Pune to witness 40% shortfall in residential units by 2018: Report

Huge demand for second or retirement homes in Pune from NRIs and Mumbai based investors

Pune will witness a shortfall of around 191,000 housing units which is around 40 per cent of its total requirement by end of 2018, said a study conducted by global real estate consultancy firm Cushman & Wakefield (C&W). The supply projected until 2018 end is only to the tune of 78,000 units, translating into a significant housing shortfall in the city.

According to the study, with flourishing IT-ITeS businesses and manufacturing activities, Pune has been witnessing an unprecedented growth in population, primarily due to a large increase in migrant population. Pune is likely to witness maximum requirement in the low and middle income groups, together accounting for around 82 per cent of the demand and equally distributed amongst the two categories.

 

The report said that of the total demand, majority (46%) is likely to arise in the middle income group (MIG), followed by 33% in the lower income group (LIG) and 21% in the higher income group (HIG). The supply projected until 2018 end is only to the tune of 78,000 units, translating into a significant housing shortfall in the city.

Moreover, there is also a huge requirement by NRIs and buyers or investors from Mumbai looking to purchase an apartment in Pune as their second or retirement home.

Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield, "The private sector housing, which is largely responsible for creating housing in India, has been grappling many issues such as rising input costs, expensive land valuations, outdated building norms, restricted access to funding, serious delays in regulatory processes and uncertain economic conditions resulting in poor and/or slow sales volumes, all of which have resulted in holding back the growth of this sector since the last 2-3 years. Consequently, the demand-supply imbalances across cities have been becoming more pronounced."

Until 2018, the expected supply in the LIG will be approximately 21 per cent of the total supply across top eight cities, while demand constitutes 58 per cent share of the cumulative demand-supply gap. Delhi-NCR, Kolkata, Mumbai and Pune are expected to witness the highest shortfall in LIG units. The MIG accounts for 59 per cent of the total supply across top eight cities while it has a 23 per cent share in cumulative demand-supply gap.

Cities such as Ahmedabad, Bangalore and Mumbai are expected to lead the ranks of those with the shortfall of housing units catering to MIG. HIG accounts only for 19% of the total supply across top eight cities and has a 20 per cent share in cumulative demand-supply gap. Bangalore, Chennai and Delhi-NCR are the leaders in cities with the highest demand-supply gap for HIG units.

Dutt added, "The current estimates are based on population growth and supply trends of the past decade. We still have to gear up for the massive industrialisation that will take place through the development of the planned industrial corridors and the smart cities that will be developed. Specifically, the government needs to focus on increasing the capacity of the private sector to increase the supply manifold by removing all bottlenecks in acquiring land, regulatory processes, raw materials and finances to meet its goal of housing for all by 2022."

The expected supply of residential units including existing under construction and planned pipeline is estimated to be 1.31 million housing units which is expected to be delivered across the top eight cities by the end of 2018. The bulk of the under-construction units have already been sold. Delhi-NCR is likely to have the highest supply of around 516,000 units delivered in the next five years, followed by Bangalore with around 243,000 units and Mumbai with 203,000 units.