Track2Realty Exclusive: An assessment of business confidence index of Pune real estate post the formation of a stable Government at the Centre is not as easy as gauging the mood of the developers across any other city. The precursor to the very assessment is fraught with a question mark that why will the business sentiment change overnight with the change of Government at the Centre.
Pune is not like Gujarat which has gone all out to hail the fact that the Prime Minister is from the state and hence achche din (rosy days) can be expected ahead. Nor is Pune like Mumbai which being the financial capital of the country is like the barometer of the business sentiment for the nation at large.
Pune, as a matter of fact, is governed largely by its own demand and supply cycle; yet the confidence index of the real estate developers across the city is pretty high. This demands an analysis of various ifs and buts that are driving the sentiment index of the realtors across the city. Analysts tracking the Pune market at ground zero have their own reasons why business confidence index has shown a northward movement even though transaction or the new launches have not suggested that confidence to translate into actual business.
What seems to be a major confidence booster to the business community in the city in general and the real estate developers in particular is the fact that the investors sentiments is showing an upward trend to now to bet with their fortunes in the city. It may not have translated into transactions as of now but they still maintain that the stability at the Centre is a boost to investor confidence. Even the CII Business Confidence Index has improved from 49.9 to 53.7 in 2Q 2014.
It is interesting to note that the city based developers are talking about pragmatic patience for the time being. They seem to be convinced with the fact that the demand and supply cycle need to complete full circle before the index goes into green. There is a general feeling that it will take some time before Pune real estate market is witness to any tangible upward movement in prices especially since there is a good amount of ready stock available. It is also anticipated that some upward movement is on the cards towards the end of the year once ready stock will start to get absorbed and vacancy level goes down.
Shantanu Mazumder, Director – Pune Branch with Knight Frank India asserts that overall the single largest contributor to this turnaround in sentiments was the run-up to the 2014 General Elections. While the results of these elections were officially declared on 16th May 2014, the sentiments started improving much before that, indicating towards a new decisive and stable Government at the Centre. The question is what kind of tangible difference is there in the functioning of the authorities in terms of approvals and clearances.
“In context to Pune there is no difference in functionality as it is more to do with State Government functioning. But definitely the investors’ sentiments will go up to invest now in the city because the overall sentiments have turned around. But the real change would come post the State Elections which is scheduled in September this year and a clear majority complimenting the General Election results would change the market dynamics,” says Mazumder.
Abhay Kumar, CMD of Grih Pravesh Buildteck agrees that the business confidence index of Pune real estate market has gone up substantially post the new Government. According to him, with change in Government in Centre the business confidence index is growing; State Election is round the corner and the current Government too has changed their view on the stalled projects and is showing positive changes. Pune realty sector has been sluggish for last two years and now we can observe some positivity in terms of increased footfalls and marginal increase in sales compared to last year.
“The tangible difference in functioning of different authorities can be identified by the time taken in those approvals. Pune Municipal Corporation is trying to reduce time in giving the approvals and has opened a grievance cell in case of unnecessary delays. They are in the process of fixing timelines for all approvals and clearances. In case of locations which are outside corporation limit, once the drawings gets vetted by town planning authority it is sent to collector for approval which is usually done within a month,” Abhay exudes the confidence.
Rishav Vij, Associate Director – Office Services with Colliers International maintains that the new stable Government at the Centre has boosted overall business confidence and the positive changes are visible in the increased floating real estate demand in the city. Not the IT sector alone but the manufacturing sector has also shown improvement in their outlook towards business growth over the last few weeks. As far as the tangible difference in terms of the functioning of the authorities vis-à-vis approvals and clearances is concerned, it is premature to comment on such changes especially since these approvals are a State subject. However, with the impending State Legislature Election later this year the overall pace has picked up,” says Vij.
Even the retail buyers and end users in the city property market are now looking forward to invest in the real estate; something that promises the desired way forward for the developers. Investors’ sentiments are slowly but surely gaining strength and the market response too supports this view with increased footfalls and also the registration offices are getting back to increased activity. The Pune developers now wish that the new government creates conducive environment for industries and IT sector in Pune. Navi Mumbai International Airport too will have a positive impact on Pune realty. They demand that the airport construction must now begin without any further delay.
Of course, the grey areas like speedy approvals process, single window clearance, putting infrastructure development project on a fast tract mode, BRTS, flyovers, metro, and Private Public Partnership (PPP) model still stands there. All this will help projects to complete in timely manner and efficiently. Planned infrastructure is also high on the wish list of the developers that will allow newer micro markets to get developed while providing long term growth opportunities. Many assert that even if single window clearance that has been an industry demand for long now is not met any improvement or speedy mechanism in the approval process will add to the growth dynamics. But since the business of real estate is by and large sentiment driven, it is time for Pune real estate market to cheer the high rise of business confidence index in the city.
