India’s apartment sizes shrink 27% over the last five years - GulfToday

India’s apartment sizes shrink 27% over the last five years

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Labourers work at the construction site of a residential complex on the outskirts of Kolkata. Reuters

V Nagarajan

The liquidity crisis, changing buyer preferences, and growing concerns about affordability have all caused real estate developers to rethink the conventional wisdom of ‘bigger is better’, and to significantly moderate unit sizes across the seven major cities.

 Average apartment sizes in the top seven cities have shrunk by 27% over the last five years — from 1,400 sq. ft. in 2014 to nearly 1,020 sq. ft. in 2019 so far. Surprisingly, NCR — one of the worst-hit residential markets in recent years - has seen the least decline of merely 6 per cent during this period.

The current average size of apartments in NCR is nearly 1,390 sq. ft., pulling ahead of Bangalore where average flat sizes reduced to 1,300 sq. ft. in 2019,” according to a survey by ANAROCK Property Consultants.

MMR already has the least average apartment size among all top cities, and also recorded the highest drop of 45 per cent - from 960 sq. ft. in 2014 to 530 sq. ft. in 2019.

Pune followed with a 38 per cent reduction in sizes during this period, with the average apartment size currently at 600 sq. ft.

Interestingly, the main southern cities of Chennai, Bangalore and Hyderabad have seen size reduction of 8 per cent, 9 per cent and 12 per cent respectively over the last five years.  For instance, the current average size of properties in Hyderabad (at 1,570 sq. ft.) is the maximum among the top 7 cities. Similarly, the average size of properties in Bangalore is also comparatively bigger at about 1,300 sq. ft. while in Chennai it is approx. 1,190 sq. ft.

Meanwhile, Kolkata saw sizes reduce by 9 per cent over the last five years to stand at 1,120 sq. ft. now against 1,230 sq. ft. in 2014.

Among the major factors of apartment size shrinking contributing to the escalating ‘claustrophobia effect’ of shrinking apartment sizes, demand for affordable homes in metros tops the list. Also, buyers are increasingly looking to avail the government’s credit subsidy benefits for affordable housing.

These require a home to be priced INR 45 lakh and not exceed 60 sq. mt. carpet area or approx. 850 sq. ft. built-up area (including overall loading).

Seen in that light, the reduction in sizes - particularly in the affordable segment - helps buyers to avail of the subsidies. Moreover, buying an affordable home also comes with GST benefits. The GST for affordable housing is 1 per cent as against 5 per cent for mid-segment homes. In short, buyers get reduced costs and added benefits, but lose out on space. Developers get to attract more buyers, but many have had to shed their cherished ‘luxury’ market categorisation and stoop to conquer.

My brother who is also an NRI wants to gift his share to me pertaining to ancestral property situated in India. Which option is ideal, Will or gift deed? Please advise us. Sharma, Sharjah.

It is assumed that you and your brother are the owners of the property. If he bequeaths under a Will, the bequest shall take effect only on his demise and it may get challenged by his legal heirs. If it is transferred under a gift deed, it has to be duly stamped and registered with the sub-registrar of assurances and signed by two witnesses. It is advisable to opt for gifting of the property by a registered deed.

I am owning two residential properties jointly with my wife. We are planning to dispose of them and reinvest sales proceeds in a bigger accommodation. How do we avoid long-term capital gains tax? Pradeep Guha, Dubai.

It is assumed that you and your wife are the absolute co-owners of the two equally contributing for the acquisition of the said properties. You and your wife will be liable to pay long-term capital gains tax under Section 45 of the Income Tax Act, 1961, if the said properties are held by you for a period of two years or more. The capital gains tax liability will depend upon the ratio of holding in both the properties and each one will have to compute individually the liability for payment of long-term capital gains tax. Both of you can avail the deduction under Section 54.

I bought an apartment partly utilising home loan and the remaining through remittance from abroad. Though the loan has not been repaid entirely, I intend selling the apartment to repatriate funds in UAE. Is there any restriction while seeking repatriation when the loan is partly repaid? Sandeep, Dubai.

No. There is no restriction provided where the funds were raised by way of loans from housing finance institutions, repatriation is allowed to the extent of such loans were repaid in forex. At the same time if the sale takes place on or before the expiry of two years, provision of short-term capital gains and if after two years, long-term capital gains will apply in India. The balance amount, if any, can be credited to the NRO account and can be remitted under the yearly $1 million facility.