Infrastructure projects receive an impetus
The extension of metro lines from Swargate to Katraj, Vanaz to Ramwadi, Shivajinagar to Shevalevadi and Man to Pirangut are seen as future growth stimulators for housing demand in neighboring localities. Besides, the recently proposed 170 km-long ring road and a new airport also have the potential to augment the realty sentiment.
Stamp duty reduces by one percent
A revision in the stamp duty rate by one percent brought it down to six percent in the city with effect from April 1, 2020, until FY-end 2022. Prospective homebuyers welcomed the move.
No tax for housing units up to 500 sq ft
The Pimpri Chinchwad Municipal Corporation’s (PCMC) decision to waive off the property tax on residential structures measuring up to 500 sq ft has come as a respite to about 1.5 lakh families. The ruling applies to both the regularised and unregularised properties for the fiscal year 2020-21.
Town planning schemes on the cards
The proposal of four new town planning schemes along the planned Peripheral Ring Road (PRR) augurs well for the real estate market of South Pune. The Pune Metropolitan Region Development Authority (PMRDA) would implement the schemes over 500 hectares of land in Holkarwadi, Vadachiwadi and Autande Handewadi.
COMMERCIAL REAL ESTATE OUTLOOK
- Grade A office space transactions declined owing to a demand-supply disequilibrium. While the demand for small-sized offices measuring between 500 sq ft and 2,000 sq ft witnessed growth, the market had an overweighing supply of large floor plates.
- Baner and Balewadi accounted for nearly 60 percent of the office space deals in Jan-Mar 2020, followed by Kharadi at 40 percent.
- Pre-leasing by corporates and co-working operators remained a popular trend in Pune. For instance, Smart Works pre-leased 5,000 sq ft of co-working space in a project by Malpani Builders in Baner.
- AP 83, a commercial project worth Rs 400 crore by Amar Builders in Koregaon Park and Solitaire Edge, the retail cum office space by a citybased developer in Viman Nagar were a few mega commercial projects announced in Q4, FY 2019-20.
Grade A builders continued to thrive on limited market competition. With only a few Category B developers operating in the market post the Non-Banking Finance Companies (NBFCs) crisis, Grade A builders seized the opportunity by reducing the average unit sizes to befit the budget expectations of prospective homebuyers. Besides, high creditworthiness of these builders also helped them remain buyers’ first choice.
While ready units topped the popularity charts, limited supply in the category shifted the customer interest towards under-construction projects. Around 140 projects including phases were launched in the quarter in Bavdhan, Wakad, Hinjewadi and Kharadi. Punawale and Ravet stole the show with substantial new launches and nearly 2,700 housing deals in the studied quarter.
Unsold inventory in Pune dipped marginally from 96,500 units in Oct-Dec 2019 to 96,000 units in this quarter. The number of months required to dispose of the current residential stock also reduced to 12 as against 14 in the preceding quarter.
Expansion of Metro line and improved commercial offtake buoyed the home buying sentiment in Pune in Jan-Mar 2020. The market remained upbeat and in the first two months itself, the city surpassed the total number of residential sales recorded in Q3, FY 2019-20. However, March reeled under pressure owing to the unprecedented outburst of the Coronavirus.
In a bid to offload the housing stock, builders remained open for negotiations, however, overall property prices remained unchanged in Jan-Mar 2020. South Pune held over 60 percent of the unsold housing stock in the city.
West Pune drew nearly 70 percent of the housing demand. Apart from Hinjewadi, Bavdhan, and Wakad, new areas such as Punawale and Ravet also garnered home buyer interest. Proximity to Pune-Bangalore Expressway and Hinjewadi IT Park along with the availability of 1, 2 and 3 BHK units priced within Rs 30-65 lakh boosted real estate demand in Punawale and Ravet.
Sadashiv Peth, Yerwada, Marunji and Alandi clocked four percent growth in the average ‘asks’, each, QoQ. While Sadashiv Peth reported a hike in prices on account of demand overweighing supply, Yerwada and Marunji benefitted due to their proximity to the premium locales of Viman Nagar and Kalyani Nagar, and Hinjewadi IT Park, respectively. Alandi gained momentum due to the improved civic infrastructure, seamless connectivity via six-lane road and availability of low-cost residential units.
Average rents in Pune grew by four percent, YoY. Dhayari, Tingre Nagar and Hinjewadi emerged as the bellwethers and reported a nine percent growth in the average rentals, each, YoY. While Dhayari and Tingre Nagar gained due to the spillover demand from Koregaon Park, Kothrud and Viman Nagar, Hinjewadi cashed in on its proximity to commercial establishments and IT Parks.
Housing demand in under-construction projects re-surfaced as Category A developers accounted for nearly 70 percent of the new supply in the quarter. The affordable segment ruled the roost with about 60 percent of the market demand, followed by mid-segment projects pegged at Rs 40-60 lakh. However, the luxury market that was already witnessing subdued traction further hit the boulder with the outbreak of COVID-19 in India. The crisis compelled developers to either shut down their construction sites or operate on lower capacity, which is expected to delay project deliveries. Transactions, too, declined significantly in the reviewed quarter as India experienced its biggest lockdown ever.