Bottom Line: Chennai is fast catching up with compact housing than large format villas.
N Gowtham, an NRI from Muscat on his return to home town preferred to buy a compact luxury apartment than a villa. Many among his peer group were surprised by his choice. Chennai residents, after all, have long been known to prefer independent houses and villas. Apartment culture in the last over a decade could only make inroads because of affordability factor, added with the ease of finance in buying an apartment.
But this NRI had no dearth of money to buy an expensive villa and hence curiosity over his choice of property. Gowtham is nevertheless pretty clear about his choice.
“After having lived in gulf country and been exposed to the quality housing in right-sized compact apartments, I find villa property not only vulgar display of wealth but also loaded with unnecessary expenses. It is unnecessary spending both in terms of buying and maintaining it. Moreover, the kind of amenities and lifestyle that I need now can not be served by a standalone villa but with a multi-storey apartment only,” says Gowtham.
This NRI is the changing face of young cosmopolitan Chennai where the villa culture is fast losing out to apartment. And this apartment too is shrinking and getting compact, with or without loaded options of amenities and lifestyle, depending upon the budget.
A report by ANAROCK Property Consultants clearly indicates this growing trend. It says the average size of apartments has reduced by 15% in Chennai by the year 2018. The average size of an apartment during 2014 was 1,290 square feet and in 2018, it got reduced to 1,100 square feet.
The ANAROCK report points out an interesting trend that apartment sizes in the luxury housing segment (priced above INR 80 lakh) also saw a 20% reduction over the last five years. The average size of properties in this segment was 1,830 square ft in 2014, which came down to 1,460 square feet in 2018.
M Karthik, a local property agent is not surprised by this trend. According to him, there is very small market for villa projects now. Even though there is more profit in building and selling luxury villas the developers nowadays prefer to go for smaller apartments in the 1000 sq feet to 1200 sq feet range. The holding cost of a luxury villa often eats up the profit margins that is otherwise higher with a luxury villa.
“Chennai has traditionally been a cost conscious market with conservative spending habits. Yes, the housing market has traditionally been tilted towards villas and independent houses. But then those houses were not beyond the affordability curve of the city. Today, when affordability is a big factor, added with the fact that distance from work place is also an issue, people are changing their housing wants and needs,” says Karthik.
Most of the analysts who track the local property market maintain that the emerging market realities and the economy of the region has changed the way people look at the housing. This change has been pretty fast in the last over a decade. It is a paradigm shift in the housing market of the city.
Chennai wants compact comfort
Chennai fast switching to compact comforts of smaller apartments than villa
Apartment sizes reduced by 15% in the last 5 years
Lifestyle amenities and closer to workplace are preferred over size of apartment
Developers even eliminating balconies to make it affordable
It may also give the impression that the slowdown in the economy in general and the property market in particular has been the catalyst behind the changing mood of Chennai. But then that would be an outside view, keeping in mind the fact that Chennai city is increasingly becoming the home ground of the expat work force who are exposed to the compact living in other major cities of India.
Those who still want to have villas and independent houses are mostly the retired professionals. They nowadays better prefer to move to outskirts and beyond the city limits to enjoy that kind of housing within a reasonable budget, without the increasing traffic chaos and pollution.
And those who want to have a house within EMI paying budget, and also seek to be closer to the work place are preferring smaller compact apartments. And hence it is not very uncommon, unlike in the past, that the developer launching a 2BHK apartment of 800 sq feet size is the one to sell the first in the given micro market.
There are a few emerging trends that would define why and how the apartment sizes are shrinking in the city. The preferred average cost of an apartment in the city today is within INR 40 lakhs. The family structure is moving from joint families to nuclear families. Late marriages and single child is no more unusual in the city. Over and above that, the income to spending cycle clearly indicates that Chennai is no different from other metro cities like Delhi, Mumbai or Bengaluru.
Astronomical rise in the property prices is probably the biggest factor leading to the launches of smaller apartments. In most of the key localities of the city the property prices have doubled, in some cases even been witness to 300% appreciation, and the affordability is today a critical factor in the housing market. Obviously, the income level of an average professional in the city has not been in sync with the rising property prices.
Last, but not the least, as could be seen by the choice of NRI Gowtham, is the quest of lifestyle within the housing complexes, and that too within the city limits. Collectively, this is changing the very face of the Chennai market and making it as competitive as any other global city.
Ravi Sinha @ravitrack2media
Track2Realty is an independent media group managed by a consortium of journalists. Starting as the first e-newspaper in the Indian real estate sector in 2011, the group has today evolved as a think-tank on the sector with specialized research reports and rating & ranking. We are editorially independent and free from commercial bias and/or influenced by investors or shareholders. Our editorial team has no clash of interest in practicing high quality journalism that is free, frank & fearless.
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