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Real estate developers are increasingly reducing the size of the apartments to make them affordable at a time property markets are going through a prolonged slowdown, said a new study.
Mumbai Metropolitan Region (MMR) witnessed the maximum fall in apartment sizes at 26.4% between 2010 and first half of 2015, said a report by property consultant JLL. Kolkata witnessed 24% decline in apartment sizes, Bengaluru saw a 23.7% fall and Chennai saw a decrease of 22.2% during this period.
"The fall in average apartment sizes across all top seven cities is a clear indication that developers intend to make houses affordable for buyers by reducing average apartment size instead of reducing the capital value," JLL said.
It said several urban buyers are increasingly looking for new homes near their office locations which could be small in size. They prefer a house that is “sufficient” enough for his family requirements. "This does not mean that they are compromising on their lifestyle, they prefer a small compact home equipped with all basic amenities," it said.
JLL said buyers are increasingly opting for homes that are closer to work-places in order to reduce commute times. "As these locations are expensive compared to the suburbs, buyers may be able to afford smaller units, which is more than acceptable. To enjoy the luxury of bigger homes with good amenities, they prefer to buy homes in peripheral areas of the cities, from where the concept of second homes is emerging at outskirts of the cities," it said.
Frequent churn in malls
The report said the contract period for anchor tenants in malls has come down from 12 years to 15 years in 2010-11 to 9-10 years in 2014-15. For other brands, it has come down from 5 years to 6 years in 2010-11 to 2-3 years in 2014-15, it said.
"As a consequence, in a few good malls where business is roaring, the rate at which malls churn brands have increased considerably. On an average, when business is good, churn rates of around 15-18% have been recorded. This is abnormally high considering that it used to be in the range of 4-8% in well-managed malls in the initial period," JLL said.
Combination of reasons such as unsuccessful retailers leaving the mall mid-way and e-commerce players establishing/expanding their brick and mortar stores and mall owners initiating churn to improve the tenant mix of the mall led to high churn, it said.
