The real estate market of Pune, which was disrupted in Apr-Jun 2020 due to the COVID-19 outbreak, displayed some signs of recovery in Jul-Sep 2020 as housing demand improved across segments. While ready-to-move units continued to grab homebuyers’ attention, the popularity of under-construction units also increased amid a host of offers provided by the developers. The shortage of ready units, too, compelled homebuyers to look at projects nearing completion, highlights 99acres Pune Insite.
The COVID-19 outbreak restricted the growth of the residential sector in Pune in Apr-Jun 2020. With projects stalled, delivery dates extended and homebuyers deferring their purchases, the market remained meek with over 70 percent dip in the residential sales as against Jan-Mar 2020. Nevertheless, Jul-Sep 2020 remained positive with businesses reopening and people gradually resuming their everyday lives. The real estate market in Pune also witnessed marginal recovery as housing sales in the city reached 50 percent of the pre-COVID-19 levels. According to 99acres Pune Insite Report, close to 2,300 housing units were sold in Jul-Sep 2020, with under-construction properties occupying over 40 percent of the market share.
According to Gaurav Nahata, Real Estate Consultant, Purple Realtors, “When compared to the pre-COVID-19 times, the demand for under-construction properties has gradually improved as homebuyers are apprehensive of the market uncertainties and are unwilling to undertake substantial investment as involved in ready-to-move units. Besides, the majority of schemes and offers rolled out by developers such as 10:90 or 5:95 flexible payment plans, no-EMI till possession, EMI holiday for a year and 100 percent refund on deal cancellation are applicable only on the under-construction properties, which have also heightened their popularity.”
Currently, the subdued demand in the ongoing projects, peaking inventory levels and restricted cash-flows, have pressurised many developers in Pune to provide attractive schemes in the under-construction market. Nevertheless, the maximum demand in the segment is for projects nearing completion in the next six to 12 months as potential buyers are reluctant to invest in projects with longer completion timelines. Their prime focus is on saving cost and faster possession of the property to avoid the dual financial burden of rentals and Equated Monthly Installments (EMIs).
Kishan Agrawal, Proprietor, Prociti, shares that the maximum demand in the under-construction segment has been for units in the budget range of Rs 40-60 lakh. Not only because they are the second most supplied in the city, offering galore of options to potential buyers, but also because they provide relatively bigger carpet area that helps the customers meet their altered requirements of home office and study.
The Insite report highlights that the residential units pegged at Rs 40-60 lakh captured around 22 percent of the market supply in Jul-Sep 2020. Moreover, the maximum demand in the segment was in the outlying pockets of Pune, Dhanori, Chakan, Ravet, Balewadi, Wagholi and Baner-Sus Hadapsar. The proximity to the IT/ITeS hubs of Magarpatta and Hinjewadi and the under-construction PCMC-Shivajinagar metro corridor helped these pockets garner maximum traction. The average ‘ask’ rate in these sub-pockets hovers between Rs 3,600 per sq ft and Rs 5,700 per sq ft.
Source: 99acres Pune Insite (Jul-Sep 2020)
In addition to the factors mentioned above, the stamp duty reduction also aided the recovery of real estate in the city. Although it did not result in significant sales, it certainly boosted the enquiries from genuine homebuyers. Nahata anticipates that while the reduction in stamp duty would not spike demand in projects with longer completion deadlines as the registration process follows at a later stage, the projects nearing completion in next 6-12 months and the secondary market may benefit from the same. Moreover, the recent announcement by the Reserve Bank of India (RBI) to keep the repo rates unchanged at four percent and the rationalisation of risk weights on new home loans availed up to March 31 may also improve the residential demand in ongoing projects.