‘Less is more’ is a popular ideology that a lot of people are attempting to practice these days. Whether it is electronic devices, financial obligations or even size of homes, ‘small’ seems to be in big demand these days. In real estate, developers are noting the variation in needs of the growing young workforce and are providing them compact homes – apartments between 400 to 600 sq ft.
The Beginning
The concept of compact homes began in New York and Newark where newly arrived workforce and property prices were rising and a housing solution was desperately needed. The idea was replicated in highly populated cities like Singapore and Tokyo. In Bengaluru, the thought was put into action with the building of Pashmina Brookwoods.
Buyer profiles
The target group for compact homes is mainly working individuals or couples in the age bracket of 24 – 35 years. Rented apartments, paying guest accomodations and serviced apartments are not always an appealing option for them. Compact homes offer a much better alternative to those who can afford it.
The rise of nuclear families has increased the demand for smaller homes. It is estimated that around 50% of households in India have less than 4 members. This has paved the way for higher economic independence, rising income levels, increased focus on career versus marriage and changing gender dynamics. Understandably, realty has had to keep up with the changing expectations of these segments.
Lately the number of couples who are postponing parenthood post-30s (called nest-builders) is also on the rise. Almost 6.7% of households in southern metros comprise of this group. Compact homes are also a sound investment option for bachelors and couples who don’t have large budgets to purchase homes.
Market size
‘Compact living in Bengaluru’, a report created by Vestian and Assetz Property Group claims that the Garden City creates 1.0 – 1.2 lakh jobs every year of which 45% belong to the IT and ITES sector. Income for these individuals ranges between Rs 5,00,000 – Rs 10,00,000 per annum. Almost half the workforce that joins the city every year holds postgraduate degrees. Single-person households are surprisingly on the rise, putting India third in the list of countries that have the fastest growing one-person households. Clearly the market is ripe for compact homes that are closer to workplaces, have adequate amenities and can be easily maintained.
Compact homes in Bengaluru are being absorbed faster than regular apartments. The demand for them is spurred on by the higher RoI they promise. Individuals no longer have to save until they are 40 to afford their first home purchases.