Big is Beautiful

Big is beautiful seems to be the new mantra for home buyers who have been preferring to buy more spacious homes. Over the past five years there has been a consistent increase in the average home sizes , with  Hyderabad and NCR in the driver seat.

According to Anarock Group, size  continues to matter for the homebuyer, even after the restoration of relative market normalcy post the Covid-19 pandemic. Latest data by this property consultancy  indicates that average flat sizes in fresh supply hitting the top 7 cities grew 7% in the last five years – from about. 1,150 sq. ft. in 2018 to about. 1,225 sq. ft. in Q1 2023. In 2022, the average flat size in these cities stood at 1,185 sq. ft., while it was170 sq. ft in 2021.

MMR is the only city where average flat sizes reduced in the last five years – from 932 sq. ft. in 2018 to 743 sq. ft. in Q1 2023, according to  Anuj Puri, Chairman – Anarock Group. In these five years, it was only in  2020 that the average flat sizes in MMR witnessed an annual rise of 21% against 2019. Since 2020, homes in the region are shrinking.

Among the top 7 cities, NCR saw the highest growth in average flat size in the last five years – from approximately 1,250 sq. ft. in 2018 to approximately 1,700 sq. ft. in Q1 2023. Developers in NCR are closely tracking demand and launching bigger homes in this region. Here are notable trends in other key cities .

• Hyderabad has the highest average flat size at nearly 2,200 sq. ft. in Q1 2023, followed by NCR with nearly 1,700 sq. ft.
• In Chennai and Bengaluru, the average flat sizes stand at about 1,175 and 1,300 sq. ft., respectively.
• In Kolkata, average flat size was approximately 1,150 sq. ft.
• In Pune, average flat size stands at about 1,013 sq. ft.

Before Covid-19, apartment sizes were shrinking annually to meet the demand for compact homes prevalent then,The central concerns were affordability and millennials’ preference for low-maintenance homes. The 2020 saw an abrupt reversal of buyers’ preferences. With a sudden emphasis on the WFH and study-from-home culture, flat sizes began increasing for the first time in four years, as per Anuj Puri.

In 2023, property prices are heading north but the demand for bigger homes continues. Q1 2023 saw average apartment sizes in the top 7 cities increase by approximately 7% since 2018, with MMR the only outlier with average home sizes reducing around 20% in the period.

City Level Yearly Trends

The yearly trends of average flat sizes in the top 7 cities show that Q1 2023 has seen a 5% annual rise – from about 1,170 sq. ft. in Q1 2022 to about 1,225 sq. ft. in Q1 2023.

• NCR saw average flat size rise 50% – from approx. 1,130 sq. ft. in Q1 2022 to approx. 1,700 sq. ft. in Q1 2023.
• Kolkata saw flat sizes increase by 44% – from a modest 800 sq. ft. in Q1 2022 to 1,150 sq. ft. in Q1 2023.
• Hyderabad saw average flat size increase by 29% in the year – from approx. 1,700 sq. ft. in Q1 2022 to approx. 2,200 sq. ft. in Q1 2023.
• Pune saw a 16% yearly increase – from 877 sq. ft. back in Q1 2022 to 1,013 sq. ft. in Q1 2023.
• Bengaluru saw a 8% yearly jump in avg. flat sizes – from approx. 1,200 sq. ft. in Q1 2022 to approx. 1,300 sq. ft. in Q1 2023.
• Chennai saw average. flat sizes decrease by 6% – from approx. 1,250 sq. ft. in Q1 2022 to approx. 1,175 sq. ft. in Q1 2023
• MMR saw avg. flat sizes decrease by 5% –  from approx. 783 sq. ft. in Q1 2022 to approx. 743 sq. ft. in Q1 2023.

The notable exceptions of MMR and Chennai are certainly interesting. A perception among developers that there is currently sufficient existing supply of larger format homes may be  the key factor. Also while MMR is hyper expensive , Chennai is a very cost-sensitive market. In both cases, the supply of smaller, more affordable homes makes sense.