Small Is Luxury

The residential luxury segment presently has been witnessing diversity in terms of the market dynamics, owing to the anticipations from the target end-user segment. While owning a prime piece of the residential asset has long been considered a matter of pride for homeowners, the modern housing culture has led to a fundamental alteration in the consumption of real estate. This has thrown the spotlight on various noteworthy trends. One such burgeoning housing preference that has been brimming the real estate map is micro homes or compact residencies with plush amenities. These homes are gradually gaining traction due to the rapid rise of population and space crunch in the metropolitan cities. With increasing housing rents and residential real estate becoming expensive over the years, home buyers are more inclined towards opting for spaces that are smaller in size for instance 1 BHKs with plush features that fall well within their budget. 

With a strategic rise in the population of nuclear families in India, the trend of compact homes has been extending energy in the country’s real estate markets. A compact home comprises a hall, bedroom, study, and a kitchen with washrooms and a balcony. These houses vary in configurations from 500 sq. ft. to 800 sq. ft., well-suited to meet the requirements of a small family. Compact Living is convincingly smart living, where build space is limited, yet the quality of amenities and design remain high. It has become more common in cities like Mumbai, where space comes at a premium price. It has been researched that in Tier 1 cities, where land is minimum and property valuations are steep, the concept of smaller homes with luxury amenities has scaled up a lot. This has augured well for the developer community who are in approval of launching small-sized apartments that not only lessen the cost but are also space-efficient to placate the distinctive home buyer requirements.

Below mentioned are reasons making smaller homes with luxury amenities one of the sought-after trends in real estate: 

Significance of homeownership: In the backdrop of the pandemic, the modified consumer behaviour patterns have witnessed reluctance in the home buyer’s preference towards renting. However, what remains unaffected is the affordability factor in the midst of the unstable job market. The community of investors who once upon a time showed more preference towards renting spaces have today comprehended the importance of owning a home particularly in times of such unprecedented crisis. With the value of other financial assets having dropped down post the crisis, they have understood the importance of owning a real estate asset. Post the pandemic consumers have turned cautious and are discovering various residential options in the market to undertake investment. Quality-conscious and discerning consumers are now keen on upsizing their purchase and scouting for plush budget-friendly homes without compromising on the luxury of space. Homes with plush bedrooms or an additional study with wellness amenities are becoming the current choice against their pre-pandemic preferences. This has pushed up the demand for affordable luxury housing.

Increasing preference from NRI’s and HNI’s: These segments of buyers are all set to reflect the changing dynamics in the Indian property segment, from being mere investors to future end-users. With the sense that real estate valuations might start moving upwards sooner and that luxury housing wouldn’t be as affordable as it is now, high-net-worth individuals (HNIs) and non-resident Indians (NRIs) have started untying their purse strings. These buyers are now making use of the tail end of the economic slowdown to make investments in homes that are offering occupants far greater utility. Instead of capitalising on the most luxurious properties, they are putting their funds in smaller projects that they can sell quickly or use on their own. Instead of parking their funds in plush residencies, NRI’s returning to India are favouring to invest in smaller homes, thus saving their finances to start a business as a source of livelihood. These self-employed segments of buyers, prefer to have an asset portfolio of diverse projects, instead of putting their money in large developments. They prefer to divide their funds among various small projects, which permits them to sell easily if they want to, or earn good rental from their various investments. Furthermore, the fall of the Indian rupee has encouraged NRIs to invest in India’s property markets. An improved regulatory regime also provides greater confidence among them to invest in India. So, the number of leads from this segment has risen substantially.

Small is the new big: The heightened demand for smaller homes with lavish amenities is a clear indication of the fact that luxury does come in small sizes too. This is an essential shift from the trend which played out during the pre-pandemic phase, where consumers would opt for smaller units in affordable valuations in and around the city and suburbs. Although this shift will continue, spaces coupled with upgraded need-of-the-hour amenities are now the top-of-mind considerations for an average homebuyer. With the nationwide lockdown having pulled temporary shutters for fitness centres, sports complexes, jogging tracks, theatres, and parks, customers are opting to buy well-planned residences that offer such lifestyle and leisure amenities. While affordability still remains the crux of home investment, investors today want high-quality compact units with exceptional self-contained amenities. In this context, luxury micro homes are being preferred since they provide for the maximum utilisation of available space, design acumen, and comfort. 

The heightened demand for jewel-box homes with a relatively small footprint or square footage, but packed with luxury finishes will top real estate charts in the post-pandemic epoch.

The author is  Director (Marketing), Sheth Creators

DISCLAIMER: Views expressed are the authors' own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.