Despite the outbreak of COVID-19 pandemic, the residential uptake in Pune in the quarter ending March 2020 increased marginally in the wake of the augmented supply of under-construction units and attractive property prices. The city recorded around 5,000 property registrations during the quarter against 4,500 conversions in Oct-Dec 2019, highlights 99acres Insite Report.

The Indian real estate market, which saw some green shoots of recovery during the last quarter of 2019, received a severe setback with the outbreak of Coronavirus and the subsequent lockdown in March 2020. From stalled construction activities to banned site visits, the pandemic took a massive toll on the real estate markets across the country. However, Pune managed to stay afloat during the quarter in the backdrop of the strong home buying sentiment in the pre-COVID-19 period. As sales momentum continued in the city from the previous quarter, it managed to absorb a portion of its unsold residential inventory, which dipped to 96,000 units in Jan-Mar 2020.

Increased residential sales

According to 99acres Pune Insite Report (Jan-Mar 2020), while the residential market in the metropolis suffered a hit in the last month of the quarter, the sentiment remained upbeat in January and February 2020. The first two months of the period alone accounted for 5,000 property registrations in the city, approximately 10 percent more than the total transactions recorded in Oct-Dec 2019. Competitive property prices from builders willing to offload of their piled-up residential stock and increased supply of under-construction units, particularly by Grade A developers, triggered the home buying momentum in the city.

Gazanfar Siddhiqui, Associate Vice President, Sales, 99acres.com, avers, "The presence of only a few Category B developers in the market post the Non-Banking Finance Companies (NBFCs) fiasco helped the Grade A builders to corner the market with about 70 percent of the market supply and demand. Attractive deals, coupled with the reduction in the flat sizes by 150-200 sq ft to cater to the budgetary expectations of prospective buyers, contributed to the increased conversion in the city. Besides, high-creditworthiness of these builders also played a crucial role in paving the trend.”

Majority of the conversions recorded in the city were in the technology hub of Hinjewadi, Bavdhan, Wakad, Punawale and Ravet. The presence of IT/ITeS companies fueled residential demand in Hinjewadi, and proximity to it helped the other areas get their share of homebuyers. Ready-to-move units continued to be homebuyers favourite; however, under-construction properties stole the show with nearly 60 percent of the demand share.

Localities

Average Capital Rates (Per sq ft)

Percentage Growth (QoQ)

Punawale

Rs 5,560

3%

Bavdhan

Rs 7,150

2%

Wakad

Rs 6,690

1%

Ravet

Rs 5,700

2%

Hinjewadi

Rs 5,750

0%

Source: 99acres Pune Insite (Jan-Mar 2020)

Unsold inventory declined marginally

The increased residential uptake and limited new supply brought down the unsold inventory levels from 96,500 units in Oct-Dec 2019 to 96,000 units in Jan-Mar 2020. The numbers of months required to dispose of the existing inventory overhang also reduced to 12 from 14 in the previous quarter. Across zones, South Pune occupies nearly 60 of the unsold housing stock in the city, followed by North and East.

Sentiment may improve by Q3 2020-21

Nevertheless, the residential sales in the city may improve further post the dust around the COVID-19 crisis settles. According to Gaurav Nahata, Property Consultant, Purple Realtors, "The Indian real estate sector has been suffering from prolonged turbulence due to economic stress in certain segments and the rising number of Non-Performing Assets (NPAs). The situation has further worsened with the outbreak of the COVID-19 pandemic. The crisis has gravely affected the developer community, which would now resort to anything, including price cuts to sustain themselves in the market. Hence, property values across metros, including Pune, may descend by 10-15 percent in the upcoming quarter. The price reduction is likely to lure potential homebuyers back into the market not only from India but overseas as well."

The residential demand, however, may remain lop-sided towards finished projects or those nearing completion as investors may avoid high-risk prospects. Moreover, while the Pune's housing market is unlikely to resume normalcy before the early next year, it is expected to take a route to recovery post monsoons around mid-October.