This depends on your need. Such apartments are best for singletons or couples. “Most people who start working or those who have recently got married can’t afford to buy big apartments, especially in metro cities, where housing is expensive even if you rent it,” says Pankaj Kapoor, managing director, Liases Foras, a real estate research and rating firm.
For such people, a studio apartment is a good option, particularly if they spend most of their time at work. It’s even better if they can buy one near their workplace as it will help them save on transportation cost. Says Mohammed Aslam, chief operating officer, residential services at Jones Lang LaSalle: “Usually, young people want to stay in an affordable place and sell it when they move to a different city for work.”
These flats also work for parents whose children are pursuing higher education and may otherwise have to stay in a hostel.
Besides the low price, another obvious advantage is that the registration charge and stamp duty for such houses is less. For instance, if you buy a house worth Rs 15 lakh in Chennai, the stamp duty will be about Rs 1.2 lakh. However, if you buy one that costs Rs 35 lakh, the stamp duty will be Rs 2.8 lakh. You can check how much you need to pay as stamp duty by using the various calculators on real estate portals, such as Propmart and India Properties
If you are buying a studio apartment in a new housing project, be prepared to pay for some facilities whose prices are fixed by the developer. These include a parking slot and club membership. However, ensure that the maintenance charge, which you will have to pay, is not a fixed fee and is calculated on basis of the area of your house.
Is it worth an investment?
A studio apartment can be a good investment if you are a newbie or conservative investor wary of putting your money in equity or mutual funds. Most Indians consider real estate a safe investment option, so buying a studio apartment, for which you need to pay a home loan EMI of Rs 6,000-10,000, can be a feasible choice.
Even if you move to a bigger house later on, it guarantees a rental income. Alternatively, you could sell the flat and use the sale proceeds to make a down payment for a second house. These houses are easy to sell as the demand for smaller apartments is always higher than those for larger ones.
According to Ganesh Vasudevan, vice-president, Indiaproperty.com, studio apartments are an attractive option for real estate investors because of the high capital appreciation and good rentals they offer. “Studio apartments in business centres, such as Chennai, Bangalore, Gurgaon and the western suburbs of Mumbai, are in big demand. These apartments have witnessed a capital appreciation of 15-20% a year in the past 4-5 years,” he adds.
While buying a studio apartment, the most important aspect to consider is location. It should be near a workplace hub as this will guarantee a steady stream of tenants or buyers. Studio apartments are in prime demand in and around central business districts and IT centres.
Another good option is if it’s close to a major medical hub or hospital, as the families of most people who have to undergo long treatments prefer to live in a studio apartment rather than shell out money for expensive hotel rooms. Opt for a project in an area which has good connectivity and where new industries are being set up. Find out if any major government projects are coming up as this will enhance the resale value of your house.
If you plan to sell the apartment after a few years, buy an unfurnished one. Though developers offer fully furnished studio apartments, they will not tell you the cost of each piece of furniture or electrical item. So, it makes more sense to choose and pay for your own fittings and furnishing.