News Point: At a time when the property markets across the country are either stagnant or marginally correcting the prices, Pune real estate is showing a healthy appreciation.
As per National Housing Bank (NHB) Residex, Pune has been witness to highest appreciation on a pan-India basis. Though the quantum of appreciation has been micro market specific, the data available with the NHB estimates that in 2015 Pune saw an increase of 6-14 per cent in residential property prices.
It is not only the price appreciation that is promising in the city but the transaction rates are also better than many other cities. While appreciation has often led to lesser transactions in other cities, in Pune it is in sync and hence indicates a genuine end user driven demand in the city.
In terms of the unsold inventory while the neighbouring Mumbai is sitting over 48 months of unsold inventory, in Pune the unsold inventory in the market stands at a comfortable 13 months.
It clearly shows that in Pune there is no stress in the residential market. The analysts maintain that keeping in view the nature of the business anything less than 5 quarter of inventory (15 months) is a comfortable situation. And hence, there is scope for new launches of the residential properties as well. The new launches have not been as much as expected due to policy uncertainties.
Parth Mehta, Managing Director, Paradigm Realty finds a method into it when he says that Pune city has been a job creator in areas of financial services and IT over the past decade that is very similar to Bangalore. Given the influx of earning population on the back of growth in business, this city has grown in valuation. Also, the affordability in the city is in tandem with the home loan finance capability of people with ticket size of flats ranging under Rs. 1 crore in a good location for 2 BHK.
“Pune has been lucrative to investors too with people buying it for its rental yields as the rental market too has good traction. Moving forward, given the extensive project launches with major layouts adding to supply and lackluster job scenario the 13 months inventory still looks worrisome,” says Mehta.
Arvind Jain, Managing Director, Pride Group appreciates the fact that Pune’s outstanding performance vouchsafes the unwavering confidence that end users and investors have been exhibiting in Maharashtra’s most dynamic economic powerhouse. The trend of Pune’s real estate market performing against the larger odds and out-distancing other cities in terms of real estate vibrancy will definitely continue.
“With the combined effect of manufacturing, Information Technology, the services sector and hospitality providing impetus to Pune, the city has all the right economic and demand drivers firmly in place. Moreover, its inclusion in the 100 Smart Cities program has served to boost the interest from multinational companies to set up and expand operations here. This will serve to further increase inward migration and fuel greater demand for residential real estate, and provide end users and investors alike an outstanding rationale to place their faith in this market,” says Jain.
Kishor Pate, CMD, Amit Enterprises Housing says Pune is still seeing a very healthy demand for property. While neighbouring Mumbai is now being seen a largely unaffordable, real estate investors are now flocking to Pune in order to participate in the real estate boom in this city. Growth on the Pune property market has been even more noticeable over the last two years.
“The steady momentum has been the key to healthy growth in real estate demand in Pune. In terms of appreciation too, investment in the Pune market is far superior when compared to other cities, most notably the neighbouring Mumbai. Even in 2014, Mumbai saw only 16 per cent appreciation in 2014 while Pune recorded the highest national increase in capital values at 39 per cent,” says Pate.
It is noteworthy that the National Housing Bank’s Residex recently confirmed that up to March 2015, price appreciation for residential properties continued to be the highest in Pune among the 26 cities it monitors. In fact, all other large cities have been showing a decline in property valuations. Since then the Pune market has only strengthened, as the economy is slightly less sluggish in the last 2-3 quarters. More importantly, the inclusion of Pune into smart city list is also going to change the dynamics of real estate market in the city.
The analysts tracking the city economy suggest that over the past two decades, Pune has seen rapid growth of the IT culture, and there is immense demand for homes from people working in the city’s software parks and IT companies. At the same time, the city’s thriving manufacturing industries also feed the demand for homes.
Moreover, Pune offers a plethora of options for both buyers and investors, at prices which are more affordable than in other cities. This is what makes Pune such an attractive investment proposition, and why property prices continue to register good growth.
The next few years would really be era of growth for Pune real estate market as the investors will flock to the future smart city. At the same time the kind of jobs that are expected to be created in the smart city Pune would be magnet for expat work force which has always been critical for the growth of housing market of the city. Pune real estate developers definitely have the reasons to smile their way to the market.
