'Small, close to office' is the new mantra for the home-buying millenial

However, buyers need to check public transport facilities and connectivity to major areas

Twenty-eight-year-old Gopal Babu got a job in information technology (IT) company in Bengaluru about three years ago. Recently, when he wanted to buy a house, he chose one that wasn’t big, but closer to his workplace. So he settled for a 550 sq ft apartment, priced around Rs 3.2 million.  “I wanted a small house that suited my pocket and close to my office,” Babu says.

Babu’s was not an isolated case. A number of young professionals are looking to buy smaller houses that are closer to their workplaces and also suit their pockets. Developers, who are battling falling sales and lower cash flows, are tapping this segment like never before.

Of the total new project launches in Q2 2018, about 137 projects consisted of one-bedroom apartments (1BHK) as against just 90 in Q2 of 2017, a yearly increase of almost 52 per cent, according to Anarock Property Consultants.

Mumbai, where average prices have crossed Rs 14,000 a square foot, saw a maximum rise in the number of 1BHK projects, from merely 40 in Q2 2017 to almost 81 in Q2 2018. Surprisingly, Pune saw a decline of nearly 18 per cent in the number of projects having 1BHK over the year, as per Anarock.

“These young professionals prefer to buy homes in locations that are close or well-connected to their workplaces so that their daily commute is reduced, and work-life balance is maintained,” says Anuj Puri, chairman at Anarock Property Consultants.

Puri adds that additionally, in the prevailing market sentiment, which is averse to overly heavy investments in residential property, smaller homes come handy for the younger crowd.

Ashish R Puravankara, managing director of Bengaluru-based realty firm Puravankara, says that the profile of first-time buyers in cities such as Bengaluru, Pune and Hyderabad has changed, to 25-35 years from 40-45 years earlier, due to the emergence of IT & ITes jobs.

“There is certainly an unstated need by consumers looking for compact homes. They prefer investing in real estate and buying a home as a fixed asset, by paying their EMIs instead of paying monthly rentals, considering this as a long-term saving tool,” Puravankara says.

Both large and small developers have launched small-sized apartments including Lodha, Omkar in Mumbai; Puravankara, Salarpuria Satva in Bengaluru; VTP Realty in Pune, Indira Projects in Chennai among others.

For instance, Mumbai-based Omkar launched two projects in which it offered one BHK and two BHKs of smaller sizes.

Its Omkar Signet at Malad East on the Western Express Highway had an inventory of 588 apartments priced between Rs 7.2 million for 1BHK measuring 318 sq ft and Rs 10.6 million for 2BHK measuring 495 sq ft. Another project, Omkar Lawns & Beyond in Andheri had an inventory of 1,200 units, priced between Rs 8.3 million for 1BHK measuring 353 sq ft and Rs 12.4 million for 2BHK measuring 494 sq ft and Rs 15.7 million for 3BHK measuring 645 sq ft.  The developer sold 800 units in the first phase.

Anarock's Puri says that while the 1BHKs are low on maintenance and well within one’s budget in a prime location, buyers of these homes need to check the area where such projects are located. “Since most millennials buy these homes to stay close to their workplaces, it is imperative that he checks the public transport facilities and the connectivity to major areas,” he adds.

Also, with the rental demand for 1BHKs seeing an increase over the last two to three years, many consider these units as good investment options. For these buyers, the resale value for such properties is seen to be attractive only if they are located close to prominent workplaces, built by reputed builders etc, he says.