Pune, 8th July 2022: The residential real estate segment gained significant momentum in the first half of 2022. In a bid to meet the supply deficit in Pune’s residential realty market triggered by stalling of projects due to Covid-19 pandemic, developers continued the trend of an increased number of new homes being brought to the market as per the Gera realty Report.
For the half year ending Jun’21, a total of 26,611 units were brought to the market. This has risen by 106% to 54,845 homes being brought to market in the first half of 2022. For the 12 months from July 2020 – July 2021, a total of 64,671 homes were brought to the market. This increased by 80% to 1,15,996 homes brought to the market between July 2021-June 2022 and is the highest number of homes launched over a 12-month period into the Pune market.
On the other hand, the inventory available for sale is 74,818 apartments, 30% below the peak of 1,07,402 apartments seen in Jun ’16. Gera Developments has classified projects into 4 stages based on construction status i.e., Early, Mid, End and Ready. Early-stage inventory constitutes ~27% of all available units for sale as on Jun ’22. The early-stage inventory was at 19.12% a year ago, however, this has increased on account of the number of new projects and new inventory launched in the last year.
Gera Developments – the pioneers of real estate business and the award-winning creators of premium residential and commercial projects in Pune, Goa and Bengaluru, on Wednesday, released the July 2022 edition of their bi-annual report, titled ‘The Gera Pune Residential Realty Report’. The report is an outcome of the longest-running, census-based study of the residential realty market of Pune. It is based on primary and proprietary research conducted by Gera Developments and covers all existing projects in a 30-km radius of the city centre.
Overall, the residential real estate market in Pune is in an upcycle and gathering momentum sequentially. Looking at the yearly data of new launches by price segments, the average prices of homes across the city have increased by 8.11% in the last 12 months. There is a rise in prices across the board especially in the new projects where prices have gone up by ~ 24% in the last 12 months. 70 projects have been launched in the Luxury segment (Average price ~Rs 10,000+ Psf) which has contributed to the significant rise in the average prices across the city.
Explaining the overall trend in the market, Mr. Rohit Gera, Managing Director, Gera Developments, said, “After years of prices falling, we have now seen home prices continue to rise for the last 2 years. This is a good sign as affordability continues to be near all-time highs as well. Sales and new project launches are at all-time highs. The last 12 months saw more than 1.15 lakh homes being brought to market and over 1.05 lakh homes being sold. Both numbers are all time high records. The luxury segment too, saw an increase in sales and new launches – in fact to compensate for the years of being in the doldrums.
While on one hand, we saw positive sentiment translating to robust sales and positive price movement after years of shocks created by man and God, we are now faced with a war, supply chain disruption, inflation, global challenges, a stock market rout, rising interest rates. In addition to this, we also have the Government to thank for a massive increase in the FSI leading to a potential over supply. The acronym VUCA is extremely applicable to the Pune Real Estate market. VUCA stands for Volatile, Uncertain, Complex, Ambiguous. And in our view, cautious optimism is the way to go in this VUCA world”
The report also suggests affordability levels have seen a slight reduction however, on an overall basis, the affordability continues to be very strong at 3.61x annual income. Over time interest rates and prices (from Dec ’14 onwards) have trended down, while incomes have risen thereby increasing the affordability significantly. The other impact of affordability is that customers now can move to the bigger developers who have the capabilities to deliver on promises. When affordability was low, customers had no choice but to settle for lesser known developers leading to a fragmented market.
Comparing sales velocity in H1 2022 to H1 2021, there is a 31% increase in sales (from 40,669 units to 53,398 units). Sales velocity increased by 24% in the last 12 months compared the previous 12 month period (from 85,378 units to 1,05,625 units)
The PremiumPlus and Luxury segment has done exceedingly well with high double digit growth rates of 75% and 74%. The segment that is still underserved is the Budget segment and one should expect to see an increased supply in this segment going forward. At 53,398 units offtake at a six monthly level is the highest that we have seen in the last 7.5 years. The least growth in offtake is seen in the Budget segment (+4%).
The number of large projects (those with more than 500 units) as on Jun ’22 is 177 which in Jun ’18 was 115. This absolute number has increased by 54% over the last 5 years. In Jun ’18, these 115 projects constituted ~3% out of the total of 3,472 projects being developed. In Jun ’22, the 177 projects constituted 7% out of the total of 2,503 projects being developed.
Looking at the total inventory distributed across small projects (<=100 units)- only 15% of the total inventory is in this segment. This used to be 30% 5 years ago. In contrast large projects ( >=500 units) now constitute 11% of the total inventory in Pune.
Here are the key highlights of the report, encompassing trends from January to June 2022:
# Highest ever launch of new homes at 1,15,996 – a surge of 80%
The effect of the pandemic has totally been eliminated when it comes to new projects being launched.
