#FestiveImpact: Pune housing market is en route to recovery

By
251

  • Share on
Pune

Rohit Gera, MD, Gera Developments shares insights on Pune’s realty market in an exclusive interview with 99acres.com.

rohit Gera

Q.What is the general home-buying sentiment in your city?

The buying sentiment in Pune is in the early stages of recovery. The city alone accounts for 27 percent of all RERA registered projects in Maharashtra. Of the 18,279 RERA registered projects in Maharashtra (across residential and commercial), 4,911 are in Pune District (which contains 14 talukas). It is a significantly high number for one district and it completely narrates the recovery tale of Pune.

Another way to look at the recuperating market is through the lens of “replacement ratio”. The replacement ratio is the new supply added in the city divided by the number of apartments sold.  A replacement ratio of one indicates that demand and supply are in consonance, i.e. inventory sold is being replaced by new stock. When the ratio is more than one,  inventory supply is faster than sales and when replacement ratio is less than one, sales are faster than inventory addition. The current replacement ratio is 0.784 which is a robust leading sign of recovery.

Q. How have sales, new launches and property price movement been in the last three quarters?

Overall, new launches in the period of Jan 2018 to June 2018 have increased from 24,792  to 31,618.  This is good a sign of market revival.

Sales in the period July 2017 - Dec 2017 was 36,086 units and in the period between Jan 2018 to June 2018 was 40,345 units. Thus, the sale volume has also increased by 11.8 percent on a six monthly sequential basis.

However, property prices have seen a decrease on an overall basis for the fifth consecutive half-year tracking period. From a peak of Rs 5,096 per sq ft in Dec 2015 to Rs 4,685 per sq ft. on Jun 2018, the drop in the past six months has been a further 1.17 percent.

Q. How have the city developers prepared for the festive quarter? What kinds of deals are floating in the market?

Bank subvention scheme of 80: 20 and variations in the same depending on the loan amount sanctioned, upfront discounts, white goods, low booking amount and even a free car with purchase are some of the offers that realtors have introduced for the upcoming festival season.

Q. Do you think these deals will help lure buyers and augment sales?

I think what is missing is the impetus to book as there are a lot of fence-sitters in the market scouting for good offers that last longer. These deals shall surely give some fillip to sales.

Q. Do you see a favourable price movement post the festive season?

Positive price movement is a function of demand for homes which itself is a derivative of factors such as job creation, salary hikes, affordability, home loan rates etc. If these macro factors improve and the supply gets absorbed in the festive season then most certainly we can see positive price movement going forward.

The exact quantum is difficult to predict at this point. However, market reports indicate that property prices have recorded CAGR of 5.1 percent from June 2011 to June 2018, i.e. they have increased from Rs 3,475 per sq ft to Rs 4,685 per sq ft. Moreover, in the last five years, the average inflation rate has been 4.75 percent indicating that prices have moved in line with the inflation in the country.

Q. Is this festive season the best time for the investors to return to the market or should they wait further?

Over the recent few months, we have seen demand picking up, and the sentiment is improving. New launches are being tailor-made as per the budget of the prospects, and the government has also declared sops for a few segments (four percent GST waiver for affordable housing and PMAY). Currently,  the real estate industry is at the tipping point for a strong revival. It is undoubtedly the right time for investors to return to the market.

Q. How has been the performance of your city’s realty landscape this year? Is it at par with the expectations? What are the areas high on buyers’ popularity charts so far this year?

The areas in Pune that have seen the maximum new launches are Dehu, Manjiri, Hinjewadi, Wakad and Kanhe. These areas have maximum supply of affordable homes. On a yearly basis, the city is still recovering from the market slowdown. However, recent numbers indicate a positive report especially for reputed developers with a strong brand and a consistent track record.

Q. Where are the maximum number of new launches happening in your city?

Areas such as Dehu, Manjiri, Hinjewadi, Wakad and Kanhe account for 21 percent of the total new stock added between Jan 2018 to June 2018.  Pockets such as Dhayari, Wagholi, Fursungi, Bhosari and Alandi also witnessed supply of new housing units. Overall, these 10 areas accounted for 1/3rd of the total new supply in Pune.

Q. Do you see realty recovering fully by the end of this year? What will induce this growth?

The recovery is already in progress. All the regulatory changes introduced by the government to strengthen the realty sector at a structural level have begun to cause movements by way of non-genuine players exiting and market consolidation. Hence, prudent developers with the might to complete projects are the ones that are going to have a strong play. Needless to say that these changes have brought to fore the importance of reputed developers with a consistent track record and strong governance standards. We fully expect these changes coupled with improvement in buying sentiment to drive recovery in the coming year.


Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. 99acres does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.


  • Share on
Rate it 1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...Loading...
  • Post a New Comment

Usage of 99acres.com to upload content which enables targeting by religion/community/caste/race is prohibited. Please report inappropriate content by writing to us at report abuse
Home Legal Sitemap Send Feedback
Back To Top