PUNE: Unsold residential units may have piled up in the city but favourable policy measures announced in the Union Budget last month will guide the pick up in sales towards the end of the year, the latest report from Knight Frank said on Tuesday.
India Real Estate Outlook Report January-June 2014, which the real estate advisory company released on Tuesday, said 2014 is witnessing a slack in demand for homes and thus a fall in the launch of new residential projects. "But the various fiscal and tax concessions which came through the budget will help lift the buyers' sentiments which will show a favourable trend in the second half of the year," the report stated.
Shantanu Mazumdar, director of Pune branch of Knight Frank, told reporters that the unsold inventory of residential units in the city this year is likely to be around 34,500 units against 38,800 last year registering a 11% fall, Mazumdar said. The sales volume during the second half of 2014 is projected at 19,800 units which is 11% higher than the sales in the second half of 2013, he added.
"Positive election results, higher salary growth of IT/ITeS employees, various sops announced in the Union Budget, 2014, and with a clear intention of new government to bring the economy back on track seem to have induced a positive change in the home-buyer sentiment," Mazumder said, adding that 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 second half of 2014, after a lull of more than two years," he asserted.
Both new launches and absorption of residential units are coming from the peripheral districts of Pune where the ticket size per deal is below Rs 50 lakh, the report stated. "Another feature of the sales trend is that the size of units is shrinking as buyers are choosing one bedroom or compact two bedroom options to restrict the total outgo," the report added.
South Pune is gradually emerging as a preferred destination for home buyers due to its strategic location between the two major IT/ITeS employment hubs of Hinjewadi and Kharadi, the report said.
"A slowing economy, rising interest rates, high inflation and a weak rupee had contributed to the negative sentiment for the last two years. However, the new government's intention to revive the economic growth seems to have struck the right chord among investors and we do notice a substantial change in the sentiment for the better," Mazumdar said.
Rohit Gera, managing director of real estate firm Gera Developments, said the overall rate of market expansion has come down in the last 12 months (indicating a reduction in project launches). Simultaneously, the unsold inventory stock has gone up by 15,000 homes in the same period.
"The total unsold stock as on July 2014 stood at 66,279 homes while 12 months ago, the figure stood at 51,363. Our analysis shows that the maximum stress is on the luxury segment (where current quoted prices are in excess of Rs 7,500 per sq ft) which has seen a 61% rise in unsold stock in the last 12 months," he said.
But the various fiscal and tax concessions which came through the budget will help lift the buyers' sentiments which will show a favourable trend in the second half of the year.