by Mr. Ashutosh Limaye, JLL India
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-demonetization reality and RERA.
While many developers in the city are trying to right-price and
right-size 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:
(1) to improve their own cash flows as there is a lot of latent
demand in this category and
(2) 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 location, amenities and a
developer’s compliance with the real estate regulator still remain important
factors.
Here’s a low-down of some key precincts that have an upcoming
supply of compact homes so that buyers can compare living across these areas of
Mumbai.
A scoring matrix (see below) has been used to rank select
comparable precincts which have a supply of apartments with lesser than 500 sq
ft carpet area coming up.
Resultantly, Goregaon, Malad,
and Kandivali have been chosen from the western suburbs while
Kanjurmarg andMulund 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) has been obviously considered.
The better score has been given to precincts with a higher supply of the
popular 1BHK 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 verdict
The study reveals that given these parameters, the best suburb to
get one’s own compact house is Malad, with a 4.1 average score. 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 homes’ 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 innovation. Developers in other cities often
replicate the successful ways of their Mumbai counterparts.
Moreover, with slower sales seen in the bigger ticket sizes in
recent months and demand for apartments priced under INR 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 both the key stakeholders – i.e. buyers and developers – of
compact homes, this product category will see the most action in 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 INR 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.
About the author..
Mr. Ashutosh Limaye, National Director – Research, JLL India
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