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Never has there been more focus on the end-users – even in Mumbai, which is the priciest real estate market in India, than in recent months, especially in light of the post-demonetisation reality and RERA. While many developers in the city are trying to find the right price and size for their offerings, to suit the end-users’ requirements, some have gone ahead and started launching compact housing projects across key suburbs of Mumbai.
The aim behind launching such projects appears to be two-fold:
- To improve their own cash flows, as there is a lot of latent demand in this category.
- To attract home buyers wanting to live within Mumbai city limits, with compact apartments suiting their budgets.
Recent projects launched in precincts like Goregaon, Malad, Kandivali, Kanjurmarg, Chembur and Mulund, point towards this emerging trend. A few top developers with proven track records, have also entered into this segment recently. Home buyers looking to book in these upcoming projects, however, are advised to carry out their due diligence, as the location, amenities and a developer’s compliance with the real estate regulator, still remain important factors.
Key precincts that have an upcoming supply of compact homes
A scoring matrix has been used to rank select comparable precincts, which have an upcoming supply of apartments with less than 500 sq ft carpet area. Resultantly, Goregaon, Malad and Kandivali have been chosen from the western suburbs while Kanjurmarg and Mulund are their eastern counterparts. More points have been given to precincts with higher supply in this new product category and having good existing, as well as upcoming physical and social infrastructure.
Connectivity to key business districts of SBD north (i.e., Andheri) and SBD-BKC (i.e., the de-facto CBD of Mumbai) have been considered. Better score has been given to precincts with higher supply of the popular 1-BHK configuration. Similarly, suburbs providing lower entry points to home buyers and those with lower average base ticket size, were ranked higher as that is a sign of higher affordability for most home buyers.
Source: JLL REIS
The study reveals that given these parameters, the best suburb to get one’s own compact house is Malad, with an average score of 4.1. It not only has a good supply coming up in this category, but also gives lowest entry points for buyers, among all these precincts. Moreover, it enjoys good connectivity to SBD north, SBD BKC and office locations in adjacent Goregaon, apart from itself being an office location. A good social infrastructure exists here and physical infrastructure, too, has improved.
Among the developers that have announced compact home projects in Malad, Omkar and Godrej are the top ones that stand out for their brand name and track record. In Kandivali and Mulund, developers such as Gundecha, Nirmal Lifestyle, among others, are active in this segment.
Will compact housing help Mumbai’s buyers and developers?
Mumbai has always been ahead, in terms of product-level offerings in its residential market. In fact, it can be called a ‘lab’ for Indian residential realty, as trends in this city seem to catch on popular imagination in other metros and tier-II cities. Challenges, in terms of land prices and construction costs, have led leading developers in Mumbai to adopt innovative marketing campaigns and project as well as product-level innovations. Developers in other cities, often replicate the successful ways of their Mumbai counterparts.
Moreover, with slower sales in the bigger ticket sizes in recent months and demand for apartments priced under Rs 1 crore remaining intact in the city, it makes good business sense for developers to offer this new product category. Housing has, and will always remain a basic need and with rapid urbanisation, more people are going to buy their own house. Moreover, with benefits for buyers and developers of compact homes, this product category will see the most action in the years to come.
For buyers, it promises a coveted city address. Having one’s own house within the city limits, is far more important for many residents than having a bigger apartment farther up in the distant suburbs, as they can save time in commuting to and from office every day. Apartments priced under Rs 1 crore may mean higher purchasing power for those end-users, who are otherwise unable to buy their dream home within city limits. Compact homes promise them all this, within their budget.
(The writer is national director – research, JLL India)