Developers reduce average apartment, villa sizes to keep ticket price in check
The average size of new apartments across top nine cities witnessed a reduction of nearly 3% to 1,149 sq ft in the last financial year ended March, from 1,187 sq ft in FY14, according to a latest report by property portal PropTiger named India Realty Report for FY16.
Villa sizes also registered a drop of a whopping 18% across cities to 2,220 sq ft, compared with about 2,719 sq ft in FY14.
“Supply was indicative of demand in the present context, as the past two years saw better sales of smaller apartments and villas,” said the report.
This trend was more prominent in cities like Bengaluru, Mumbai and Pune, the employment hubs that house high volumes of the migrant workers.
Smaller homes has been the flavour of the season with 1-BHK units accounting for 22% of total residential sales in FY16, rising from 21% in FY15. The demand for 1-BHK units was mostly concentrated in cities like Bengaluru, Pune and Mumbai.
“This can be directly attributed to higher average prices in these cities, necessitating introduction of smaller sized units to contain the total cost,” the report said.
However, two- and three-BHK units continue to dominate the market, together accounting for over 70% of total sales for a third straight year in FY16.
Meanwhile, demand for affordable homes priced less than Rs 50 lakh increased in the last financial year, accounting for over 50% in launches and 52% in sales.
Demand for budget homes in the range of Rs 25-50 lakh is likely to increase going forward, due to lucrative incentives announced in the Union Budget FY17, according to the report.
Anurag Jhanwar, Business Head (Consulting and Data Insights), PropTiger.com, said, “Consumer centricity is taking precedence, with launches aligned to better product and customer value proposition, offer bundling and attractive financing schemes.”
The report said Indian residential real estate market seems to be getting into a stabilization mode, with sales in the second half of FY16 falling by 1% over the first half, the lowest rate of fall since H2 FY14. The prices have also remained range bound, with a nominal price increase of around 1% during the same period.
Total sales of residential units in FY16 dropped by 33% to 211,000 units in FY16, from around 315,000 units in FY15 – marking a third straight year of fall. Launches also declined 46% in FY16, compared with FY15.
Gurgaon and Noida were the only cities that registered continuous decline in property prices since FY14, while other cities recorded marginal growth.
While cities like Ahmedabad, Hyderabad, Kolkata with affordable prices and lower inventory overhang are expected to provide opportunity for price appreciation in select pockets, the bigger cities are expected to see range bound movement in prices, said the report.