers cannot afford to purchase homes in the costlier locations of these cities and therefore, prefer to live in rented ones. This makes compact flats an ideal investment option for property investors, both, from a capital appreciation as well as rental income point of view."
However, industry players like Rushank Shah, director, sales, Hubtown Limited, is of the view, "It is the gloomy macro-economic scenario, which has forced people to consider the option of buying more affordable one-bedroom apartments rather than investing in luxury homes and making the future unstable."
With inflation being the trend in a developing economy likes India, people are burdened in every sphere of life. They are more satisfied with having a home, with a manageable debt, rather than creating an unstable living environment.
Jay Patel, founder and CEO, IndiaMLS, says, "India has seen a slow economy for the last few years and even though things look brighter with all the initiatives being implemented to drive the economy, people have yet to see the fruits of the said initiatives. This, coupled with the ultra-high prices of luxury homes in prime areas, has made it simply unviable for people to look at these homes as a safe investment. The lower price point opens it up to a larger audience of secondary buyers and makes their investment more liquid."
Also, it has been observed that smaller properties have the advantage of being an asset that appreciates at every instance. The entry-level investment gets lower in terms of the ticket size. Ashutosh Pathare, business head Mumbai Region and group sales head, ABIL Group, explains, "There are two types of buyers one who are the real users and the other, the investor. A person buys according to his need. If he requires three-four BHK apartments and has a social status to maintain, then he would never buy one or two-BHK house. He will wait for the right house and the right deal. On the other hand, the investors will go in for one or two-BHK apartments as they offer good returns in the medium-to-long-term."
Vibha Singh, Times Property, The Times of India, Mumbai