After two years of looking working couple decided that the only way they could acquire a home without compromising on lifestyle was to sacrifice square feet. Also, they preferred to pay equated monthly instalments (EMIs) and build an asset for themselves rather than shell out rent. For many young buyers thinking along the same lines, the studio apartment has become the dwelling of choice.
Income levels and steep prices would necessarily have pushed the couple mentioned above to the distant localities if they wanted the standard 2BHK (two-bedroom, hall, kitchen) apartment.
"This will lead to each of us wasting nearly three hours every day for commuting to and from office," said the husband, who's 29 and works with a consultancy. "We would rather use this time for ourselves than just being part of crowd during peak hours." They eventually opted for a 300 sq ft studio apartment.
So what is a studio apartment?
Overseas this is usually one multipurpose room along with a kitchen and a bathroom. In India, a studio apartment generally has a balcony as well, which makes it a variant of studio apartment.
Such homes are more affordable for young people, both single and married, but the success of the segment is also due to the sophistication with which the product is conceptualized, built and marketed—as an upmarket, lifestyle solution.
For builders, these 250-400 sq ft flats starting at Rs 16 lakh have turned out to be a fast-moving category, generating sales and cash flow. In the last one year, around 1,400 studio apartments have been sold in the top six markets and the current inventory for this segment stands at 24 months as against average inventory levels of 40 months.
The lower inventory level for studio apartments against total stock levels indicates the market is responding well to these smaller size units, said Pankaj Kapoor, CEO of realty research firm Liases Foras.
Apart from several small builders, large developers are also entering the fray. High demand has prompted developers to include studio apartments in their projects.
It's very simple, there is more demand for this product and ultimately we will follow the demand pattern. Youngsters in early stage of their career or starting their life are interested in a product like this as they need more time for themselves than the size of the house.
Around 20 per cent of homes at this 40 units project in Pebbles are expected to be studio apartments. We are going the western way. Many young executives have lived abroad for a few years for education and stayed in studios there, so when they come to India, they prefer a similar setting.
According to Kapoor of Liases Foras, around 15,600 studio apartments, accounting for 8.6 million sq ft, are being built in the top six cities-Mumbai, National Capital Region (NCR), Bangalore, Pune, Hyderabad and Chennai.
Of these, NCR ranks highest at around 7 million sq ft, mainly on account of speculative activity and development rules. The demand for such maintenance-friendly, compact houses is not restricted to metros with developers building more of them given the faster working capital generation.
"There is a steady and inflexible demand for studio apartments, both in the metros and tier 2 cities. These apartments are usually the first to be sold out in a residential project that features them. Without doubt, they are the most cost-effective residential options for people who prefer to own rather than rent, especially in projects close to workplace hubs," said Om Ahuja, CEO, residential services, JLL India.
Studio apartments also suit single women who prefer more manageable spaces that are minimalistic and contemporary from a design point of view. Such compact homes are also considered to be safer.
Megha Sharma, 38, senior adviser at a WPP Group public relations company, bought a compact apartment to keep things simple for herself. "After a day's hard work, my priority is to come back to a house where there is not much left for me to do. It's great when someone has cleaned the window glasses... while I am in office," Sharma said.
While margins remain low, many developers bank on such configurations as a sure-fire sales proposition, with almost instant absorption if the location is right. "When the downturn hit the Indian real estate market, practically the only residential configurations which continued to see demand were studio apartments and cost effective one-bedroom flats," JLL India's Ahuja said.
The demand for larger units has meanwhile revived considerably, but studio apartments are still the fastest moving products on the market.
With new start-ups growing by the day and supply for regular homes overtaking demand, studios work well for both developers and buyers," said Mavi, managing director, BOP Group.
For buyers with budget of around Rs. 16.5 lakhs, Suncrest Structures offers 357 sq ft apartments in its Pebbles project at Varthur, Bangalore. Of the total project, around 20 per cent flats will be studio apartments and remaining will be a combination of 1 BHK & 2 BHK apartments.