One of the major problems faced by home buyers nowadays is the skyrocketing prices of homes. While affordability seems to be a problem specific to the buyers, it sure affects the developers as well. The demand for high-priced residential units is limited to high net worth individuals, but they constitute only a fraction of the client base. A larger percentage is that of the middle income buyers who are looking for something better in rather affordable prices.
To suit the affordability of buyers, builders tend to reduce the sizes of apartments. They tend to compromise on the size of their product than the quality of it. As it is becoming difficult for buyers to buy expensive homes, it is also hard for the builders to sell such projects. So they have found a way out. This concept of selling smaller units is more or less inspired by the ‘Sachet Marketing Strategy’ of the FMCG industry. Builders are making smaller sized apartments without reducing the price per square feet, which ultimately makes the apartments affordable for the home buyers.
Buyers’ preferences have also changed with time. Although they are not ready to compromise on their need for a better lifestyle, they are pretty much okay with a compact apartment that can meet all their requirements. Moreover, proximity to their workplace is also a major criterion behind their choice. The families have also become nuclear so they can easily adjust in a cozy 1 BHK or 2 BHK apartment. Hence, the small sized affordable homes have become need of the hour.
Over the last five years, the major real estate markets of the country have witnessed significant decline in the size of their residential apartments. The Mumbai Metropolitan Region (MMR), which is already starved of land and affordable homes, has seen the highest decline in apartment sizes i.e., 26.4%, followed by Bangalore, Chennai and Kolkata. Delhi/NCR saw a decline of 9.7% percent.
Builders resort to this strategy because a change in capital values is not in their hands. It is affected by the market forces and several other litigations. However, change in the size of apartments is at their sole discretion. So they alter the size of units they offer to suit the spending capacity of their prospective customer base.
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