Sunday, November 19, 2017

URBANIA

PUNE Cautious optimism

 

The Gera Pune Realty Report has pegged the city’s real estate growth at 25.26 percent for 2013

 

Gera Developments, one of the pioneers of the real estate business in Pune and the creators of premium residential and commercial projects in Pune and Goa, have released the Gera Pune Realty Report for the period July 2013 to December 2013. The report, an established industry benchmark, highlights the overall sense of controlled optimism seen in the Pune real estate market for the numerous projects at various stages of construction across the Pune Metropolitan Region. 

 

The systematic breakup of the report reflects the growth of the market from 209,521 units spread across 1813 projects as on December 2012 to 262,438 units spread across 2335 projects in December 2013. The overall market has grown by 56.7 per cent in the last 2 years – from 167,460 units in December 2011 to 262,438 units in December 2013.

 

The Gera report which gives an in-depth view of the Pune realty market has indicated an increase in supply through the launch of 41607 units of which 19,209 units were in new projects while 22,398 units were added by way of new phases in existing projects. Also over the last 6 months, the average market price has risen from an average of Rs. 4464 per square foot up to Rs. 4804 per square
foot reflecting an increase of 7.66 per cent for the second half of 2013.  It may be recalled that the average price a
year ago was Rs 4211 per square foot – the y-o-y increase from December 2012 to December 2013 has been 14.13 per cent. Both the six monthly and yearly average market price have increased significantly, after going through a short term correction.

 

Rohit Gera, Managing Director, Gera Developments while commenting on the report said, “The Pune residential market on the whole seems to be in equilibrium and this has contributed to the increase in prices. The market expansion of only 4.12 per cent in the second half of 2013 as compared to an expansion of 20.3 per cent in the first half indicates that developers have slowed down project launches in light of the large number of launches in the first half of the year as well as the marginal reduction in off take of newly launched projects.  It is this approach that has given the market a sense of controlled optimism as far as the supply side is concerned.Last year we predicted an increase of 13 – 17 per cent in the average market price and the year ended at 14.13 per cent.  This year our prediction range is widened to 13 – 18 per cent.”

 

He further added, “While the overall market has expanded over the past year, concerns of developers being under pressure do not seem to be warranted as the overall sell out of stock is nowhere near any cause for concern.  Further, the steady increase in prices over the last 6 and 12 months also indicates that there is momentum in the market.  On  analysing  the  price  points  across  the  market,  there  is  a  clear  trend  of  larger  apartments  selling  at  higher  prices. 28.71 per cent (11,948) of the 41,607 new units launched are priced Rs 75 lakh or greater. The sellout for higher sized units is 71 per cent  compared to 81 per cent for the lower sized units. On the basis of our findings it is clear that both West and East Pune are seeing equal growth. We have seen that while the percentage of unsold stock continues to be in a reasonable range of equilibrium, the absolute levels have increased and as such, a seismic event will lead to  greater volatility and sharper price corrections. However, the possibility of such an event seems relatively low from the current perspective.”

 

The total unsold stock of 55,684 is approximately 8 months of inventory (given the current rate of sales) which is a very comfortable situation from an inventory overhang perspective and doesn’t indicate the likelihood of prices dropping. The 501 sq ft to 750 sq ft segment has the maximum number of unsold apartments (15,855), followed closely by the 751 to 1000 sq ft segment (15,414 unsold apartments). During the 6 month period, the 1251-1500 sq ft segment saw a 16.46 per cent jump, the 1501-2000 sq ft  segment saw a 7.7 per cent jump and the segment above 2001 square foot saw a mere 2.6 per cent jump in the unsold stock.

 

Of the unsold stock roughly 50 per cent is below the Rs 40 lakh cost bracket (53 per cent in June 2013) while 83 per cent of the stock is under Rs 75 lakh (87 per cent in Jun 2013).The average rate across all micromarkets put together is Rs 4806 per square foot.  There is a change in the top 10 highest gainers and bottom 10 lowest gainers with prices depreciating in Vimannagar/Yerawada.

 

In conclusion, the residential property market in Pune has maintained its momentum even in a challenging economic environment and managed to outshine several key markets in the last 2 years. The market has seen tremendous diversification in terms of types of projects being launched and continues to offer a variety of options to investors as well. The spread of organised retail, constantly changing city dynamics and demographics coupled with the healthy rate of growth and opportunities generated by the IT/ITeS, manufacturing and automobile sectors have ensured a steady stream of demand.

 

The market seems to look for clear direction with a government in control of the situation rather than a fragmented mandate. Looking forward, there are signs of a BJP led government at the centre. This event is significant and if it turns out to be correct, there will be buoyancy in sentiment that will translate to all investment classes including real estate.  The real estate regulatory bill for the state of Maharashtra is pending sign off by the President of India.  This bill will lead to an increase in customer confidence and comfort and can further boost demand for approved projects.




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