Customers are choosing 1-BHK flats in Mumbai as compared to 3-BHK flats taking into account the high property prices in the city. Real estate is a major investment avenue but this majorly depends on the appreciation of capital over a period of time. Real estate also involves a particular holding period and is often regarded as an illiquid investment. According to the Director at Ajmera Realty, Dhaval Ajmera, the cost of a 1 BHK apartment is lower and these apartments are easier to give on rent or sell. In terms of renting apartments, small families, students, couples and working professionals always prefer 1 BHKs according to him. As a result, there is higher demand for 1 BHK units at present in Mumbai and another factor behind this is the fact that monthly maintenance is lower for these apartments.
These units make for good investment options according to him. People are also preferring properties on the outskirts of Mumbai on account of improved infrastructure and cheaper prices with huge property prices in the central areas of major cities. Developers are targeting zones like Thane, Kalyan, Borivali and Navi Mumbai when it comes to 1 BHK units since demand is pretty high in these locations. Buyers in the 25-30 age group are looking for 1 BHK units on account of EMI affordability and financial constraints. Developers have to prioritize this segment since the number of walk-ins is very high in this category. Developers are also trying to ensure that 1 BHK configurations are offered at their projects in tandem with 2 and 3 BHK configurations according to Ajmera.
According to the director-research at Colliers International, Surabhi Arora, the demand for these apartments should go up in the future with affordability being one of the major factors behind real estate investments. With the property price increases and low supply of land for development, the size of average apartments is continually shrinking, particularly in cities like Mumbai. Buying a 1 BHK is always a better option for new buyers as compared to 2 BHK units. According to experts, purchasing a 1 BHK home in South Mumbai will entail an investment of around INR 1.3-1.8 crore while in the eastern and western suburbs of Mumbai and Navi Mumbai, prices will range between INR 25-75 lakhs. 2 BHK homes generally start at INR 85-90 lakhs and prices go up to INR 4-5 crores. However, in a few micro markets, price differences between these two configurations may only be around INR 10-15 lakhs.
When one purchases a 1 BHK apartment in a prime location, rental yields of up to 4% can be expected. 1 BHK homes are also easier to sell for investors with a steady influx of working professionals into Mumbai who require homes on rentals. This affordable configuration is perfectly tailored for their needs. Banks have lowered interest rates, making home buying a tad easier and new investors are willing to purchase affordable units while continuing to reside in rented apartments in the same city according to experts. There is steady secondary market demand along with demand for ready-to-move-in offerings from developers where taxes are lower. 1 BHK units are expected to dominate the renting and buying markets in Mumbai for quite some time.