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The Low-down on Compact Homes in Mumbai



Anuj Puri, Chairman – ANAROCK Property Consultants

‘Small is beautiful’ is the new buzzword with Indian millennials when it comes to buying homes in cities like Mumbai. These young professionals are less focused on size and look for homes in locations close or well-connected to their workplaces so that their daily commute is reduced and work-life balance is maintained. Compact homes are also low on maintenance expenses and are invariably very budget-friendly in all respects.

With the ever-increasing rents in a city like Mumbai, buying a compact home is also a very suitable option for several new citizens. Taking a small loan and paying up the monthly EMIs on an investment-grade asset which can be easily resold is seen as preferable to shelling out hefty rents.

On the back of this trend – and the prevailing market sentiment which is averse to overly heavy investments into residential property – apartment sizes in the Indian metros are definitely shrinking as developers increasingly deploy affordably-priced homes for which the demand is currently the highest. In fact, apartment sizes have already reduced significantly enough to justify any and all measures that help maximize the usability of the available spaces.

Maximizing Available Space – Creative Furnishing is ‘In’


Space-saving furniture is all the rage in cities around the globe which face Mumbai’s space constraints. For instance, hyper-expensive cities like Tokyo and Hong Kong have taken the concept of space-saving furniture to highly creative levels. Sofas double up as beds, study units can be folded away, chairs can be stacked and murphy beds are usually mounted up against the wall when not in use. Brands like Godrej Interio, HomeLane etc. are cashing in on the new trend of Nano homes and coming up with furniture that will aptly fit into relatively constrained spaces. Moreover, IKEA – the world leader in this niche – is also establishing its footprint in India.

The trend of shrinking apartment sizes is by no means limited to Mumbai:

The average size of new properties in NCR was 1,853 sq. ft. in March 2018, which dropped to 1,323 sq. ft. in the month of April.
Bangalore too followed this trend with property sizes shrinking from 1,300 sq. ft. in March to 1,160 sq. ft. in April. In fact, if we consider the trend at an annual level, it emerges that flat sizes in Bangalore’s new projects reduced from 1,478 sq. ft. in 2017 to around 1,334 sq. ft. in 2018.
Other cities like Pune, Hyderabad, NCR and Kolkata also followed suit with average sizes of properties seeing a downward trend over the last two years. Chennai was the only city where average property sizes remained more or less the same over the last two years.

While affordable housing tends to be compact almost by definition, mid-segment housing in cities like Mumbai is much more expensive than in other cities. Price points play a big role in housing sales today, and the entire system in fact currently favours first-time homebuyers focused on budget housing, with various incentives for flats which do not exceed 30 sq. m. in the metros and 60 sq. m. in smaller cities for EWS and LIG category homebuyers.

Definitely, the phenomenon of shrinking apartment sizes is most pronounced in Mumbai, where property prices are the highest. While we can see this trend gradually manifesting in other cities, Mumbai is the most land-constrained city where the only alternatives for budget-constrained homebuyers are in the distant suburbs, or in mass-housing skyscrapers where developers will invariably attempt to jam in as many units as possible on relatively small plots.


The Data on Mumbai’s Compact Homes

As per ANAROCK data:

Nearly 77 projects with highly compact units have been launched across MMR since 2013 till date. This supply comprises of homes with carpet areas between 136 sq. ft to 281 sq. ft. 2018 till date saw the launch of 7 projects accounting for about 1,100 compact housing units in MMR.

The minimum carpet area we have considered for this analysis is 136 sq. ft., while the maximum carpet area considered is 281 sq. ft. The minimum basic cost – excluding registration and other miscellaneous costs – for an apartment with a carpet area 136 sq. ft. is currently Rs. 8.35 lakh, while the overall price can go as high as Rs. 60 lakh, depending on the location, amenities offered and the developer’s brand value.
The minimum size seen was 136 sq. ft. in a project in Ulwe, Navi Mumbai whose basic cost is Rs. 11.75 lakh per unit. Malad East saw the launch of micro homes of 247 sq. ft. carpet area size priced at Rs. 45 lakh.

The basic cost of an unfurnished compact housing unit in Mumbai is anywhere between Rs. 8 – 60 lakh, while the prices of furnished homes go up by 15-20% depending upon the exact specifications and other variables.


The prominent areas that saw the launch of compact homes in 2018 include Neral, Ulwe, Navade, Karanjade and Malad East. Other major hotspots for such homes include Kandivli, Chembur, Malad West, Andheri East and West, and Ghatkopar.

Unit & Buyer Specifications

A micro-home comprises a living-cum-bedroom, a kitchenette and very compact bathroom, the overall configuration being just enough for a young professional or a family of two. High ceilings and foldable furniture provide a sense of relative spaciousness within these apartments. To make the house more functional, one can use space-saving foldable murphy beds. While they are tiny within, these micro-homes do come with state-of-art outdoor amenities like swimming pools, gyms, clubhouse, gardens and party halls, to name a few.

Such compact homes in Mumbai are usually popular with the young working professionals who prefer location over size, or those with moderate annual incomes at or below Rs. 8-10 lakh. In the suburbs where prices are lower, slum area residents who yearn for a better lifestyle are also eyeing such homes. Apart from young professionals aged between 25-35 years earning Rs. 10 – 25 lakh a year, even slum dwellers earning anywhere between Rs. 7-10 lakh annually and looking to upgrade their lifestyle are buying such properties, particularly in the suburbs.

Loans on Compact Homes – Done Deal


On the back of the various incentives rolled out to developers and buyers of affordable housing by the Government which is fully-intent on meeting its ‘Housing for All by 2022’ agenda, banks readily provide home loans for compact housing buyers – as do several new housing finance companies that are looking to tap into the growing market of affordable housing. In the past few years, several such companies have mushroomed across the country and are extending loans at relatively decent rates of interest.

These finance companies have a loan bandwidth from Rs. 5 lakh to Rs. 40 lakh and the target audience varies from drivers and domestic servants to youngsters who have started fresh on their career journeys. Also, the documentation process for availing loans for such homes is much simpler and easier than for larger homes. As with costlier properties, a compact home buyer can avail of loans up to 80% of the total cost of the property, excluding registration.

The interest rate of a public-sector bank such as SBI is currently at 8.35% for a loan amount below Rs. 30 lakh, and 8.50% for a loan amount greater than Rs. 30 lakh. Under schemes like Pradhan Mantri Awas Yojna (PMAY), one gets the additional benefit of a subsidy amount of Rs. 2.68 lakh from the Central Government if certain criteria are met – such as the overall family income being below Rs. 18 lakh, the house size being below 1100 sq. ft. and this being the family’s first home purchase.