Amidst rising demand for relatively bigger size apartments led by the COVID19 pandemic realities, property developers’ focus on compact studio apartments, which had emerged as a favourite option among urban millennials in the last few years, has come off.
For the first time in the last seven years, the share of studio apartments in total supply has declined to 15%, truncating the uptrend witnessed across major Indian cities due to preference for compact apartments, showed data from Anarock Property Consultants.
In the backdrop of spiralling demand for such configurations by both single and married millennials in top cities, developers increasingly launched projects that offered these in the last seven years. The share of these apartments across the top seven cities had risen to 19% in 2019 from mere 4% in 2013. But in 2020, the scenario changed with the pandemic denting its growth string.
“If we look back at previous years, out of the total 2,102 projects launched in 2013 in top 7 cities, just 75 projects or 4% offered studio apartments. The share increased to 5% in 2014 and henceforth we saw an on-year increase in the overall share of projects that offered these until 2019 when the share stood the maximum at about 19%. It was only in 2020, probably impacted by the new pandemic realities – that the overall share dipped to 15%,” said Anuj Puri, Chairman, Anarock Property Consultants.
“Over the past few years, due to heightened real estate prices across MMR, homebuyers have preferred to settle for studio or smaller ticket-size apartments. However, the pandemic has completely transformed the decision making rationally from the perspective of quality of living. The value of owning a home has come to the forefront and this coupled with attractive real estate prices, low interest rates, reduced stamp duty and registration charges, work from home culture etc have resulted in a shift in home buying trends,” said Deepak Goradia- Vice Chairman and Managing Director, Dosti Realty.
According to him, the demand for 1 BHK and 2 BHK homes has increased significantly. Even among second time homebuyers, the aspiration levels have increased greatly pushing the average ticket size of property upwards.
Out of the total 884 projects launched in 2020 across the top 7 cities, nearly 130 projects offered studio apartments forming 15% share of total supply. In contrast, 2019 had witnessed total launches of 1,921 projects, of which 368 projects or 19% offered studio apartments.
Of the total project launches with studio apartments in all top 7 cities between 2013 and 2020, MMR and Pune together comprised a whopping 96% share. In contrast, southern cities including Bengaluru, Chennai and Hyderabad didn’t really catch on this frenzy and saw the launch of just 34 projects during the same time period. Property prices and affordability are the key factors driving this preference or acceptance among homebuyers.
By definition, a studio apartment has a single large room combining a living room, a kitchenette and a bedroom. Only the bathroom is separated by a wall. Such apartments are usually preferred by bachelors, students, newly married couples or even those business travellers who frequently visit a city for work. Despite being small in size, studio apartments became the favoured option for many with smaller budgets but preferring to live in proximity to key employment hubs.
This drop in share of these apartments can also be related to the fact that 2020 was the year when demand for bigger homes began to rise substantially amidst the new pandemic realities of the Work from Home model and online education. Resultantly, developers changed their offerings to suit the new realities and hence curtailed the supply of studio apartments across cities.