Buyers of Residential Properties in Pune Have Reasons to Smile
Real estate is a sought-after asset since its returns are high and buyers of residential properties in Pune have reasons to smile.
The city residential realty market has seen the highest appreciation in India despite 13 months of unsold inventory. The quantum of increase varied between different agencies, but the appreciation has been the highest in Pune.
A good job market driven by the information technology sector, a largely end-user market compared to those that are investor driven; a floating population investing in Pune and lower price of houses when compared to other cities are factors that have boosted the appreciation.
The 13-month unsold inventory, which went up in 2015, did not impact property prices in the city. Based on estimates, in 2015, Pune saw an increase of 6-14% in residential property prices depending on the area.
According to National Housing Bank's Residex, which measures property price movements in 16 cities, the increase was the highest in Pune till March last year among major cities. The data on Residex is available till March 2015 and all metro cities show a declining trend.
"Unsold inventory in Pune is also lesser (perhaps the least) compared to other cities. That is also a reason why price drop hasn't happened in Pune," Alok Jha, manager-research, JLL India, said.
Most of this price increase is in the first half of 2015. After the state government brought in rules to use agriculture land for residential projects, the price increase has tapered.
"Till last year, Pune was doing extremely well till the time the government came up with new policies for conversion of land and all the new taxation structures. So, the number of launches has also been going down around Pune as compared to previous years. Ready-to- occupy houses have increased phenomenally which had never been the case in Pune. With the new policies, the consumer has started to feel that the government will further help them in getting a better offer from the developer," Sumeet Bhatia, office head for Cushman & Wakefield, Pune region, said. "Everyone is playing the wait and watch game," he added.
In such a scenario, Bhatia added, there is no further scope for price increase on an average. However, there is no likelihood for significant corrections, either, he added. "The market has corrected by about 7-8%. Developers are not reducing the prices of flats by slashing them, but when somebody sits across to thrash out a deal, people are getting a good bargain because developers are stressed in terms of liquidity," he said.
There is, however, an alternative view within the developers' circle. Some believe the changing rules around increased floor space index (meaning higher supply in a given area), conversion of land, possible single-window clearances, TDR rate can help in bringing down property prices in future. Only, no one is able to hazard a guess on the timeline, they said.
"I won't be surprised if Baner starts quoting a Rs 4,000 per sq.ft price in future. The FSI will increase, the supply will increase. Ahmedabad saw this trend. Even the best area quotes a sub-Rs 5,000 sq ft price," city-based affordable housing Vastushodh's managing director, Sachin Kulkarni, said.
Source: Times of India, 7 March 2016