PUNE: What makes Pune such an attractive property investment destination despite the fact that Mumbai, India’s legendary real estate market par excellence, is right next door? A few years ago, the reasons for this were not as obvious as they are today.
Despite their proximity to each other, Mumbai and Pune are two very different property markets. Mumbai’s space crunch has made residential property exorbitantly costly, driving more and more aspiring middle-income home buyers to the fringes.
Mumbai, also, continues to grapple with its notorious infrastructure deadlock. Prices in most areas of Mumbai have stagnated and there is considerable pressure from the market to bring them down. If Mumbai does see a correction in prices – which is very likely in the near future – its residential real estate market will pick up pace again.
On the other hand, Pune residential property market has maintained its momentum even in a challenging economic environment. Various research agencies have confirmed that Pune has remained one of the best-performing residential real estate markets over the past two years.
Residential sales have slowed down even in Pune. However, it is also a fact that they have remained healthy enough to sustain the viability of the city’s real estate market. This is why Pune developers continue to launch fresh residential projects in all budget categories – affordable housing, mid-income housing and even in the super-luxury category.
Thanks to the sustained viability of the Pune property market, it will not see a price correction. The excessive speculative investment activity which caused prices to rise faster than they should have in earlier years has now been curbed. Pune developers are now discouraging mass purchase of units by speculative investors so that the market retains its rationality.
The investors who remain are operating from sufficiently wide investment horizons. This means, they will hold on to their properties for at least 3-5 years before they put them on the resale market. In the interim, they are content to earn very satisfactory rental incomes from their properties. Property investment which is conducted in such a manner does not cause the wild price fluctuations and erratic supply patterns that speculative investment does.
Pune is a property investment market that provides options to a wide spectrum of investment budgets as the city has a steady supply of options in all price brackets.
Meanwhile, the city’s healthy rate of employment generation – especially from the IT/ITeS, manufacturing and automobile sectors – ensures demand and property purchasing ability.
Even in high-ticket luxury housing, the investment potential in Pune is high and rising. Similar to Mumbai, luxury housing in Pune has its own segment of wealthy buyers as well as its own upper-crust residential locations.
The future supply in these prime locations – which include Sahakarnagar, Prabhat Road, Boat Club Road, Kalyaninagar and Koregaon Park, is extremely restricted due to lack of land parcels. Prices in these elite neighbourhoods will continue to rise as the available stock is absorbed. This will ensure that investment in Pune luxury housing segment will continue to be attractive.