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G Vaidyanathan lives in a three-bedroom rented house in the heart of Bangalore and considers it both comfortable and convenient. When a friend asked him to see a studio apartment, Vaidyanathan went and booked it the moment he saw it.
"Let me be honest. A studio is not for a family man like me. But it is ideal for a single person, or two of them," says Vaidyanathan, 46, who was born in Bangalore and works for Societe Generale, on the internet services side. He dreams to move to less-crowded Mysore but says his wallet may not support that.
"There are two points in studios' favour: One, their affordability; and two, these can be used purely for the renting purpose," he says.
He plans to furnish the studio, bought with an investment of Rs 11 lakh, and rent it to young people who come to work in Bangalore's IT sector, taking advantage of proximity to the electronic city. For his own living - he has two children, one with special needs - he prefers a larger house.
Studios have slowly become an urban phenomenon and are, surprisingly, targeted at both ends of the income spectrum. These could be an option for renters moving into the property owners' market for the first time, as well as an investment option for the well-heeled, or rich NRIs wanting pads for a few week's stay in India.
A studio has a bedroom, a kitchen and a living area - all squeezed into one room under one roof. While the 'barsati' has always been around, the studio is new. "The barsati is an unplanned extension of the house. It usually comes with a huge terrace," says Rahul Sabharwal, chief operating officer of Jerry Rao-headed VBHC. "The studio was more of a western phenomenon, Mumbai being the only exception in India."
It has, for the past three years or so, arrived in sub-urban Delhi and Bangalore, too, though its uses vary.
Different strokes
In the real estate world, views - and pockets - differ on what a studio apartment is all about. Developer Wave Infratech, which is building a 152-acre township in Noida, says a studio is a space where a person can both live and work.
"Our USP (unique selling point) is that our multi-use studios have commercial licence as well," says Amar Sinha, executive director of Wave Infratech. Wave has started bookings for its multi-use studios, and says these are meant for the artistes and entrepreneurs who want to live and work out of their homes.
The reason for studios getting popular, experts say, is the rise in cost of land and its acquisition becoming prohibitive. So, builders are offering more in less space. And, because pockets of consumers wary, realtors are savvy enough to develop studios from Rs 5 lakh to Rs 75 lakh, or even more.
"While developers can do nothing to spare consumers from the financial burden of increased cost of land and construction, they can and do now opt for developing no-frill projects that offer reasonably-sized living spaces at lower costs," says Anuj Puri, chairman & country head, Jones Lang LaSalle India.
Studios are catering to working migrants in big cities and to those looking to invest in real estate. "There are vast chunks of population moving from Tier-II cities to the NCR to earn their living," says Wave's Sinha.
A sample of Wave Infratech's studio is about to be displayed at its Noida sales office. It has priced its fully-serviced multi-use studios between Rs 35 lakh and Rs 75 lakh.
Studios are also being built for young people who have not been earning for long. VBHC, or Value Budget Housing Corporation, has built studios in Bangalore that are priced at as low as Rs 5.5 lakh. The company sold 200 studios in three months in 2010. The company is on-site at Mumbai's Palghar, where it has built 80 of the 350 apartments it has built are studios - these were sold out in six months. It is now targeting Delhi. "There is a lot of demand. There is end-user demand, as well as investor demand," says COO Sabharwal.
Delhi's Manjula Sinha, 62, says she is excited about owning a multi-use studio. A corporate trainer who dabbles in astrology, she owns a house in Noida and is not sure whether she would use it herself to live and work in or as an investment bet.
"A house is getting tough to look after," she says. "(In the studio) I simply have to arrive with my clothes. Everything else will be taken care of." Her husband is a retired army man and her two grown-up children live abroad. Her investment in the studio will total Rs 65 lakh.
Sudhanshu Sekhar Dash, a banker from Bhubaneswar who has made Bangalore's tech city his home, has bought a studio for Rs 10 lakh. "It is near the electronic city. I can rent it out or my children can use it when they grow up," says Dash, 43.
In a June 2013 report, Deloitte estimated the need for affordable housing - houses for people in the Rs 10,000-25,000 monthly income bracket who can afford privately-built formal houses costing Rs 4-10 lakh - at 15 million. This translated into a Rs 9-lakh-crore opportunity for developers and a Rs 7-lakh-crore one for housing finance companies, it said.
City-specific
Of course, demand for housing in India is city-specific. So, Mumbai, where housing has always been small-sized, is no stranger to studios -these flats might not always have been called studios, though. "We are trying to sell these one-hall-kitchen apartments as first homes, and not second ones," says Ganesh Gokhale, head of distribution at Xrbia Developers, which is building a township designed by Hafeez Contactor at Matheran, near Mumbai. "We are targeting the nearby markets of Thane and Kalyan." The cost will be Rs 12 lakh.
Research papers released in recent months have differed on absorption of affordable housing vis-à-vis the luxury market. This might be the reason for developers to target both ends of the spectrum, even with studios.
The Deloitte study found 30,500 units priced below Rs 10 lakh had been launched in 132 projects across 22 cities between June 2011 and January 2013. Three cities - Ahmedabad, Mumbai and Indore - had more than 20 projects each. The smaller formats (that is, one room and kitchen) that developers are constructing in these cities are more affordable and sell in 25 per cent less time than larger formats (one/two bedroom, hall and kitchen).
However, according to research firm PropEquity, 1,241 affordable units were launched in January this year and 1,083 in February; in comparison, in the luxury segment, 4,816 units were launched in January and 3,821 in February. In terms of absorption, while 2,551 affordable homes were sold in January and 2,271 in February, 4,991 and 5,459 luxury units were sold in the same months, respectively.
Builders say one of the things they try to control while building studios is margins. "You have to build very, very tight," says VBHC's Sabharwal.
Delhi-NCR
* The Room (Shweta Estates' fully-serviced studios in Central Park 2, Gurgaon)
Price: Rs 1-1.10 crore
Target: NRIs, companies wanting to avoid hotel rooms, investors
* Wave Infratech's fully-serviced multi-use studios in Noida (with commercial licence).
Price: Rs 35-75 lakh
Target: People wanting to live and work out of studios
Bangalore
* VBHC's studio apartments (at Anekel)
Price: Rs 5-6 lakh when launched; most sold in 2010, some later for Rs 10-11 lakh
Target: Those looking for affordable housing
Mumbai
* VBHC (80 studios in Palghar, Mumbai Metropolitan Area)
Price: Rs 9 lakh each
Target: People living in one-room settlements (to be handed over by June 2014)
* Arihant Superstructures' studios (100 flats in Panvel on Mumbai-Goa highway
Price: Rs 35-40 lakh
Target: Companies wanting to buy and lease to single employees
