The requirement of living in a city centre, creates the demand for studio apartments which are smaller spaces for single people or couples.
The perception of owning a home is expected to see a sea-change in the post-COVID-19 world. Many tenants who have faced pay-cuts or staring at job losses could have a tough time ahead dealing with their landlords. The need to own a home is expected to be more now. Even those who may have a stable job may consider buying a home of their home looking at the experience of other tenants.
While the interest rate on home loans is around 7.5 per cent per annum and with the property prices down, there could be enough bargain deals in the market. What could turn out to be a stumble is the arrangement of a down payment. On a house worth Rs 60 lakh, the down payment that a bank asks from the borrower is nearly 20 per cent or Rs 12 lakh. If that is what is keeping you away from owning a home of your own, there are other budget options to look at. Studio Apartments provide such an alternative as they come with furnishings such as wardrobe, beds, AC, refrigerator, induction heater, geysers, TV etc. They are, however, a one-room set with the kitchenette area within or as a separate unit.
While a Studio Apartment can be a good starting point for many to own a home, over time, one can upgrade by selling it and buying a bigger apartment.
FE Online in an e-mail interview with Ram Raheja, Director, S Raheja Realty finds out the suitability of Studio Apartments, their features and its value proposition to any prospective buyer.
Post-Covid how is the perception of owning a home going to change? Are people staying on rent more willing to buy a home of their own?
Traditionally, owning a home in India has been a matter of security and prestige. Over the past few years, we saw this trend of nomad lifestyle where there was a reluctance to invest in real estate because of the shorter returns, high rate of interest on home loans and it was argued that it is cheaper to rent than buy a house.
But with the calamity that we are facing right now, this thinking will change and people will be more driven towards owning their own home, primarily for the sense of security that it brings with it and that will be the silver lining going ahead.
The fact remains that unlike fluctuations in the financial equity markets, the value of properties in the real estate market will remain stable. And that will revive the consumer sentiment further.
For someone looking to buy a home, does studio apartment provide a better value proposition?
The concept of studio apartments is very well adapted across countries and has found prominence among young professionals, thus also giving a boost to rental culture.
For those looking at studio apartments from an investor’s perspective, the return is lucrative when it comes to studio/smaller apartments. The ticket prices are smaller and the demand is sky-high.
To add to this, the supply of this specific offering is limited as the numbers of such developments are few in the city, especially when it comes to uber locations like Bandra, Khar, Worli and Santacruz.
Most small one beds/one room kitchens as called in the past are available in old developments. Given the high cost of residential real estate in premium locations, studio apartments offer great value to acquire space within budget and the flexibility to live in a premium neighbourhood.
Typically, what are the features of a luxury studio apartment?
A fully furnished space completely equipped with white goods like furniture and maximum open space as much as possible to not make the place feel small. Luxury studio apartments features studio apartments are comparatively more spacious.
Whom does a Studio Apartment suit?
Typically the target audience are young professionals, young couples, students etc. Especially in a city like Mumbai, people want to live in the city centre and enjoy the vibrant culture.
Studio apartments are a successful model in every metro city in the world. With expensive real estate in global cities, the requirement of living in a city centre, creates the demand for studio apartments which are smaller spaces for single people or couples.
What rental yield can one expect from owning a studio apartment as an investment purpose?
The rental yield on studio apartments depends on the neighbourhood and varies for different localities, but an approximate estimate would be 3-4%.
What factors to look at while buying studio apartments?
Time is of great essence and it always adds as an advantage if the workplace/educational institute is located nearby from home. Also, as the target audiences of this segment are mostly youngsters, there is a quest to live in a locality where the social and lifestyle amenities are vibrant.
The important point to factor in before investing in a studio apartment is the location. Every buyer should make sure that the development needs to have great connectivity, social infrastructure in the neighbourhood; business districts and education centres should be nearby. Safety and security and easy access to public transportation are also equally important.