Demand Up for One BHK Houses..!

Single working individuals and newly-married couples, trapped in an environment of rising property prices.

uncertain job market and a gloomy macro economic scenario, are reconsidering the option of buying the more affordable one bedroom apartments in Mumbai.

These house buyers, confident of good increments &  job security in the past few years, had shunned such apartments and focused on buying at least 2 bedroom apartments, or / something even fancier.

But, things have changed since then, and these folks are not ready to take on higher liabilities of owning bigger apartments, especially at current rates.

Property developers / promoters, who too stayed away from this segment due to lower margins, have sensed a change in mood &  have spotted an opportunity in this unfancied 1 bedroom category.

Rustomjee Group, Marathon Realty, Hubtown, Nahar Group, NRDL, Kanakia Spaces and several other developers are all offering apartments in this category.

The product, which was a big hit in the 1980s and 1990s until the economy offered more opportunities and higher pay-packages, is making a comeback of sorts.

Mr. Mayur Shah, MD, Marathon Group that has been developing realty projects in Mumbai since 1969 said, "Buyers are very cautious right now, they are buying smaller units. The mindset is similar to pre-1995 when homebuyers were not willing to stretch themselves as confidence about their income levels was low" 

It was in the late 1990s, with tax sops on home loans thrown in, people started buying larger apartments, which was in sharp contrast to their earlier approach of buying a house with own savings or family support, and therefore mostly ended up buying 1 bedroom apartments. "Ultimately, budget plays a very important role in this decision.

Real estate prices have been going up for long making it unaffordable. Buyers are not sure if their salaries will rise in the same fashion as they did earlier," says Mr. Shah, while reasoning the revival of one-bedroom units.

About 65 % of Marathon's new 18 storey residential project near Mulund, a Mumbai suburb, will comprise 1 BHKs. For developers/ promoters too, this seems to be an easy remedy to their liquidity worries.

"Right now, turnover of such smaller apartments is high. Developers are also facing tight liquidity situation, therefore this is the best available solution for improving liquidity rather than depending on private financiers," said Mr. Manju Yagnik, Vice Chairperson, Nahar Group.

For long, developers have been focusing on apartments with at least 2 bedrooms given the high-margin possibility. But, are now considering even lower margin vertical.

"Margins in this segment are low, but given the high-volume play, many developers are moving back into this as a sure-fire sales proposition, with almost instant absorption if the location is right. 

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