Pros and cons of opting for projects with amenities

[ecis2016.org] We analyse the pros and cons of buying apartments in plain vanilla projects versus apartments in projects that offer multiple amenities

Radhika Mehta, a software professional, bought an upscale 1,500-sq-ft apartment at Vaishali, Ghaziabad, in a project with high-end amenities for Rs 2 crores. Her long-time chartered accountant friend, Sarthak Sharma, preferred to buy an apartment of the same size at almost the same price in a co-operative housing society with no amenities or add-on features. While the 1,500-sq-ft apartment could only give Mehta a usable carpet area of 850 sq ft, Sharma’s living space was close to 1,300 sq ft. This raises the question: Who made a better financial decision?

You are reading: Pros and cons of opting for projects with amenities

Of late, India’s housing market has seen a spike in the number of amenities on offer in projects. In terms of the marketability of the project, housing complexes loaded with the amenities definitely have an edge over plain vanilla projects. Nevertheless, the open spaces and amenities in the common areas of such housing projects, come at a cost. In such cases, buyers are not only loaded with higher pricing but also reduced carpet area. Loading, which is a function of amenities and open spaces in a project, is also a bone of contention between the builders and the buyers, in many cases. While customers’ preferences have changed over the years, leading to extra amenities and greater loading in new buildings, it also affects their affordability.

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Are amenities worth the extra spend?

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Amit Modi, director of ABA Corp, disagrees that the amenities and enhanced lifestyle add to the loading. He maintains that it is all about transparency and if a developer is providing more amenities with upfront declaration and the buyer wants these amenities, there is nothing wrong with it. Buyers may even opt for bigger houses and bigger projects, to avail of such amenities. At the end of the day, it is all about the ticket size of the project that matters to the buyers, who evaluate the price and the space.

“Today, everything has to be RERA-compliant and you have to declare it upfront. There is no correlation between the amenities and the carpet area – it is project-specific. You can only construct to the extent the authorities allow, on a given piece of land. Even if you reduce the amenities and give more carpet area, you would only give less than 10% to each individual unit. In terms of the ratio, you do not get even 5% more carpet area, if you compromise on the given amenities. Ultimately, the price point determines the extent to which you can create open spaces and amenities,” says Modi.

JC Sharma, vice-chairman and MD, Sobha Limited, says that when buyers move from an independent house to high-rise apartments, they seek good common areas, clubhouses, etc. If you are not keeping open areas close to 15%, you are not giving them value for money. Moreover, the thickness of the wall itself consumes 7% to 8% of the total area and somebody has to pay for it, he points out. “While calculating the loading, transparency should be there and we should not cheat. In one of our projects, we wanted to do away with balconies, because we felt it would not be used and instead increase the carpet area inside. However, the market did not accept that,” Sharma explains.

Apartments with or without amenities: How to decide?

It all depends upon the buyers’ choices and there are takers for both kinds of projects. The element of suspicion, on part of the buyers, is more with under-construction projects, where the end-user has no way to gauge what the end result would be like. In the secondary market, where the buyer can see what he is paying for, the impression gains ground that the new housing projects with ultra-modern amenities compromise on the carpet area. In a competitive housing market, there cannot be a standardised loading formula, as housing itself is not a standardised product.

However, some independent analysts often suggest that there should be an upper limit of loading, for various segments of housing. This is imperative, because even well-informed buyers, who are aware of the differences between super built-up area, built-up area, carpet area and loading percentage, may be unable to calculate it in a housing market, where developers use their own definitions.

Pros and cons of new buildings and old buildings

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New buildings

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Old buildings

FAQ

(The writer is CEO, Track2Realty)

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