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New residential launches in Pune in the second half (July-December) of 2014 shrunk by nearly 26 per cent compared with the corresponding period in 2013, said commercial and residential property consultancy agency, Knight Frank India.
Knight Frank today released its second half-yearly analysis report ‘India Real Estate Outlook' in Pune today. Report says that a fall in absorption is expected to be compensated by a sharper drop in the number of new launches which are to the tune of 26 per cent from 45,370 units launched in 2013 as compared to 33,580 units in 2014.
"There is enough availability of units in the Pune market. It will take nearly two years to offload the current unsold inventory of 67,500 units. If there is any increase in floor space index (FSI), it may lead to momentum in sales. The conversion time between a sales inquiry and an actual sale has reduced drastically in the past month, indicating some sort of revival in demand. We expect the sales volume to recover from H2 2015 onwards, after a lull of more than two years. With a clear intention of new government to bring back the economy back on track seem to have induced a positive change in the home buyer sentiment, ” says Shantanu Mazumder, director, Pune Branch, Knight Frank India.
According to the Report, sales within the Pune residential market decreased from 38,800 units in 2013 to 34,870 units in 2014 with a fall of 10 per cent. The market has witnessed a total inventory of 67,500 units in the city.
The sales volumes are expected to recover from second half of 2015 onwards after the lull of more than two years. However, the bumpy ride in demand and supply does not seem to have any significant impact on price levels. However, the Report also predicts that despite all this, prices to increase moderately during Jan – Jun 2015 with a 4 per cent increase y-o-y basis.
The Report suggests that all eyes are now on union budget, focus on affordable homes and infrastructure to expand volumes.
Pune has experienced the maximum growth of 15 per cent in office rentals in H2 2014 while rest of the cities grew by 2-9 per cent. While the residential market showed signs of recovery in 2013, there was a sudden drop in new launches and absorption from second half of 2014.
The agency has studied the six cities India, namely National Capital Region, Mumbai, Bangalore, Hyderabad, Pune and Chennai for the period between July–December 2014. These cities have been witnessing extreme volatility in terms of demand and supply over the last two years.
