COVER STORY - Taking THE REAL NOTE

Jan 14 2017 : The Times of India (Pune)

Kanchan Gogate





Amid landmark policy decisions, Pune continues to be one of the most bankable realty destinations. Experts opine it is right time to invest, as the city is predominantly a primary market.
New Year offers a promising start

Pune is considered be one of the most resilient realty markets in India.Withstanding tough times and fluid economy, Pune continued to witness a steady growth. Combating financial challenges, Pune has marched on and has established its identity as the one of the most bankable real estate destinations. While demonetisation has altered the market sentiment, experts believe it would pay rich dividends despite short-term inconveniences.
Beating the note ban blues, Pune is expected to rise to the occasion again. Though investors have adopted wait-and-watch approach, experts say it is right time to invest, as no further price correction is likely.
Year 2016 clearly rendered Pune a buyers' market as developers adapted to demand, says Sanjay Bajaj, managing director Pune, JLL India. “New launches declined by nine per cent year-onyear, thus keeping the inventory overhang to a 14 to 17 months' level across segments. Prices across markets remained stable and declined marginally in some stressed markets. The market was replete with attractive offers by the developers rolling out freebies and finance schemes, which motivated many fence-sitters to close deals in Q2 and Q3 of 2016. Overall, the average rate for mid-segment homes across the city is INR 4,850 per sq. ft. down by approximately four to six per cent over the previous year's closing rate. This is due to new launches at lower prices in same markets, and discounts on under construction units from developers.“
Bajaj adds, “The government's shock demonetisation move on November 9 has temporarily pushed buyers to the fence in anticipation of an interest rate cut in home loans. RERA implementation will complement the demonetisation intention of reducing unaccounted monies in real estate by further regularizing the industry, making it more transparent and friendly for buyers. Both these developments are favorable for purchase investment of property in the city going forward.“
Pune is end user-driven market, says Shantanu Mazumdar, director, Pune, Kinght Frank India.“Pune has delivered a better performance in all tough times. Bengaluru and Pune have always been steady going markets. With demonetisation, people are expecting price corrections but they will not happen now as Pune has rational prices. The price that's prevailing today is almost 2013 price in the market. It will not go down further, thus, it is right time to invest. Demonetisation may impact secondary market but not primary market for sure.“
A Knight Frank India report says in the long-term, they expect the real estate sector to emerge much more organised with transparency enhanced and with a higher degree of corporatisation along with a regulator, which is expected to be in place soon. That would also help the sector attract a lot of institutional funding with a competitive cost of borrowing.
Pune, the second largest city in Maharashtra, is experiencing a notable transformation owing to its burgeoning auto ancillary industry, growing presence of Information Technology (IT) companies and a growing workforce population, says Nikhil Bhatia, head, Western Region, CBRE South Asia Pvt Ltd “In spite of the big strides in real estate developments, real estate costs in the city are still a fraction as compared to other major commercial hubs in the country. However, strong demand levels have resulted in steady appreciation of capital values across residential projects in Pune. This growth momentum is likely to continue based on various policies by government agencies and industry body,“ Bhatia says.
Total demand for urban housing is estimated at 4.2 million units during the period 2016-2020 across top eight cities, as per a re port released by Cushman & Wakefield and GRI titled “Revitalising Indian Real Estate: A new era of growth & investment“.While nearly 80 per cent of the demand is driven by LIG and MIG over the next four to five years in Pune, majority of the upcoming supply is directed towards MIG.While nearly 80 per cent of the demand is driven by LIG and MIG over the next four to five years, majority of the upcoming supply is directed towards MIG.
Shantilal Katariapresident CREDAI Pune Metro, says, “Demonetisation will boost foreign investments, which, in turn, would boost the realty sector in the long run. However, the primary market will not be disturbed as inventory is always sold to endusers, who avail home loans. It's right time to buy.“
Shrikant Paranjape, vice-president, CREDAI Pune Metro, says, “Rates around the city are still affordable. City has good growth engines. Supply will reduce once RERA is enacted. So the rates will rise.“
Manish Sabade, CMD Guardian Corporation, says, “Pune as a city shines bright amongst top 14 cities in India with one of the best absorption in residential units coupled with the healthiest inventory overhang. The SMART City that sees least impact of demonetisation shall always offer best opportunity especially with the organised players in the sector.“