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Rightsizing: House owners adjust to space needs for optimal living

By Peter Theuri | Jan 13th 2022 | 5 min read
By Peter Theuri | January 13th 2022

African living room interior [Courtesy]

Reduced incomes in the wake of Covid-19 and uncertainty about the future caused people to ditch prime property for smaller or less expensive residences that they could afford. That is downsizing. But some who moved were actually rightsizing.

Rightsizing is not a common word in local real estate lingo, but it is something experts observe keenly. In 2020, real property consultancy Knight Frank released a report on the Australian market’s rightsizing.

They studied “the downsizing lifestyle trend towards luxury apartment living” and have already launched the rightsizing report of 2022.

“Two years have passed since we introduced “rightsizing,” “rightsizers” and to “rightsize” to the Australian real estate industry - that is, ultimately the downsizing lifestyle trend towards luxury apartment living,” the latest report reads.

And while this report primarily focuses on a process where people seek for “downsize”, rightsizing could go either way, up or down.

Executive Director of the Land Development and Governance Institute, Mwenda Makathimo, says rightsizing is all about acquiring optimality, whether that is in the uptake of more space or doing away with some that one already owns.

“In rightsizing, one is doing away with burdens that they should not be carrying or is taking up the responsibility that they should already have embraced,” says Dr Makathimo, a seasoned real estate valuer.

“One is trying to adjust to what meets their needs. So in this case, there is cutting off of excesses and one works towards maximising utility. Simply, such an investor or user is seeking optimal results.”

Institution of Surveyors of Kenya President Abraham Samoei says that, unlike downsizing that is forced by circumstances such as reduction in earnings, rightsizing is a choice that one makes for more fulfilment.

“When rightsizing, you could remain in the same neighbourhood but will opt for a different-sized house with the same amenities,” he says.

“But in downsizing, you will change neighbourhoods and go to areas where you need less money to survive. You could even opt for the same size of the house but in a different location where you pay less.”

Mr Samoei says that in Kenya, where consumption trends in real estate are mainly governed by location, size of family and earnings, it is circumstances - rather than choice - that influence settlement. People are often forced into decisions in downsizing.

“After a student graduates, they will most likely settle in a bedsitter. When they start working, chances are they will move into a one-bedroom house," he says.

"When they get married, they may opt for a two-bedroom house, and an even bigger one when children come. But when the children are finally grown up and leave the household, the parents may downscale and get rid of the excess space vacated by the children.”

This shift in space based on needs - with other factors held constant - is an example of rightsizing. One climbs up the ladder and could go down when need be.

But there are other issues that affect the movement including proximity to workplaces and loss of revenue, which might mean the trajectory might not depend on the property users’ wishes.

Samoei says the nature of Kenya's real estate sector, where houses in many areas are more or less the same size, prevents movement up and down the ladder for rightsizing. People often have to move to other areas in pursuit of what is optimal.

A family of four, for instance, lives in a four-bedroom house and is comfortable. But it gets to a point where all the children move out and a lot of the floor space is no longer in use. Probably, the couple no longer uses an entire floor.

They may go for a house that is smaller but not necessarily cheaper, in the neighbourhood. Or one that is the same size as their old one but instead of the extra bedroom has a library that they can use.

In 2020 when the pandemic’s tentacles gripped hardest, a lot of people downsized. While rightsizing is always about choice, downgrading was for survival.

In a previous interview with Real Estate, industrialist and real estate investor Peter Kuguru spoke of tenants vacating more expensive houses for cheaper options, and finding their target houses empty as their tenants had also made similar moves downwards.

“In downsizing, everyone is looking to survive. You are going from big to small, cost-cutting and deliberately becoming smaller for what you can afford,” says Makathimo. “Circumstances here demand that you become small if you are to live, probably because of prevailing market conditions.”

He says that users and investors define what is optimal for them and focus their energies towards achieving it. They will optimise resources to make sure there is no extravagance and there is no shortage.

“You ensure that the marginal cost is the lowest you can have. You have assessed your needs, set objectives and taken a feasibility test and are sure you are getting the maximum, say profits, that you can.”

The Knight Frank report on Australia indicates that the pipeline of new apartments in prime regions around the country will fall by 39 per cent over the next three years across low, mid-and high-rise projects.

People who move will be looking for a home office or study, more outdoor space, high-speed broadband and more indoor space as the main things the new homes should have as they rightsize.

Knight Frank Kenya Managing Director Ben Woodhams says that with Covid-19 having disrupted livelihoods, there is a likelihood that people will be changing where they live, up and down the scale.

“People are evaluating because of the pandemic and are moving to bigger spaces while others go into rural areas,” he says. This would indicate both rightsizing and downsizing.

“While in their best financial positions, people want to buy big houses and maybe in the future downsize and release equity,” Mr Woodhams says.

Property consultancy firm Duet says many people are using the term “downsizing” when what they really mean is rightsizing.

“Downsizing is where someone owns a large home and truly wants to (move) to a smaller square foot home. Maybe their financial situation has changed and they are now on a fixed income or will be literally making less money for various reasons,” the firm explains on its website.

“Downsizing implies that you are sacrificing or giving up something bigger, for something smaller whether that’s square area or size of the house payment. Rightsizing instead implies you are making a move that looks and feels “right".

In 2022 and beyond, many people may do “what looks and feels right.” Moving up and down the ladder, now that we have learned to live with the pandemic, might become more common than it has been the last two years, with optimisation being the keyword.

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