High cost of apartments in the Mumbai Metropolitan Region (MMR) has been a major deterrent to residential sales growth in recent years. High land prices due to the land locked nature of the city and the high cost of construction premiums have ensured that apartment prices continued to remain high despite the slowdown in sales in recent years. Developers tried to mitigate this by reducing the size of the apartment in order to bring down the ticket size and make it more affordable. Consequently, compact homes started becoming pervasive in MMR.
Over a 5-year period between 2014 and 2019, the apartment size in new launches has reduced by 25% at the MMR level. Homebuyers gravitated towards such compact homes as it fit within their affordability metrics and given the hectic pace of life in Mumbai, the time spent in the house had remained low.
The pandemic, however, has challenged this notion. The lockdown has forced school/college and office activities to come within the boundaries of the house, alongside regular household activities. Compact homes and the joint family culture in India have added chaos to this arrangement. This has made families come to recognize the need for additional rooms in the house.
The lockdown has made study rooms, half bedrooms and balconies an important part of the apartment, as they can be used for the purpose of work from home or study from home. As per our research, developers have taken note of this trend and started reconfiguring new launches to have larger rooms or additional bedrooms. Adding a study room or a balcony does not add significantly to the final cost of the apartment, but dramatically improves the marketability of the apartment in the current situation.
If we refer to Table 1 below, the size of apartments in new launches post July were larger by 5% and 10% in the markets of Navi Mumbai and Peripheral Central Suburbs, respectively, as compared to those launched in 2019.
Average size of apartments in new launches
It is important to note that the planning of a project and designing of the layout of apartments is done several months before the project is formally launched. Hence, this trend is not very discernible now and is limited to two markets. However, it is likely to accelerate in the near future across most markets in MMR.
(By Nibodh Shetty, Consultant – Research, Knight Frank India)