 "Real estate companies may find it hard to claim relief under S4A")
The slowdown in Pune real estate market continues and the sector dynamics are changing at faster pace. Prices of apartments (on a simple average basis) have dropped in relation to the last six months for the first time in the past five years, says Gera Developments’ Residential Pune Realty Report for December 2015-June 2016.
The project launches are down and are launched at lower prices than existing projects in the same areas, prices on an overall market basis are down, there has been a resizing of apartments to cater to the demand for smaller homes.
According to the report, while the overall apartments for sale has increased 2.7 per cent between December 2015 and June 2016, the value of the apartments for sale is virtually unchanged at about Rs 55,329 crore.
Though the Pune real estate market is going through challenging times, it is still a healthy market with the sales holding up. New project launches have slowed down to 890 in the first half of 2016, against 1,064 in the first half of 2015 and 947 projects in the second half of 2015.
According to the report, out of 323,372 homes currently under development, a total of 230,547 homes are in the early- or mid-stage of construction.
Rohit Gera, managing director of Gera Developments, said: “With the decrease in prices, Pune is a market where residential real estate is among the most affordable in the country given that it also ranks amongst the most livable cities in India. While, on the one hand, the challenges continue for the sector, the resizing of apartments and new projects being launched at lower prices is showing the first signs of a turn around. The construction activity has also maintained its pace between 14 per cent to 15 per cent year-on-year, while prices of new projects launched are below the psychological barrier of Rs 5,000 per sq ft.
The report underlined that all price ranges have seen an increase in the unsold stock except the value category where unsold stock has dropped indicating that it’s a segment that has seen traction in the last one year. The budget category (where prices presently are below Rs 4060 per sq ft.) has seen an increase of 8.73 per cent from 40,814 unsold units to 44,378 unsold units.
The value category (current prices between Rs 4,061 per sq ft and Rs 5,076 per sq ft) has seen a decrease of 3.9 per cent in the unsold stock from 24,768 units to 23,803 units. The luxury segment has seen an increase of 20.3 per cent in the unsold inventory, 4,325 units remained unsold in June 2015 which rose to 5,203 units in June 2016. Similarly, the unsold stock in the premium category has increased 60.4 per cent, and 56.5 per cent in the premium-plus category.
Gera added: "The total inventory overhang in June 2016 is, in fact, marginally lower than the inventory overhang in December 2015. The percentage of the inventory available for sale has marginally gone down, showing a shift in the healthy direction. This shows the sales and introduction of new inventory have at least for the past few months leveled off."
