Emerging Areas, Rising Costs: What Pune’s Homebuyers Need to Know

Reported by Mubarak Ansari
Pune, 7th January 2025: Pune’s real estate market is experiencing a gradual yet significant evolution, with flat prices increasing by 5-10% over the past two to three years, post-COVID. Despite a steep rise in input costs, including a 25-30% surge in raw material prices and almost doubled land rates, developers in the city have maintained comparatively affordable pricing. The average cost of a flat in Pune stands at ₹70-73 lakh, making it one of the most cost-effective metro markets in India.

Rising Costs and Affordable Housing Challenges
Ranjit Naiknavare, President of CREDAI Pune-Metro, highlights how developers are striving to manage affordability despite mounting challenges. “Construction costs have escalated due to high GST rates on materials like cement and increasing raw material and labor costs. Yet, developers have limited price hikes to sustain affordability,” he stated.

To address labor shortages, developers are turning to mechanized solutions such as Aluform technology and ready-mix concrete. CREDAI Pune-Metro has also undertaken initiatives to ensure labor welfare, organizing competitions and awards for safety and well-being.

Regulatory Hurdles and Land Prices
Land acquisition and regulatory hurdles remain significant bottlenecks in Pune’s housing sector. While the Real Estate (Regulation and Development) Act (RERA) has improved transparency, approval delays continue to impact project timelines and costs. “Recent stoppages in environmental clearance approvals have added further challenges,” Naiknavare remarked. CREDAI has been advocating for accountability across stakeholders to streamline processes and reduce costs.

Post-UDCPR (Unified Development Control and Promotion Regulations), landowners have hiked prices due to increased Floor Space Index (FSI) potential and scarcity of land in developed areas. Naiknavare emphasized that faster implementation of infrastructure projects, including roads and the metro, could unlock more affordable housing options in peripheral areas.

The Role of Government Policies
Government initiatives such as the Pradhan Mantri Awas Yojana (PMAY) and schemes by MHADA have supported affordable housing. However, their definition of affordable housing—priced under ₹45 lakh—is deemed unrealistic for metro cities like Pune. “Urgent intervention is needed to revise the definition of affordable housing. Tax cuts, GST input credits, and stamp duty concessions would enable developers to cater to a broader market,” Naiknavare suggested.

Public-private partnerships (PPP) could also play a pivotal role in boosting affordability. “Affordable land availability and government participation in funding are essential for making such models successful,” he added.

Expert Insights on Future Trends
Siddharth Vasudevan, Managing Director of Vascon Engineers Ltd, believes advancements in construction technology could bring down costs, benefiting first-time homebuyers. “Affordable housing has great potential as Pune grows as a hub for education, IT, and manufacturing,” he noted. Vasudevan also stressed the importance of leveraging initiatives like PMAY and interest rate subsidies to ease financial burdens.

Umesh Pawar, founder of Dream Works Realty, a real estate advisory firm, advises buyers to explore emerging areas such as Wagholi, Undri, Somatne Phata, Bhukum, and Pirangut for better affordability and growth potential. “Those unable to buy right now can opt for rentals and invest in other assets until they save enough for a property purchase,” he said.

Balancing Sustainability and Affordability
Sustainability is increasingly becoming a priority in Pune’s housing market. Developers are implementing eco-friendly practices voluntarily, driven by consumer demand and government incentives. “Sustainability is not a luxury anymore but a necessity, especially with younger buyers preferring greener living spaces,” Naiknavare observed.

The Road Ahead
The future of affordable housing in Pune hinges on collaborative efforts between developers, policymakers, and the government. Tax incentives, regulatory reforms, and infrastructure development will be key to ensuring accessibility for the average homebuyer. With the average age of homebuyers dropping to 25-35 years, the market is witnessing a shift toward younger, more environmentally conscious buyers, promising a dynamic landscape for Pune’s real estate sector.