Pune, known as an education hub and a prominent location for manufacturing industries, has evolved as an information technology hub during the last few decades. Spread across 244 sq. km. and with a population of over 3 million, the city has rapidly transformed from a pensioner’s paradise to a bustling economic center of India. Well-connected to Mumbai – the financial capital of India – it is also well-networked to other major cities across the country, as well as the world.
In terms of Gross Domestic Product (GDP), Pune is ranked 6th in the top 10 wealthiest cities in India and the second-highest in Maharashtra (after Mumbai) in terms of GDP contribution. The major sectors contributing to the city’s growing economy include manufacturing, education, tourism, and culture. The Mercer 2017 Quality of Living Rankings evaluated living conditions in more than 440 cities across the world, and ranked Pune at 145 – second in India after Hyderabad, which ranked 144. As per the same ranking, Pune featured among evolving business centers and nine emerging cities around the world, and was referred to a city which ‘hosts IT and automotive companies’.
Pune Residential Real Estate – Current Status:
During the turmoil of the last one year, Pune stood out positively among India’s top cities in terms of impact on residential property prices. It performed better than all other major Indian cities. Other cities like NCR and the Mumbai Metropolitan Region (MMR) saw a 3-7% decline in average housing prices. The average prices in Pune have remained stagnant or marginally corrected in only a few pockets. Average prices in the city now range between INR 5,200 – INR 5,500/sq.ft. Currently, around 1.92 lakh homes are under construction in the city and there are between 95000-97000 unsold units, constituting an inventory overhang for 35 to 38 months. Pune’s affordable housing segment (units priced below INR 40 lakh) predominated the new supply in Q3 2017, constituting 44% of the overall new supply.
Q3-2017 ended with a lower rate of new launches and minor price appreciation as compared to the previous quarter. Sales continued to move southwards compared to Q3-2016. New launches in Pune declined by 80% in Q3-2017 as compared to the same period in 2016 The rate of new launches will decline further, considering that the city’s developers are focusing on offloading their existing unsold inventory rather than launching new supply in the primary sales market. With restricted supply and stable demand, the first three quarters of 2017 witnessed higher absorption, resulting in Pune’s unsold inventory decreasing by 5% in Q3-2017 vis-à-vis Q2-2017. The city added around 3.11 lakh housing units between 2010 and Q3-2017.
· The market seems to have recovered marginally after 10 quarters, with total absorbed units exceeding total new launch supply in Q3-2017.
· The 2nd half of 2017 brought in more buyer inquiries and traction in the ready-to-move-in properties across cities, since ready properties are not impacted by RERA or GST
Budget Wise Supply:
Around 84% supply was added in Pune in the sub-INR 80 lakh budget range, with a slight skew towards INR 40 lakh range since 2010 till Q3 2017.
· The majority of available supply in Pune’s primary market falls in the under-INR 40 lakh budget range, which is around 44% of total available inventory, followed by the INR 40 – 80 lakh (42%), INR 80 – 1.5 crore (11%), and below INR 1.5 crore (3%) budget ranges.
· Along with the affordable housing segment, the mid-income housing segment in Pune has also witnessed a marginal increase in availability while demand maintained at status quo.
Key Micro-markets in Pune:
Key Projects (launched in last 3 quarters):
[Prashant Thakur is the Head of Research at Anarock Property Consultants]