1-BHK flats: Are they worth a premium price?

[ecis2016.org] Barring in a few regions, one-bedroom apartments still remain costly despite a slowdown in the market. We look at the reasons and what prospective buyers in this segment should look out for

The real estate market in India, today, is faced with an oversupply of one-bedroom (1-BHK) units, popularly called as studio apartments. While some of these, are part of projects that were launched at least two to four years ago, others are part of newly-launched projects, while the resale market too offers such units. The oversupply can be attributed to the poor sales in the market, across segments. Nevertheless, one-bedroom units are still being sold at a premium.

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In most projects, 1-BHK units are standalone apartments, with super built-up areas of 280 sq ft to 700 sq ft. The price of these units, start at Rs 6.5 lakhs and go as high as Rs 1.5 crores, depending on the amenities and other add-on features on offer. Over the past two years, certain categories of real estate have witnessed a correction in prices. Pulkit Rahangdhale, a south Delhi-based broker explains: “Prices across segments have seen a drop, on account of the oversupply in the market. Moreover, buyers have turned cautious.” However, despite this fall, the quoted rates of one-bedroom apartments remain high.

1-BHK property prices, across regions

Source: Secondary research by Content Consultants; values are indicative

The demand for 1-BHK apartments

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Developers on their part, maintain that the premium price of one and two-bedroom apartments, is merely a result of the high demand for such properties. “Wherever the prices are higher, it is on account of the fact that developers have to subsume the land cost, cost of taxation and amenities provided in the project,” justifies Tejas Vyas, chairman of the MCHI, the Maharashtra chapter of CREDAI, an industry body.

[ecis2016.org] Should location be the only price determining factor?

“Prices of properties, also depend on their location. While prices are high in the Mumbai Metropolitan Region, projects in the suburbs may offer good rates. Nevertheless, the impact of the slump is clearly visible, as new constructions and newly announced projects, are available at good rates. The gap between buyers’ expectations and price points, has reduced and sales is slowly picking up, across markets,” he elaborates.

One-bedroom properties: What should home seekers do?

First-time buyers should refrain from buying: Experts say that first-time buyers, should refrain from this category. “The area on offer in such properties, is quite less in comparison to the price you pay,” feels Rahangdhale.

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Look for two-bedroom apartments with a similar price: Home buyers can try to extend their budget and opt for a two-bedroom apartment, as these have better saleability in the current market, suggests Vyas.

Consider the location of the project: Most of the 1-BHK units on offer, are generally part of a bigger project. Consider the location of these units within the entire township, while buying the property. A bad location that hinders natural light or creates some other hurdle, may make it difficult to live in the flat and also difficult to sell.

Consider buying a high priced one-bedroom apartment as investment, only in regions where there is healthy potential for returns on investment, in form of high rentals. Opt for units that are located in a city, where there is high influx of tourists, or a region that is part of a business district.

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Source: https://ecis2016.org
Category: Lifestyle