Shama,
You can construct a very well posh architect designed house measuring 1700-1800 sq.ft in 1200 sq.ft provided you do not have intention to rent out ground/first floor. You need to have the plot width measuring minimum 23-25 at whichever side. (eg, 40x30 is an ideal site), 60x20, you can still get it.
One sample plan is as follows..
You keep the hall area with high ceiling (Double the normal height so it looks really spacious with a 20x10 hall), have dining hall, 1 bed room, puja and a kitchen , 1 or 2 rest rooms with back yard 4 ft and front car park - 11 ft, garden space 6x8.
In first floor, you can have a mini hall, 2 bed rooms with 1 master as 15x11, 1 common bath and a balconymeasuring a room size.
You just need to spend some amount 5000 Rs - 10000 Rs with an architect and he will give you a best design with good space optimized for look and convenience.

You can rent out the house in whole, but not in parts...
In construction side, you could look at hiring labour alone and buying materials by yourself. This will work out little cheaper if you could get labours from your native or from kancheepuram/Chengalpet. Since construction industry is facing job losses, these people are looking for some jobs that could keep them occupied and paid for the shorter period.
Why I say is, for every material, you will have to go for quality check, colour inspection and price factor. Any thing little above contract criteria, you will end up paying extras.
- For eg: Good quality tiles with various designs can be brought from Pondycherry in a day's trip. You could lots of bathroom, door fittings from Pondy. So is the case with electrical fittings like fans, tubes, switches, wires..
- Just spend 2 days at Pondy with enough cash in hand, order the necessary items for delivery and rest bring it along with you.
- You get good tax rebate there for purchases made in Pondy.
- Ready made doors can be bought from any door vendors.
- Windows , wardrobes, shelves and Main doors will have to be done through a carpenter.
Main items like Cement, steel, bricks , stones and sand can be ordered as per the requirement in bulk through the civil contractor/Supervisor.
You can have an exclusive contract for this fashion so that the customer selection items could be excluded from your contract rate per sq.ft.
- Definitely you will have to spend good project management time and effort to track the construction activities.
Finally your dream Home will be ready...!!!!