Fresh supply launched remained at an elevated level and conclusively above pre-covid levels for two consecutive 6 monthly periods in the running. For the 12 months ended Jun’21, a total of 64,617 units were brought to the market. This has risen by 80% to 115,996 homes being brought to market in the 12 months ended Jun ‘22. This is the highest 12 month new inventory ever introduced into the Pune market.
# Inventory available for sale at 74,818 units
At an overall level, the inventory available for sale is 74,818 apartments, 30% below peak of 1,07,402 apartments seen in Jun ’16.
Ready inventory constitutes 5.19% of the units available as on Jun ’22. Ready inventory for sale has come down from 8,369 homes in Jun ’20 to 3,880 in Jun ’22. This low level of ready inventory is also at historic lows. The End + ready inventory now constitutes 6.5% as on Jun ’22 – 50% lower than what it was 5 years ago when it constituted ~13%
# Highest ever sales for the year at 1,05,625 homes, an increase of 24 %
Comparing sales velocity in H1 2022 to H1 2021, there is a 31% increase in sales (from 40,669 units to 53,398 units). Sales velocity increased by 24% in the last 12 months compared the previous 12 month period (from 85,378 units to 1,05,625 units).
When you look at how sales recovery responded after the 1st and 2nd covid wave we see that sales volume has sustained for the last 12 months even after the 2nd wave effects have subsided.
# Premium Plus and Luxury segments leading the fresh supply
Looking at the more granular 6 monthly growth data of new launches, we see the same pattern of Premium Plus and Luxury segments leading the fresh supply with growth rates well into triple digits. The PremiumPlus segment saw a Y-o-Y increase of 160% in the fresh supply launched while the Luxury segment did even better clocking 287%. These are all strong indications of a customer base that has moved up the value chain on a consistent basis and continues doing so.
# Prices of homes across the city have increased by 8.11%
The average prices of homes across the city have increased by 8.11% in the last 12 months. There is a rise in prices across the board especially in the new projects where prices have gone up by ~ 24% in the last 12 months. 70 projects have been launched in the Luxury segment (Average price ~Rs 10,000+ Psf) which has contributed to the significant rise in the average prices across the city.
About the Gera Pune Residential Realty Report:
The Gera Pune Residential Realty Report is a bi-annual initiative by Gera Developments that is aimed at garnering insights on both the supply and demand sides of the residential realty market in Pune. This longest-running, census-based study uses feet on street methodology of data gathering and covers the Pune Urban Agglomeration area. The data is then validated and statistically analysed. What started, as a knowledge gathering initiative in 2011 has now become something that realtors, IPCs, Research Houses, Brokerage Houses and Banks & Financial Institutions look forward to. Besides a broad overview on inventory available, offtakes and prices, the report dives deeper to mine insights by price segment, sq. footage, construction stage and size of unit.
About Gera Developments Pvt. Ltd. (GDPL):
Gera Developments Private Limited, a 50-year, reputed brand, one of the pioneers of the real estate business in Pune, is recognized as the creators of premium residential and commercial projects in Pune, Goa and Bengaluru and has now marked its global presence through developments in California, USA.
GDPL prides itself on providing long-term enjoyment to customers by having a distinct ‘customer-first approach. The philosophy of GDPL is “Let’s Outdo,” which rests on the trinity of innovation, transparency, and enhancing customer experience. It is at the heart of GDPL’s effort to infuse innovation and transparency in real estate and home building, with an unwavering focus on meeting the shifting lifestyle dynamics of their customers while upholding the premium living experience. Accordingly, there are many ‘firsts’ that stand to GDPLs credit. The company introduced a 5-Year Warranty on Real Estate consisting of Preventive Maintenance & Repairs and provision of Insurance of buildings way back in 2004 for the first time in India. RERA mandated the same only in 2017. And GDPL has now introduced India’s first & only 7-year warranty in real estate. It has designed and launched the pathbreaking concept, the award-winning ChildCentric® Homes, which has revolutionized the real estate sector for both the developer and the home buyer. Other revolutionary and highly successful product lines have been IntelliplexesTM, SkyVillasTM, and The Imperium series.
These products are matched by the services of the GeraWorld® Mobile App, which brings speed, convenience, and transparency to the buyer and enhances the customer experience. GDPL has also recently launched the Club Outdo initiative, a tech-driven loyalty and referral programme that provides multiple benefits, offers, and community engagement opportunities to existing and new customers.
The company emphasizes delivering value-added experiences to customers and is driven by trust, quality, customer first, and innovation. The projects are designed around the evolving needs of their customers. The company has won several national and international awards on both the product and service front. GDPL also continues to be certified as ‘India’s Great Mid-size Workplaces’ by the Great Places to Work (GPTW) Institute for the fifth straight year in a row. GDPL has also ranked #18 on the list of Best Small and Medium Companies to Work for in Asia in 2021.