Property Developers in Mumbai Focusing on Smaller Apartments

Smaller homes are being considered by many property buyers in Mumbai. This is because 3 and 4BHK properties in Mumbai have become unaffordable for many. Even a 2BHK apartment in some posh areas of Mumbai is out of the reach of middle-income buyers.

Considering the growing demand for affordable units, many property developers in Mumbai are focusing on construction of smaller apartments. They are reducing the average size of apartments for reducing per unit cost.

According to the industry experts, developers are coming up with new offerings in order to attract fresh customers to their projects. They are taking advantage of the demand in the affordable segment, offering 1BHK units to cater to middle-income buyers or investors. As per a report published by JLL India, in the last five years, the average size of an apartment in Mumbai has seen a decrease of 26.4%.

The demand for 1BHK homes have shot up also because maintaining a 3 or 4BHK apartment gets as expensive as buying it. As per a PropTiger report, smaller, 1BHK units accounted for approximately 22% of the total residential property sales in FY16. It was in cities like Mumbai, Pune and Bengaluru where demand for such units was mostly concentrated.

Another important factor due to which developers are focusing on building smaller units are- new incentives. The government has announced new incentives to developers as well as home buyers. There are service tax exemptions on affordable homes of up to 60 square meters constructed by state or central government, including private public partnership.

A significant number of new residential property in Mumbai belongs to the smaller, more affordable segment. If you have been planning to buy a home in Mumbai or to make an investment on a budget, you can look for a small, affordable option.

Demonetization and Affordability of Properties in Mumbai

In 2016, the Indian government announced demonetization of Rs 500 and Rs 1000 notes due to which several sectors, including real estate faced challenges as it mainly thrives on cash transactions. Reportedly, property transactions in Mumbai almost came to a halt due to this announcement.

According to real estate companies in Mumbai, property enquiries reduced drastically since the government announced demonetization. Rating of 1500 to 1700 enquiries a day reduced to 400 enquiries on many property portals. If experts are to be believed, there will be a 50-70% slow down or no transaction period in Mumbai’s real estate sectors for few months because everyone seems to be straightening their businesses out at the moment.

As per predictions, rates for properties in Mumbai will reduce in several areas. If you are planning to buy a house in Juhu, Khar, Santacruz or Bandra, you can get a good deal. Even properties in South Mumbai will be available within the not-so-expensive price range. Impact of demonetization will not be very evident in areas that are close to commercial hubs, such as BKC (Bandra Kurla Complex) and Bandra East.

Some real estate companies are dismissing these predictions, claiming that the impact of demonetization will stay only for a short-term, whether you are planning to buy a flat in Chembur or Bandra East. According to them, this move will not be having much of an impact on first sales transactions or cheques only transactions that make up the primary market. However, the secondary market will face a huge impact with the move.

It is also being said that this move will make the Mumbai’s property market more reliable and engaging for foreign investors. Sales will pick up because banks will be flushed with funds and the interest rates will reduce.