14

India’s really, really small apartments

Tata is marketing goods aimed at the ‘bottom of the pyramid’


 

India’s really, really small apartmentsTata, the Indian conglomerate that launched the “world’s cheapest car,” announced last month that it plans to build 1,000 apartments in an industrial enclave outside Mumbai. And like the $2,500 Nano, the units in the Shubh Griha development will be sold at rock-bottom prices.

Real estate prices in Mumbai are among the steepest in the world—apartments in South Mumbai, for example, can fetch up to $1,200 a square foot. Tata’s apartments, by contrast, will go for between $10,000 and $16,000 apiece. The catch? They’ll be downright tiny. The smallest dwelling will come in at 228 sq. feet, with the largest topping out at 465 sq. feet. Along with the Nano car, they represent one of the most aggressive attempts by a major company to corner the market on goods aimed at what management guru C.K. Prahalad calls the “bottom of the pyramid”—that is, the world’s hundreds of millions of poor people.

While the market for ultra-cheap household items like shampoo and cellphones is well-established in developing economies, Tata’s foray into housing and cars is nothing short of “revolutionary,” says Wendy Dobson, the co-director of the University of Toronto’s Rotman Institute for International Business. “Starting with a price point and working backwards, [making a product people can afford] opens up all sorts of possibilities for entrepreneurs,” she says. According to Karl Moore, a professor at McGill’s Desautels Faculty of Management, targeting the lower and middle classes in developing countries will likely prove immensely profitable for Tata.

Tata Housing CEO Brotin Banerjee describes the Shubh Griha development as a “continuation of the group’s commitment to providing quality, innovative products for the common man.” So far, Tata’s had no trouble finding “common men” interested in scooping them up. Just two weeks after announcing the project, the company already had 8,000 applicants.


 

India’s really, really small apartments

  1. Here we have in Canada a recession boosted by failures of small businesses that cannot even get off the ground. There is micro lending in India for people that cannot even find a place to live. As we are weighted under complex tax laws which are written to ensure failure for small start up business, there is lending out there for very very poor people. Perhaps we should make a case to this developer and start small businesses in those very very tiny apartments.

  2. The problem in Canada isn't a lack of innovative design or even the willingness of developers to produce very low-cost homes. The problem is the privilege exercised by people already with property who insist that such low-cost homes not be in their neighbourhoods. It always comes down to land availability, not the shelter itself.

  3. The problem in Canada isn't a lack of innovative design or even the willingness of developers to produce very low-cost homes. The problem is the privilege exercised by people already with property who insist that low-cost homes – and the people who would inhabit them – not be in their neighbourhoods. It always comes down to land availability, not the housing structure.

  4. I've been thinking about this concept for quite some time now (even pitched it to the Canadian venture capital and corporate communities years ago). Fleetwood, one of the biggest RV makers in the world is in the process of being bought for approx $50 million. Five years ago the RV/mobile home industry peaked at 75 000 units. Last year 15 000. This year maybe 10 000. Been reading about Elkhart ,Indiana. Indiana already does what India wants to do. This might be a good reason why housing/real estate isn't such a great investment anymore. Homes can be mass produced.

  5. RV's are movable for travelling students or snowbirding seniors. Why do most people need lots of "space" in the place they live? What do many do while not working or "out-n-about" getting fresh air?….they watch tv, play video games, read books/mags/papers, or surf the net. Oh, ya…they also sleep, eat and bath. A 50 foot by 10 foot with a few slide-outs/ups can accomodate what is done in shelter by those who aren't in big family units. Students, singles, seniors. The mobile home can be placed by cities, mountains, lakes, rivers, oceans, prairies or forests. With wireless tv, net, phone and panels/turbines energy and info are no problem.

    • There used to be lots of mobile home parks, and I, a senior, lived in a few of them. They were exceptionally clean and well looked after. Today the parks are being sold for condo developments. The ones that are remaining are not cared for. Some I would be afraid to walk through, let alone live in.

  6. Hey, maybe all the surplus of repossed homes in the US could be subdivided into duplexes or four-plexes?

  7. Hey, maybe all the surplus of repossessed homes in the US could be subdivided into duplexes or four-plexes? Put a few more into use by lower-income earners.

  8. This is a misleading article. Low cost apartments have been available in India since 1960. The government leads the pack by selling 350 sq ft "Low Income Group" (LIG) apartments in the suburban area of cities for about $10 to $20 per square foot. Private builders have jumped into the fray since 1990 offering slightly bigger apartments at slightly higher prices. Tata is just another big name entering the market.

  9. Chicken coops…..yay,

  10. LIG (Low-Income-Group) apartments, if you recall are usually shelled out as per the government's quota/lottery system. There aren't as many LIGs available in a given sector to accommodate all the LIG folks. Plus, with the multi-fold of population and parallel increase in corruption, the lower stack of the pyramid has nowhere to go, but either to live on shared rented units paying high rents or to put their families back in villages and live on building rooftops. Not to mention poor quality construction of such units by government or private contractors and enormous delay in construction. Do you really feel proud about that !? Plus to acquire such a unit, one has to feed at all levels of housing board to get things in order!!
    I am glad, that company like TATA, is stepping in and doing what JRD TATA had envisioned. It has been one of the visions JRD Tata had. Plus, one can to some level feel confident of the construction quality and no red-tape-ism or bureaucracy!!!
    Tata is on of the original Indian companies which has stood to its root vision while growing and flourishing. If Tata does it, it ought to be towards a better India.
    Also, my friend, you can't compete or stand at pat China, until unless you take care of the bottom stack of the pyramid and set the base-line a little above with each attempt. The reason China is better the us, is only this. This had to be done some day, I am really glad it has started happening. Can't wait to see the basic needs of "roti, kapda and makaan" being fulfilled now, fully and evenly!!! God Bless India.

  11. At 10,000 to 16,000 this so called "bottom of the pyramid" does not ring true. In reality it only refers to the section of society that even consider it a feasible option to ever even believe it to be possible to be homeowners in India. Of course, the new middle classes in Delhi, Mumbai and Bangalore will snap up such developments but in reality they are still well beyond the wildest dreams of the majority of Indians.
    Interesting that this has been offered by the Tata group that produce the Nano. When released as the first 1 lakh car on the market, it was presented as the cat that would be affordable to all Indians and the mission statement was that within a decade every indian currently riding a scooter would be driving a Nano. How does this stand with the millions of Indians who still wish to have a Hero bicycle but that find the 1500 rps price tag out of their reach ?
    So yes, undoubtably Indian has improved economically so much in the last 20 years but many of its citizens haven't been invited to the party.

  12. I have lived in a loft of 800sqft with two small children & my girlfriend & it was tight but comfortable & there were 540sqft units in our building that were always rented or owned. I feel the real reason we are lacking in micro condo's & homes is design can be very stale & in western canada where we live it's a sort of "little Texas" Bigger is better in trucks (dualies are considered normal daily driver vehicles) & in homes. If there were cost effective & modern well designed units including optional murphy beds in younger communities with good access to transit services I believe it would be sucessfull. However banks & other lending companys are VERY conventional & likely will not see the "value" in funding such a project.

Sign in to comment.