One-bedroom, studio apartments make a comeback

Some marquee names in housing such as Hiranandani, Kalpataru, Man Infrastructure and Omkar have either launched or are launching one-BHK apartments in Thane and the Mumbai suburbs. Builders in the National Capital Region (NCR) area around Delhi are also getting active on onebedroom and studio apartments.

"Spacious, high-end apartments are seeing lesser offtake," notes Ashutosh Limaye, director, real estate intelligence service, Jones Lang LaSalle, an international property consultant.

"That is why developers are launching smaller apartments in extended suburbs. Although one BHKs sell well within the city limits, developers do not do it for commercial reasons."

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The trend is catching up amid a steady decline in the absorptions at NCR and Mumbai, the country's largest realty markets.

They have come down from 15 to 20 million sq ft a month from the beginning of 2011 to 10 million sq ft in the NCR, while Mumbai is seeing an absorption of six million sq ft, at a 25-month low, according to a recent report by SBICap Securities.

"The moment you want to move your inventory fast, the size has to be smaller, as bigger apartments move slowly," says Bharat Dhuppar, chief marketing officer at Omkar Realtors and Developers. It is planning to launch one-and-a-half BHKs in the Goregaon area of Mumbai.

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Consultants recall some big names such as Unitech, DLF and Puravankara got into mid-income housing in 2008-09 to generate quick cashflows during the slowdown in the property market.

Many started focusing on premium apartments once the demand picked up.

"There is a market for one-BHK. That is why we are launching a project," says Niranjan Hiranandani, managing director of Hiranandani Constructions, which is launching one-BHK apartments at Hiranandani Estate in Thane. Each apartment, of 630 sq ft in size, costs around Rs 50 lakh.

Tata Housing, a Mumbai-based realtor, has also been launching value homes, typically one-BHK flats with area ranging from 283 sq ft to 489 sq ft. The price of these units could vary from Rs 3.9 lakh to Rs 7.8 lakh, depending on the location and size.

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Amrapali, a developer active in the NCR, launched a one-BHK project just a month ago in Noida, at a price of Rs 20 lakh. "We will launch this product category with every future project of ours, as the demand from this category is very high in the NCR," says CMD Anil Kumar Sharma.

He says there are government restrictions in Noida related to the number of apartment units per hectare. The number can't exceed 1,600 in a hectare. "So, only big developers who have a larger area will go for this segment."

Supertech, another NCR-based builder, launched two one-BHK/studio apartment products in December. Spread over 550 sq ft, these were priced at Rs 55 -70 lakh. R K Arora, CMD of Supertech, says the cost of a one-BHK or studio apartment comes out to be very high.

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Reason: "There is wastage of common area." Also, there is demand from people who live abroad, but come to India for vacations. "A good hotel room will cost them Rs 8,000 per day, so they prefer staying in these apartments."

According to realty research firm PropEquity, NCR saw the absorption of 2,959 one-BHK units from January to October 2011 against the launch of 6,897 units.

The Mumbai Metropolitan region has seen absorption of 4,309 units against the launch of 11,429 units during this period.

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Pranay Vakil, chairman of property consultancy Knight Frank, says many developers are also launching projects with smaller apartments, as it is mandatory under new development rules for the city that a developer should earmark a certain percentage of each project for apartments of 500 sq ft.

Even buyers say one-BHK apartments are economical and fit into their budgets.

Says Nitin Raikar, who bought a apartment in the Godbunder area of Thane two months ago: "We wanted to buy a two-bedroom apartment, but prices are so high that we decided to settle for a one-bed unit."