New tricks for the old trade: Smaller homes to boost sales

New tricks for the old trade: Smaller homes to boost sales

Amid falling sales, builders are exploring ways to make houses across cities more appealing to buyers.

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Small but not cheap: Builders emulating the sachet marketing strategy.

India’s real estate has undergone several transitions over the past decade. Among the major trends is how developers have been decreasing apartment sizes to suit affordability of buyers.

Builders are exploring innovative ways to make residential housing across major cities more appealing to potential buyers at a time when it is increasingly becoming difficult to sell expensive apartments. Around the country, builders are emulating the famous sachet marketing strategy adopted by FMCG companies in the late 1990s.

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Unable to sell expensive homes in a sluggish market, builders across India are making smaller apartments without lowering the price per square feet and compromising on the quality of product. In the last five years, average apartment sizes fell across all major cities of India. Mumbai Metropolitan Region (MMR)— including Mumbai, Thane and Navi Mumbai — witnessed the maximum fall in apartment sizes on annualised basis, along with Bengaluru, Chennai and Kolkata. Other cities also witnessed varying degree of fall in median apartment sizes.

Mumbai, which already had smaller and compact apartment sizes saw a decrease of 26.4 per cent in the past five years. For the same time period, Bengaluru registered a 23.7 per cent reduction in average apartment sizes followed by Chennai at 22.2 per cent and Pune at 7 per cent. Chennai continues to deliver the largest unit sizes today among tier-II cities and Bengaluru in tier-I cities.



The dynamics of apartment sizes have a tale to tell – that developers are paying conscious attention to consumers’ requirements. 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 values. While property prices are not purely a product of developer’s discretion, the decision to alter apartment sizes as per the needs and spending power of buyers is definitely within their ambit.

Changing buyer preferences

Several buyers are increasingly looking for homes near their offices which could be small in size. They prefer a house that is sufficient enough for their family. This does not mean that they are compromising on their lifestyle, but prefer a small compact home equipped with all basic amenities.

Buyers are increasingly opting for homes that are closer to work-places to reduce commute time. As these locations are expensive compared to the suburbs, buyers may be able to afford smaller units, which is more than acceptable. To enjoy the luxury of bigger homes with good amenities, they prefer to buy homes in peripheral areas of the cities, from where the concept of second homes is emerging at outskirts of the cities.

The writer is chairman and country head at JLL India.