Small sized homes coming in to fit buyers needs

A spate of apartment launches and entry of new players in the residential property market has meant a creation of oversupply coupled with less demand. As builders especially in large cities like Mumbai and NCR look dismayed in terms of selling off their inventory a new breed of developers with pocket sized homes are trying to disrupt the market.

In his path breaking book on Disruptive Innovation by Clayton Christensen, professor at Harvard Business School, he mentions that disruptive innovations make a product or service much more affordable through better technology or new ways of operating. He cites the example of Toyota which disrupted the US car market when large players like GM didnt even consider them as competition to begin with as they entered the bottom end of the market.

In the real estate sector there is tremendous scope for disruption. In a market like India where people are looking to buy homes under 30 to 40 lakhs there are not many options especially in larger cities. What can truly disrupt this market is better and faster construction techniques coupled with smaller sized homes which can be sold in larger numbers. The concept has been replicated in FMCG in the form of sachets for shampoos which led to a mass consumption even amongst the poor who could not afford a larger sized bottle.

What this means is that we should start seeing developers think differently and capture the lower segment of the market which has flats starting from 500 sqft onwards in much affordable prices. Examples are already to be seen. Many developers today are making plans for the sub 1200 sqft segment instead of higher carpet sizes to keep the costs lower for customers. 

In a market where absorption of new homes has slowed down compared to pre 2010, developers are finding unique ways to keep the inventory moving. Property research firms also point to the unlimited demand for affordable housing under 25 lakhs across India, which might open up a plethora of new launches of smaller sized homes in the future.