Mumbai Sees Significant Fall in Apartment Sizes

While most people are aware of the falling rupee value and the increasing real estate prices in the city of Mumbai, there may be very few people who may be aware that the average size of apartments in Greater Mumbai has significantly reduced in the last five years.

Areas in Thane, Navi Mumbai and Mumbai Metropolitan Region (MMR) too have seen a fall to a certain extent in apartment sizes in the investable-grade category according to Jones Lang LaSalle (JLL). Mumbai is witnessing a considerable fall in apartment sizes since 2008. According to JLL, apartment sizes in Greater Mumbai in 2008 were on an average 20% larger than those on a pan-India level. While the median size of apartments remain almost constant at approximately 1,600 sq.ft at a pan-India level, the unit sizes in Greater Mumbai have greatly reduced and are currently almost 15% lesser than other cities. This is a fall of approximately 31% from 2008.

While parts of Navi Mumbai and Thane also saw a fall in apartment sizes, the fall is lesser compared to that in Greater Mumbai. Thane saw a reduction in apartment sizes by 17% while Navi Mumbai saw a reduction of 18%.

Reason for falling apartment sizes

While one may expect increasing affluence of Mumbai populace would result in an increase in preference for larger size apartments, that was not the case. Apartments in the investable-grade category in Greater Mumbai, Thane and Navi Mumbai saw a sharp reduction in sizes in the year 2009. One may argue that this was the after effects of recession. However, considering that construction of a house in the investable-grade category takes at least 3 years, this is unlikely.

This means that reduction in apartment sizes in 2009 was considered before the recession. While a slow reduction in apartment sizes post 2010 can be attributed to recession, the sharp fall in sizes in 2009 can be attributed to other factors such as rising apartment prices and increasing population in Mumbai.

As per JLL data, there was a steep escalation in residential property prices by 110% across MMR in 2009. Greater Mumbai alone saw an increase of prices by almost 120%. Mumbai is already the most expensive city in India to live in. Such sharp escalations come with reduced affordability. Thane and Navi Mumbai still maintained saleability compared to the other two regions. Real estate developers perceived the necessity to reduce apartment sizes in order to maintain affordability in MMR and Greater Mumbai.

Secondly, Mumbai is witnessing a rapidly increasing population over the last 60 years. It was ranked 17th in the category of most populous cities in the world in the year 1950. Mumbai currently ranks as the seventh most populous city in the world with a population of 19.7 million (including MMR and satellite belts). Delhi and its satellite cities rank second after Tokyo, Japan. This increasing population raises a concern for space. This may also be considered a key contributor to the reducing apartment sizes over the past five years.