Relevant supply saw appreciation over market average; 4-6% price rise expected in 2016
Sanjay Bajaj, Managing Director – Pune, JLL India
In 2015, Pune beat the average capital value appreciation across key Indian cities in the residential real estate asset class. While prices in other cities rose by 2-6%, Pune’s residential market saw a price appreciation of 7.9% (y-o-y) last year. The current year is likely to see prices rise by 4-6%, and stable sales velocity. Given the positive investment scenario in India and unabated demand for office space in the city, residential demand in Pune has remained healthy over the last few years.
At a sub-market level, the North-West market (Hinjewadi, Marunje Road, Ravet, Punevale, etc.) saw the highest price appreciation of 8.9%, followed by the North-East (Wagholi, Keshnanad Road, Kharadi, etc.) at 8.6%. Appreciation in the South-East market (Undri, Pisoli and Kondhwa) stood at 7.9%, while in the North (Moshi, AlandiRoad, etc.) it was 8.4%. The South-West (Bhugaon, Pirangut, Gothawade, etc.) and Central sub-markets (Koregaon Park, Dole Patil Road, Kalyani Nagar, etc.) saw a price appreciation of 7.6% and 6.4%, respectively.
Due to rising demand for homes by the employees of IT/ITeS, BFSI and manufacturing companies, most residential projects being launched in Pune are concentrated in the North-West and North-East, including areas like Hinjewadi,Balewadi, Hadapsar, Kharadi, Wagholi and Nagar Road. The fringe areas of the South-East sub-market such as Undri and Pisoli are also picking up fast and have seen a significant number of launches in the price bracket of Rs. 3,000 to 4,000/sq.ft. over the past few quarters.
The prime reasons for the emergence of the South-East area are the relatively lower price tags when compared to other competing areas, and good connectivity to central areas and established locations. The South-East market has projects by reputed developers such as Godrej Properties, Nyati Group, Mantra Properties, Marvel Realtors, Tata Housing, Ekta World, Sobha Developers, Goel Ganga Developments, etc.
In the last couple of quarters, peripheral locations have been the major demand contributors for the city. Fringe pockets of Pune such as areas along the Pune-Mumbai Expressway, Bhugaon, Pirangut and Pisoli have enjoyed increasing interest from buyers recently, mainly due to the affordable price bracket of Rs. 3,000-5,500/sq.ft. Other locations targeting affordable segment homes are Dhanori, Charoli, Moshi and Alandi Road.
Pune’s luxury homes segment has also been growing, with prominent players such as Panchshil Realty, Kolte-PatilDevelopers Ltd, Lunkad Realty, Marvel Realtors, ABIL, Rohan Builders and Naiknavare Developers capitalizing on the demand in this segment. However, a slight shift in the luxury homes development trend is now visible, with many new players having ventured into the affordable housing segment. Developers such as Dreams Group, Vastushodhand Tata Housing have launched quite a few affordable housing projects in the last few quarters. This is obviously where the greatest demand lies.
Supply of affordable housing (Rs. 3,000-4,500/sq.ft.) and mid-segment housing (Rs. 4,500-5,500/sq.ft.) has grown significantly and added more than 15,000 units in 2015. This trend will continue, with several more affordable and mid-segment projects likely to hit the market in the peripheral areas. The response to newly-launched projects is also good, which in turn is encouraging developers to construct more projects.
Reputed developers are definitely experiencing better sales than their less prominent counterparts, and are continuing to launch new projects or phases in existing projects. Newer developers with less exposure have restricted their launches and are offering heavy discounts to lure customers and reduce their inventory. This was not the case during growth phase of 2011-2014, when even the new entrants attracted robust demand for their projects in the city.
Areas such as Kharadi, Wakad, Undri, Hinjewadi and Wagholi have witnessed a steady increase in the number of customer enquiries, and will remain preferred destinations for end-users in the future. In 2016, sentiment on the Pune residential property market will remain positive and areas that offer better affordability and returns on investment will pick up.