The Hindu Business Line : Small is beautiful, again

The huge demand for small dwelling units, and funding limitations, are encouraging developers in Pune to look at compact housing and the once popular 1-BHK (One-bedroom, hall and kitchen). A few weeks ago, the Promoters and Builders Association of Pune (PBAP) had sent out a notice to its 250-odd members to launch 1BHK projects in the range of 500-700 sq.ft, priced around Rs 15-25 lakh. The developers are working on 10,000 such units.

According to Mr Anant Jog, Director, Darode Jog Builders, the locations where these projects are coming up include the outer areas of the city, such as Sinhagad, Baner, Hadapsar Bavdhan, Undhri and Wagholi. In areas such as Undhri the rates are around Rs 10 lakh. The target segment is not the employees of the IT sector but people in other segments such as education, automobile and allied services.

‘Value-for-money’ buyers

Ms Kruti Kumar Jain, Executive Director, Kumar Builders, says there is a revival of 1BHK projects in Pune. “It is not just not just 1BHKs, what we see now is an increased focus on affordable housing for those looking for value for money and keen on self-financing — not availing banking finance to fund their property purchase. This could be studio apartments, 1- and affordable 2-BHKS. The aim is to build homes within Rs 30 lakh, which we believe is the ideal price range for consumers in the current market as the financing will be through internal accruals.”

The target customers are from the middle-income group with annual income starting from Rs 5 lakh. This group accounts for 45-55 per cent of potential home buyers. The average price range for 1 BHKs in Pune is between Rs 13 lakh and Rs 18 lakh. It may be recalled that the 1BHK concept had become less popular over the past few years, with more demand for 2- and 3BHK houses.

This was due to the withdrawal of incentives given to developers to construct small dwelling units.

Developers were eligible for tax incentives for constructing flats of less than 1,000 sq.ft in Mumbai and Delhi and below 1,500 sq.ft in cities such as Pune, provided they had obtained the approvals before March 2007 and completed the projects before 2011. The Karnataka Government has been the fastest to react to the trend and has granted various concessions to enable developers to build more mass housing.

“Also, in today’s market, majority of the demand is from first-time home buyers who want value-for-money products. So we are designing our products accordingly,” said Ms Kruti Kumar Jain. Kumar Builders has generated more than 1,300 enquiries in the past three months for products in the economy category, she said.

Customers as end-users

Mr Jog said that in its 600-apartment project, Crossover County, 50 per cent of the project has been sold. He noted that about 80 per cent of the customers are end-users and not people looking at housing as an investment.

Ms Kruti Kumar Jain said the trend for affordable housing has caught on across the country. This is because clients who are in need and cannot postpone their decision to buy a house are expected to shell out their own savings, with little help from banks at very high interest rates. “Therefore, we are seeing demand for mass housing and budget flats going up,” she said.