Realtors shrink size of apartments to make it affordable

Real estate developers are increasingly reducing the size of apartments to make these affordable at a time when property markets are going through a prolonged slowdown, says a new study. 

Mumbai Metropolitan Region (MMR) witnessed the largest fall in apartment sizes at 26.4 per cent between 2010 and the first half of 2015, said a report by property consultant JLL.

Kolkata witnessed a 24 per cent decline in apartment sizes, Bengaluru saw a 23.7 per cent fall and Chennai a decrease of 22.2 per cent. 

"The fall in average apartment sizes across all top seven cities is a clear indication that developers intend to make houses affordable for buyers by reducing average apartment size, instead of reducing the capital value," JLL said. 

It said several urban buyers are increasingly looking for homes near their offices, which could be small in size. They prefer a house "sufficient" enough for family requirements. 

It also said they are not compromising on their lifestyle, as they prefer a compact home with all basic amenities. "As these locations are expensive compared to the suburbs, buyers may be able to afford smaller units, which is more than acceptable," the report said. 

Firms shift to suburbs

The trend of companies migrating to offices in suburbs - driven by a combination of cheaper rents and lesser commute times for workforce - has risen sharply over the past decade.

Not only location-independent information technology companies (IT) but other sectors, too, are setting up office spaces in secondary business districts (SBDs) and peripheral business districts (PBDs), JLL said. 

According to JLL, the migration is driven by occupier demand for large IT parks and office projects in SBD and PBD precincts. 

PBD has seen the biggest jump in the share of office stock, rising from 28 per cent in 2004 to 47 per cent in the first half of 2015.

The share of SBD in office stock has remained stable over the last several years at 43 per cent of the total office stock, central business district witnessed a severe attrition of occupiers and a decline in fresh supply of office space that has led to a significant drop in its share of office stock from about 33 per cent in 2004 to 10 per cent in the first half of 2015.