Om Ahuja, CEO – Residential Services, Jones Lang LaSalle IndiaTechnically, studio apartments comprise of single large rooms that encompass the bedroom, living and dining areas, with compact kitchens and bathrooms attached. When they first made their appearance on the Indian residential landscape, studio apartments found favour largely with bachelors and small families who spend most of their time at work.
Even today, the demand for studio apartments comes primarily from software professionals and executives from the manufacturing sector. Such professionals have generally spent over a year stationed in a metro and find that they prefer to pay EMIs on an affordable, maintenance-friendly living unit rather than pay high rents for flats and serviced apartments.
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. Another factor that drives demand for such units is the ease with which they can be rented out or sold at a profit on the secondary market. This also makes studio apartments a prime target for investors. Moreover, studio apartments do not attract much maintenance costs and make for hassle-free purchases as well as resale.
The typical Indian home buyer prefers larger homes, and will go in for more generous formats whenever possible. However, the rate of property price escalations in our primary cities has narrowed things down considerably. Simultaneously, proximity to the workplace remains a priority in an evolving economy, and the studio is the logical choice for those who cannot or do not choose to buy larger units.
Studio apartments are also popular with mid-management level buyers who tend to reside in certain cities for extended periods. Rather than pay for a serviced apartment or hotel room, they prefer to acquire studio apartments and sell them off when they no longer need them. There is also a lot of demand from single working individuals and newly-married couples who need to set up a home immediately and eventually upgrade to larger sized homes later on. As already stated, the demand for such units on both the primary and resale market is consistently high.
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 1BHK flats. The demand for larger units has meanwhile revived considerably, but studio apartments are still the fastest-moving products on the market. The margins are low, but it is definitely a high volume vertical and many developers bank on such configurations as a sure-fire sales proposition, with almost instant absorption if the location is right. This provides them with instant working capital. The demand is even greater for furnished studio apartments, and many developers offer these as well.
The current demand for studio apartments is percolating down from the equally high demand for serviced apartments, and is still picking up from there. 80% of the overall demand for studio apartments in cities like Mumbai, Delhi NCR, Bangalore, Pune and Chennai is driven by software professionals and recently relocated manufacturing sector executives. Price points vary according to city, location and amenities offered, but generally range between Rs. 12-35 lakh.