Tata, 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.