The Growing Trend Of Compact Homes
We live in an era of solo living and nuclear families which has created huge demand for small and affordable apartments across cities. Additionally, rising demand for housing spaces due to rapid urbanisation and the struggle to sell expensive homes in a sluggish market are influencing developers to adopt a strategy of 'housing units with smaller sizes'. In fact, the concept of compact homes is taking shape worldwide.
“Recognising the potential of compact homes, developers have started adopting the strategy of ‘housing units with small size’ to suit the needs and requirements of homebuyers. Another the strategy behind foraying into the compact housing segment is to be able to allow homebuyers to buy their dream home at a dream price and also improve the cash flow into the market,” says Samyak Jain, director, Siddha Group.
“Apart from the millennials, micro-apartments have been also gaining the attention of the investors in large numbers. Globally, data has suggested that rental returns in micro-units are generally 5 to 10 per cent higher than regular apartments. The higher returns stem from robust demand and better utilisation of the available resources,” Jain adds.
The trend of shrinking apartments sizes is being seen in major cities like Mumbai, Delhi-NCR, Kolkata, Chennai, Hyderabad and Bengaluru. PropGuide explores the reasons for the growing popularity of compact homes.
THE DRIVNG FACTORS
Developers' strategy to augment business
Increasing land prices and construction costs leave no room for reduction in home prices and it becomes a challenge to promote expensive homes. Real estate developers are therefore, reducing the average unit size of apartments to maintain overall unit costs within the optimum range. This way developers can benefit and recover much-needed cash through launching small-sized apartments.
Buyers' preferences for smaller homes
Large number of people who migrate to other cities for work, look for homes close to their workplaces and that drives them to even opt a smaller accommodation. Besides, larger houses demand high maintenance and thus, buyers prefer to go for smaller, compact residential spaces which is spacious enough to meet their housing needs.
Compact homes are affordable
Prices of smaller apartments are relatively cheaper. The concept is in line with the government's affordable housing programme. Not just this, these apartments are equipped with all modern amenities that provide a contemporary living experience.
Opens doors for other investments
Compact homes prove to be a practical option for buyers who cannot afford expensive houses. The cost saved by buying a smaller home, can be invested elsewhere to meet other lifestyle goals, e.g. for the education needs of children.
Easy to maintain
Compared to larger apartments, small-sized homes are convenient to maintain and are easy on one's pocket as they greatly lower the utility bills. Not only this, these tiny apartments enable its occupants to intelligently design their spaces to keep pace with latest home décor trends. Well-located compact homes, which are in proximity to schools, hospitals and offices, can significantly cut down the transportation costs for the residents.
Smartly-designed to maximise space
Small-sized apartments allow optimal utilisation of space which larger apartments usually lack and lead to wastage of spaces. Compact homes are thoughtfully designed to accommodate everything while ensuring that no space is wasted.
Higher scope of resale
Compact homes are likely to have higher resale value since these homes have a high demand and many prospective buyers. This implies that owners of such homes can exit their investments without any hassle and at a good profit, if they wish to relocate or move into larger homes.
Compact homes have become largely popular in metro cities Mumbai, Delhi-NCR, Kolkata, Chennai, Hyderabad, and Bengaluru owing to the presence of young professionals who make up a large a portion of first-time homebuyers. Particularly in Mumbai, compact homes ranging from 189 sq ft to 700 sq ft, have been a key driver in the growth of the real estate market as developers are looking to offer the right product at the right price. Micro markets such as Kandivali, Chembur, Andheri and Ghatkopar are major hotspots of these homes, especially as they have excellent connectivity and social infrastructure, observes Jain.
Delhi-based real estate agent, Gopinath Singh says he has been repeatedly asked about compact homes and its availability. “In Delhi, the saturated market doesn’t allow new constructions and the existing stock is relatively bigger 2BHK or 3BHKs. Noida offers bigger homes too. However, in parts of Noida and Gurugram, you could find compact homes. Compact homes aren’t the same as small homes. The idea is to provide homebuyers or tenants with amenities that will bridge the gap of space starvation,” Singh observes.
(With inputs from Sneha Sharon Mammen)