Pune: Gera Developments, pioneers of the real estate business and the award winning creators of premium residential and commercial projects in Pune, Goa and Bengaluru, today presented the Gera Pune Residential Realty Report for the period December 2015 – June 2016. The report suggests that, although the Pune real estate market is going through challenging times, it is still a healthy market with the sales holding up. Prices of apartments (on a simple average basis) have dropped relative to the previous 6 months for the first time in the last 5 years. They have reduced by -2.20% in the January 2016 to June 2016 period continuing the slowdown witnessed in prices over the last two years. New project launches (including new phases of existing projects) have slowed down from 1064 in the first half of 2015 to 947 projects in the second half of 2015 down to 890 in the first half of 2016.
According to the report, while the overall apartments for sale has increased by 2.7% between December 2015 and June 2016, the value of the apartments for sale is virtually unchanged at approximately Rs. 55,329 crore. This indicates flattening of the overall scale of the industry. From an inventory perspective, the overall market has grown by 6.06% in the last 6 months (Jan’16 to Jun’16) from 3,04,905 units under construction in December 2015 to 3, 23,372 units in June 2016 as against 8.54% in the previous six months (July’15 to Dec’15) and 16.83% in the six monthly period before that (Jan’15 to Jun’15). While individual six monthly periods may suggest a slowdown in construction activity the YoY figures indicate that the pace of construction activity has remained fairly stable. The July 2015 to June 2016 growth rate is 15.11% while from July 2014 to June 2015 the market grew by 14.36%.
As per the report, out of inventory of 3,23,372 homes currently under development in various stages a total of 2,30,547 homes are in the early and mid -stage of construction. This means all these homes (and projects) will be covered under the RERA. There are 1, 39,393 homes being developed (as on June’13) of which 96,971 homes are sold (as on Jun’13). It is highly likely that almost all these homes have passed their promised delivery dates and these customers will likely find relief through RERA. Depending on the rules formulated, these projects may see a strain on profitability if compensation is required to be given to customers for these projects.
While commenting on the Gera Pune Residential Realty Report, Mr. Rohit Gera, Managing Director, Gera Developments said, “With the decrease in prices, Pune is a market where residential real estate is amongst the most affordable in the country given that it also ranks amongst the most livable cities in India. While on one hand the challenges continue for the sector, the resizing of apartments and new projects being launched at lower prices is showing the first signs of a turn around. The impact of RERA as well as the translation of the intent to reality of the government to improve the speed of approvals although challenging will increase transparency and avoid fly by night operators to enter the market. Construction activity has also maintained its pace between 14% to 15% YoY, while prices of new projects launched are below the psychological barrier of Rs 5000 per sq ft. The inventory overhang remains at 13.93 months over the last one year (Jul’15 to Jun’16), which by any measure is healthy and amongst the best across India, if not the best.”
The report underlined that all price ranges have seen an increase in the unsold stock except the Value category where unsold stock has dropped indicating that it’s a segment that has seen traction in the last 1 year. The budget category (where prices presently are below Rs 4060 per sq ft.) has seen an increase of 8.73% from 40,814 unsold units to 44,378 unsold units. The Value category (current prices between Rs 4061 per sq ft. and Rs 5076 per sq ft.) has seen a decrease of 3.90% in unsold stock from 24,768 units to 23,803 units. The luxury segment has seen an increase of 20.30% in unsold inventory 4325 units unsold in June 2015 rising to 5203 units in June 2016. Similarly, the unsold stock in the Premium category has increased by 60.40% and by 56.46% in the Premium plus category.
According to the report, maximum new stock has been added in the past six months. Only 17.79% of the stock has been added between January 2016 to June 2016 is within PMC limits indicating that most of the incremental stock is added outside the Pune Municipal Corporation limits. This indicates the growth of the city outward beyond PMC limits.
Providing his perspective on the current real estate market scenario Mr. Gera further added that, “It is not all bad news for the Pune real estate market, though there is a build- up of inventory, sales continue to take place across the spectrum. The total inventory overhang in June 2016 is in fact marginally lower than the inventory overhang in December 2015. The percentage of the inventory available for sale has marginally gone down showing a shift in the healthy direction. This shows the sales and introduction of new inventory have at least for the past few months leveled off.
The normal way to look at the market is to look at the rates per square foot, when the rates per square foot go down, it appears that there is a reduction, however, a broader look tells a different story. There has been a steady increase over the past few years in the loading as well as the extra costs. Adding these costs will result in an effective increase in the overall cost of homes. While these changes will rapidly change the industry and protect the customer, I would advise home buyers to look at the track record and intent of their developer especially during this time when the future is so uncertain.”
While the big picture shows challenging times for the real estate sector with the decrease in prices, the inventory level still remains stable suggesting the Pune market to be sound with the sales and construction activity gaining momentum. It still continues to be the best performing market and most affordable market where in its more end user driven rather than an investors market.
Your email address will not be published. Required fields are marked *
Save my name, email, and website in this browser for the next time I comment.
Sign me up for the newsletter!
Notify me of follow-up comments by email.
Notify me of new posts by email.
Pune’s renowned Interior Designer, Rachna Gupta wins Mrs Style Icon 2019 crown
Masai School A Military style coding school to open campus in Bihar
Eminent Potters create awareness about the art of ‘Studio Pottery’
Air Products Kochi Industrial Gas Complex Achieves ISO9001:2015
India News Hosts Pioneers of North in Chandigarh
2014 The Global Indian New Network (TGINN)