NY Mayor Bloomberg announced a housing program to build micro-apartments in NY City. These apartments would be of 275 sq. ft (hopefully all carpet feet area 
and mainly for households having 1-2 persons (in Mumbai whole families live in this kind of area).
Howard Husock of Manhattan Institute writes this terrific article on this policy move:
Many will doubtless regard with skepticism the Bloomberg administration’s newly announced “micro-unit” pilot program. The administration is asking developers to submit proposals for the design and construction of an apartment building on a city-owned site in Manhattan; the city will adjust zoning restrictions there, allowing the winning developer to construct a building full of tiny, 275-square-foot apartments. In a country where plenty of homeowners havegarages far larger than the proposed apartments—which would be not much bigger than an ATM lobby—there will be a tendency to see the micro-units as novelties similar to gourmet food carts, Central Park bike-rental wars, $500 Broadway tickets, and other aspects of life unique to the Big Apple.
We should actually welcome this move:
Instead, we should view these little apartments as a serious and significant step forward in the city’s housing policy. The Bloomberg administration is reinventing affordable housing in terms that make sense: denser and cheaper, instead of expensive and subsidized. And in doing so, the city is mapping the way toward ensuring that it continues to be a magnet for the talented young newcomers it needs.
Though it may look radical to allow apartments that must be smaller than any of Anna Wintour’s closets, the micro-unit idea is actually a rediscovery of what affordable housing used to be before it assumed its current form. Throughout the late nineteenth and early twentieth centuries, New York saw the construction of small, cheap housing, such as the Lower East Side’s tenement houses and Brooklyn’s thousands of three-story buildings (often with stores on the first floor and apartments on the second and third). It was the same in other cities.
The policy so far was to promote large apartments:
For the last few decades, New York City has strayed from that tradition. For one thing, “affordable housing” now usually means new, expensive, deeply subsidized construction—large units for a lucky few, supported by higher rents for other tenants and tax credits for big developers. (Indeed, this has been the Bloomberg approach to date.)
New York also embraced the ill-conceived policy of rent stabilization. Today, the city has more than a million rent-stabilized apartments (along with 180,000 public-housing units). That gives a large portion of the population a strong disincentive to move, lest they lose a good deal. Data compiled by NYU’s Furman Center for Real Estate and Urban Policy indicate that between 1990 and 2000, 35 percent of New York City tenants remained in the same unit—while in Los Angeles and Houston, just 14 percent and 10 percent did so, respectively.
The idea is to have entry level housing:
As long ago as 1907, Jacob Riis, the first housing reformer, noted that setting housing standards too high threatened “to make it impossible for anyone not able to pay $75 a month to live on Manhattan Island.” To its credit, the Bloomberg administration has recognized that just as New York needs entry-level jobs, it also needs entry-level housing.
What was happening in NY earlier, is happening in Mumbai (and other cities in India as well) now. Approvals are being given for houses which are beyond most except the well-heeled. One luxury project after the other is coming up with large apartments crowding out others who need smaller apartments minus the luxuries. Worst is see so many swimming pools being allowed when most places do not get regular water supply.
We see some builders responding to small sized apartments but this is not because of any policy etc. It is because there are limited takers for the luxury apartments.
Well, am not saying the builders alone are responsible. There is demand for luxuries etc. which is being supplied. India has seen large rise in black and white incomes in the last few years. This has been coupled with easy loan procedures etc. This has led people to demand luxurious life and houses.
However, there is large demand for smaller/affordable houses as well. Without proper policy intervention, this is unlikely to be met. At current pace of rising prices, even far away suburbs have become unaffordable to most. 1 Cr Rupees is a laughable budget these days. Unless there is serious thinking done on providing housing, we are looking at a terrible urbanisation mess going ahead.
The urbanisation process has still not started in India. One shivers to think what will happen to prices and availability once the process starts. What are we waiting for? FDI in afforable housing regulation?
