SP realty arm treading a cautious path, to scale down 3BHK flats in Mumbai

At a time when the sale of larger homes with study rooms and outdoor areas has picked up due to work-from-home becoming the new normal, Shapoorji Pallonji Real Estate (SPRE) is looking at cutting down the number of three-bedroom apartments at its upcoming projects in the Mumbai Metropolitan Region (MMR).

Six months ago, it was looking at increasing the number of three-bedroom apartments by 5 per cent. Around 50-60 per cent of its residential portfolio comprises two-bedroom apartments; 20-25 per cent being three-bedroom apartments.

“We are cutting down the number of three-bedroom apartments in Thane and Mulund. We want to be cautious,” said Venkatesh Gopalakrishnan, managing director (MD), SPRE.

Gopalakrishnan said the demand for three-bedroom apartments will grow in the second phase of recovery after a prolonged nationwide lockdown to contain the spread of the novel coronavirus.

However, Vikas Oberoi, chairman of Oberoi Realty, said his company was seeing greater demand for three-bedroom apartments.

“We are planning to sell 4,000 apartments in 2020-21 (FY21). We will achieve the target,” added Gopalakrishnan.

Anuranjan Mohnot, MD, Lumos Alternate Investment Advisors, said: “The current subdued macroeconomic environment due to Covid-19 has put serious pressure on the Rs 2-crore-plus residential real estate market in MMR. Many developers are redesigning their products to attract a larger customer base at the bottom of the market pyramid.”

However, in Bengaluru, Pune, and the Delhi-National Capital Region, some developers are increasing the product size to accommodate the work-from-home culture and better living standards, he added.

When most developers are erring on the side of caution, SPRE is looking at launching a clutch of new projects. It is looking at launching its budget housing Joyville in Hinjawadi in Pune this month, another housing project in Pune by January next year, a residential project in Mumbai by February 20201, new project phases in Thane and Bengaluru in December this year, and the second phase of Joyville in Manjri in Pune in February 2021. Joyville is a joint venture between SPRE, Actis, ADB, and IFC.

What's up

• SPRE planning to sell 4,000 flats by March 2021
• Intends to launch handful of new projects
• Pune, Mumbai in the pipeline for the next three months
• New projects lined up in Thane, Bengaluru in December this year 
• It is looking to launch second phase of Joyville in Manjri (Pune) in February 2021  

Gopalakrishnan said the company has taken a moratorium of 25 per cent on land loans and not taken any moratorium on the operational projects.

Even though one and a half- and two-bedroom apartments are the top sellers, followed by two and a half- and three-bedroom ones, the sale of larger apartments has picked up, affirmed rating firm ICRA.

“While the sales mix remains similar after Covid, the absorption level for five-bedroom and other large formats has increased significantly in the second quarter of FY21. This is possibly due to rising preferences for dedicated work/study areas and second/holiday homes due to expected changes in working and living styles. Increased demand from non-resident Indians may also have supported the trend since such buyers typically opt for larger format flats, and the current depreciation of the rupee, together with attractive deals, would have supported their purchasing power,” said ICRA.

Demand has also increased considerably for one-bedroom apartments, primarily from first-time homebuyers, reflecting the growing urgency of owning a home, it added.