PUNE: Conventional wisdom of real estate suggests that in times of slowdown, the emerging markets outperform the matured markets. The matured markets are expected to correct or crash during tough times. However, Pune has been bucking the slowdown blues and has maintained a uniform appreciation across the micro markets of the city, something that defines how resilient Pune’s property market is.
The future appreciation potential of Pune is also estimated to be among the best, compared to other cities on a pan-India basis. While there has been a decent capital appreciation in Pune in the last couple of years, even the rental yields have been witness to a healthy growth. Analysts are unanimous that Pune has outperformed most other markets over the last two years, consistently bringing satisfactory ROI to investors. They dismiss negative forecast. What makes the Pune property market a realistic one is the fact that there is sufficient demand for all types of housing in the city, and Pune’s property market is inherently rational and safe since most of the demand comes from end-users.
Arvind Jain, managing director, Pride Group, maintains that every market experiences ups and downs, but markets like Mumbai are legendary for getting overheated. Pune, on the other hand, has been experiencing healthy growth and not speculator-driven price inflation. Thanks to better land availability and the fact that the city is still expanding outwards, Pune’s property market is kept rational by a constant influx of supply in its new real estate destinations.
“The highest demand for properties in Pune is in mid-income housing. This is beyond doubt the best segment to invest in. Generally, Pune offers steady capital appreciation, between 10-15 per cent per annum in most areas. The right places to invest in are its emerging corridors, which will see steady growth as infrastructure and connectivity improves. The right time to invest in these areas is while the entry point is still low. Soft launches by reputed developers are an excellent opportunity in this regard,” says Jain.
Kishor Pate, CMD, Amit Enterprises Housing, also agrees that in the last one year while the investment potential for residential properties in the financial capital of Mumbai, remained largely flat and unexciting, Pune emerged as the obvious choice. According to him, most serious property investors in Mumbai who chose residential property are now content to exit with moderate profits.
“Pune, on the other hand, showed an almost uniform appreciation of 14-16 per cent in property prices. Vacancy levels in Pune stand at between 20-22 per cent, while in Mumbai they are close to 35 per cent. As a result, investors are staying invested. Pune is one city where the residential property market has maintained its momentum even in these challenging times. In fact, Pune has been one of the best-performing residential real estate markets in the recent past. End-users and investors continue to focus on this market because of its high viability and rationality,” says Pate.
Abhay Kumar, CMD, Grihapravesh Buildteck, on the contrary, says that Pune is suffering from over-supply in recent times and a correction seems round the corner. He maintains that the last couple of years were not good for Pune market but there would be a spurt of growth in 2014. This city has changed its dynamics to cater to the demand issue. Now one can see some very interesting developments inside and on the outskirts of Pune, which has contributed to fresh interest in this city.
“Certainly property is going to give the best ROI in Pune market. Right now due to over-supply and sluggish demand in constructed properties, the land deals are not really happening. This phenomenon has made land extremely attractive in Pune. Good deals are available in all emerging areas of Pune. One should wait till the general elections. The inventory is in abundance and the market is not going to shoot up in the near future, but we can get some better direction if we wait till April 2014. Rental yields too, are now in line with cities like Mumbai and NCR which cannot be termed very attractive. Pune is an attractive market for land purchase in the current scenario just because great deals are available at this point of time,” says Abhay.
Moreover, there is no evidence of overheating in the Pune property market. On the whole, pricing of mid-income and even premium housing is still affordable to buyers, when compared to cities like Mumbai and Bangalore. In contrast, there is currently not a single location in the Mumbai Metropolitan Region which is performing well, both, because of exorbitant pricing and severe infrastructure deficit everywhere.
Analysts also have a word of advice for those who are indecisive about their choice to invest in the Puneproperty market. They suggest property should be acquired not only on macro-factors such as overall vibrancy of a market, but also at the right time and in the right place. Not all locations in Pune perform equally well in terms of capital appreciation, and some have actually reached near-saturation.
The best strategy for investors with more modest budgets, is to invest in emerging locations such as Undri, Ambegaon, Dhanori or Wagholi. For investors with a higher budget range, Baner, Aundh, Kharadi, etc., is the best bet. In all cases, capital appreciation is assured as long as one remains invested for a minimum of 4-5 years.