PUNE: We already know that Pune is no longer just a Pensioner’s Paradise (though it still is the #1 city of choice for retiring people in Maharashtra). At least three other factors now define Pune – the growth of the Information Technology, the massive spread of organized retail and the city’s changing demographics.
The last factor has had a significant impact on the demand for real estate in Pune, both in terms of sizes and types of homes. Until the late 1980s, residential real estate demand in Pune was driven largely by people who were working in a rather laid-back services industry. The modus operandi for home purchase in those years predominantly revolved around saving up a sizeable financial corpus and purchasing whatever home was affordable in that budget, preferably with little or no leverage.
Pay scales were moderate to low, and a comparison with the far more favourable pay scales prevalent in Mumbai was inevitable. As a result, there was a more or less constant flight of talent and capital from Pune to Mumbai. At the same time, lack of international employment opportunities prevented Pune’s qualified youth from exploring their fortunes abroad.
As a result, the city’s residential real estate market catered to a very basic level of requirements. There was little incentive for developers to be adventurous in unit sizes, specifications and locations. Property rates – and therefore property investment potential – remained low as the city awaited new market triggers.
Then, in 1990, Pune began to emerge as a destination for Information Technology companies. At first, this was limited to BPOs who sought to capitalize on Pune’s considerable English-speaking manpower and its low property rates. Nevertheless, the economic impact was visible almost immediately. Young people who, in the previously existing scenario, would not have reached any kind of impressive earning capacity before their mid-thirties began earning hitherto unheard-of salaries at the ages of 20-24.
This, coupled with the traditional desire for home ownership and ready availability of home loans, had a 360-degree effect on the requirement for homes in Pune. It also had an impact in terms of locations. IT/ITES companies prefer to set up shop in the less expensive outskirts of a city, and people who work in these industries prefer to live close to their workplaces. With the emergence of Hinjewadi, areas around it suddenly sprang into sharp focus and demand for more central areas began slowing down.
The effect of the It revolution on Pune’s real estate market has indeed been tremendous. Today, Pune’s developers are catering to an entirely different set of demographics than they did 15-20 years ago. The onus is now large flats with ultra-modern amenities, and on locations which offer fast access to the city’s IT hubs. Simultaneously, the MIDC in Pimpri-Chinchwad is boosting demand for homes in its vicinity, driven by well-paid employees from those industries.
Today, the annual demand for homes in Pune is close to 46000 units, where it was less than 20000 units per annum just 15-20 years ago. While Mumbai is staggering under the weight of unsold units all across the city, supply and absorption of homes in Pune continues to make both property development and property investment eminently viable. Even in such a vibrant market environment, Pune’s property rates remain relatively rational….home ownership in this city is a dream which can be translated into reality.