Scaling new heights
It is an acknowledged fact that in the last one decade Pune has seen an enviable escalation in realty. The rise in construction activity has been widely attributed to Pune new face as the emerging IT hub of India following at the heels of over crowded Bangalore and beating Hyderabad that has recently been overwhelmed with the Telengana issue.
Pune is the safest, most stable and most rapidly progressing realty market, says Mr Shashank Paranjape, Managing Director of Paranjape Schemes, a city-based developer.
From 2001 onwards, the city witnessed a phenomenal growth. But it was only in 2003-04 that the Pune realty market actually took off, explains Mr Satish Magar, promoter of mega township Magarpatta and Chairman, Pune chapter of Confederation of Real Estate Developers Associations of India.
While IT is still the major driving force behind the real estate market, the demand and growth has also been fuelled by other industries. Pune also has more favourable conditions for living as Mumbai and Navi Mumbai are now largely unaffordable and saturated,” he says. According to Mr Magar, Pune has four growth engines IT, auto, educational and migration. “Migration to Pune from rural Maharashtra is on the rise due to the excellent demand for skilled and unskilled labour, leading to the growth of the city, he emphasises.
While the global economic slowdown of 2008-09 had some impact on the Indian economy, Pune realty market remained virtually unscathed. According to a study commissioned by PropEquity on The Performance of the Indian Residential Market, Pune real estate market remained steady throughout the period from the second quarter of 2008 till the fourth quarter of 2009.
Recession leads to re-invention
Mr Magar attributes this to the essence of the market. “Pune is not an investor driven market. The prices had never escalated beyond comprehension that is why the correction was also minimal, only about 10-15 per cent.”
According to Mr K.P. Baney, Managing Director, Devi Construction Company, the deeper impact of the recession was felt by the commercial sector. Demand dropped down by about 90 per cent in this sector, he says. As a result of the recession, however, most developers and builders across the city re-invented their projects to suit the lowered affordability index of the buyer who was the ubiquitous IT professional who felt the deepest impact of the global economic slowdown.
During the peak of real estate growth, aspirations were for a larger house. Two-bedroom apartments were from 1200-1500 sq ft in some areas. During recession, many builders cut prices of apartments by offering smaller sized tenements.
“Small affordable houses were and are more in demand. Pune real estate prices are always at 13-16 per cent of prices in Mumbai. So Mumbai builders suffered more, money wise, than Pune builders. However, Pune builders are used to working on lower margins,” admits Mr Baney. The mantra became affordable apartments, smaller, more compact and devoid of frills.
According to PropEquity report, the affordable range of apartments under Rs 30 lakh went up in the second quarter of 2009 by about 5,000 units while the mid-segment Rs 30-75 lakh grew marginally. The study also states that the prices of affordable housing have stabilised from Rs 2,600 per square foot to approximately Rs 2,300 sq ft during the recessionary period.
According to a recent study, it is estimated that Pune will host a population of one crore in 20 years, and will be the sixth largest city in India. Its GDP will be third in the country after NCR National Capital Region and Bangalore.
With such an optimistic growth trajectory, Pune realty market is poised for growth, opines Mr Magar. According to him, almost 40,000 dwelling units will be added to the city landscape in this financial year, but demand will be higher than the supply.
While PropEquity study reveals a drastic rise in unsold inventory in the first quarter of 2010, Mr Paranjape is quick to respond. Most unabsorbed stock belongs to unrealistic sites or developers of disrepute. Most of us do have any unsold stock, he clarifies. Mr Baney opines: In city, and in reasonably good locations, there seems to be no unsold stock of residential accommodation. May be, flats being constructed in outskirts, or where infrastructure facilities are lacking, there may be unsold stocks. But generally the conditions are not that bad.
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