Builders try another trick to woo customers by cutting flat size
With few buyers in the ultra-luxury housing segment, builders are going big on 1 BHK, one room kitchen and compact two BHK flats.
Lodha, Godrej, Hiranandani and Oberoi realty groups are all doing it. “There is no sale in the ultra-luxury housing segment. Therefore, builders are forced to reduce the size of apartments. They cannot reduce prices, so they are reducing apartment sizes,” said Pankaj Kapoor, MD, Liases Foras, a real-estate research firm.
BMC officials agree. “Earlier, we used to get a number of proposals for luxury, ultra-luxury projects and villas. Now, things are different. Most developers want to construct budget homes,” a civic official from the building proposal department said.
But is there an increase in sales? Kapoor says even the cost of 1 BHK flats are quite high. Average customers will not be able to buy them. “Most high-end developers are quoting between Rs 1 crore and Rs 1.50 crore in the suburbs for a 1 BHK flat,” he says.
Developers have a different take, though. Niranjan Hiranandani, chairman and MD of Hiranandani Group, says the youth prefer to stay or start out in their own flats rather than in rented apartments.
“The sentiment keeps changing and there are other reasons for increasing sale in the small-apartment segment. The government is also encouraging small houses. The RBI has asked banks to offer 90% housing loan, if the cost of a flat is less than Rs 30 lakh. Therefore, the sale in this segment is shooting up,” claims Hiranandani. He had recently launched a few 1 BHK projects in Powai, Thane and Panvel.
Nayan Shah, MD, Mayfair Group, says that the small size of flats gives buyers a psychological benefit. “Small houses are within their financial capacity. People initially buy small flats, then shift to bigger ones,” is his argument.
Kapoor, however, doesn’t agree. “At these prices, to buy even smaller flats, a person should have a monthly salary of at least Rs 3 lakh. If flats should sell, builders should bring down the cost of a 1 BHK apartment to less than Rs 70 lakh. Otherwise, such high prices will only result in the piling up of empty ghost-houses,” Kapoor said.
That should sound like a horror story to developers.