Track2Realty: The reduced apartment sizes in new launches in 2014 have contributed to making prices more affordable. In the over 50,000 mid segment units (1 and 2 BHKs) of newly launched houses across top eight cities in Quarter 1 of 2014, most cities have seen a reduction in sizes of approximately 100 sf. This has led to an average drop of 6 percent in cost of the apartments within these cities, says a report by Cushman & Wakefield.
While the average unit sizes of new launches in most cities have dropped, Noida recorded the sharpest decline of 16% in newly launched home sizes. This has helped control the cost of the apartments in this micro market despite a 17% increase in per sq.ft rates. Similarly, Mumbai witnessed a reduction in apartment’s sizes by 12% contributing to the ease in cost of apartments by 9% over last year.
Other markets that saw unit sizes drop were Ahmedabad (8%); Chennai (3%); Hyderabad (9%); Pune (6%); and Gurgaon (3%). However in the same period the benchmark pricing of these areas (price per sf of new launches) is not disturbed as far as possible. The ticket prices of these locations have seen a decline to infuse more affordability into the system despite some of the locations witnessing an increase in the average Unit price (INR / sf).
Chennai, Gurgaon and Hyderabad saw an additional push towards creating affordable options as they also saw a decline in prices of new launches, albeit most of these new launches have been in the peripheral or futuristic locations with lower benchmark pricing. These locations are generally price sensitive and driven by end user purchase, making it necessary to meet price expectations.
| AVERAGE CHANGES IN HOUSING UNITS LAUNCHED (2013 TO 1Q 2014) | |||
| City | Avg Unit Size
(SF) |
Avg Unit Price (INR/SF) | Ticket Price
(INR LAKH) |
| Ahmedabad | -8% | 7% | -3% |
| Bengaluru | 1% | 5% | 7% |
| Chennai | -3% | -7% | -10% |
| Gurgaon | -3% | -30% | -32% |
| Hyderabad | -9% | -7% | -15% |
| Kolkata | 3% | 14% | 18% |
| Mumbai | -12% | 3% | -9% |
| Noida | -16% | 17% | -2% |
| Pune | -6% | 4% | -2% |
Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield says, “Residential sector is banking on end-user driven demand and hence developers are tweaking products to make them more affordable. It also signals a degree of stress among developers, which is forcing them to launch products to inject doses of robust sales numbers into their balance sheets. Affordability holds the key right now; end-user buyers have been shying away from making purchases for a long time owing to lackluster economic conditions and resultant low confidence.”
However, markets of Kolkata and Bengaluru were exceptions to this trend. In these markets, both unit sizes of apartments as well as the per square foot rate have increased. Correspondingly the cost of apartments have also increased by 18% in Kolkata and 7% in Bengaluru. This is indicative of a strong end-user driven market that is catering to the large middle class population within these cities.
