Residential Housing Complex
PUNE: The city's high-end residential segment has shown a smart 39% rise in capital value in the 2011-14 period — the highest any market has shown in the country, a report by real estate advisory company Cushman & Wakefield has said.
The Pune market has also shown a strong rise in the mid segment where the capital values have risen 28%, second highest rise after Bangalore where the capital value appreciation is 41%, the report has said.
The rise in capital values is due to a combination of low availability of stock in the segment and a sustained demand as compared with the affordable homes segment where supply is coming steadily but the demand is not matching with the pace of supply, keeping appreciation depressed, real estate observers said.
The Cushman & Wakefield report analyses the performance of the residential segment across top seven cities in India to rank the average capital value appreciation. While all cities have seen capital values increase between 14% and 41% in mid segment, high-end properties recorded appreciation in the range of 16% and 39% in the same period, the report has indicated.
In the high-end properties market, Pune recorded the highest increase in capital values of 39% while Bangalore recorded 37% average increase in capital values in the period between 2011 and 2014. Chennai market recorded an average increase of 34% in capital values in the same period, while Mumbai and Delhi-NCR recorded identical average increase of 24%. Hyderabad remained at the bottom for average increase in capital values in this period.
A National Association of Realtors official said that high-end segment in Pune has found favour with both actual users and investors. "The city holds a strong promise as a centre for manufacturing, IT and services sectors so north is the only way the prices will move here, at least in the medium term," he said, echoing real estate tycoon Donald Trump who recently said prices in Pune are among the lowest in the world and investors will make money here.
Vishwajeet Jhavar, chief executive officer of Marvel Realtors said, "Growth in luxury property segment rate is location driven. Customers are paying as much as Rs 19,000 per sq ft for projects in Koregaon Park and Boat Club Road. For semi-prime locations, though the rates have increased, volumes are yet to catch up."
Shveta Jain, executive director, residential services Cushman & Wakefield said, "Markets that are largely end user driven have recorded highest average increase in capital values while investor-driven markets such as Delhi-NCR and Mumbai have remained contained in appreciation because of slower economic growth, devaluation of the Indian rupee, inflation and lower rate of real estate development."
Jain said the demand for mid-end segment housing will be robust due to tax reforms in the recent budget and positive economic sentiment. However, due to excess supply, an exponential growth in capital value is unlikely in the short term, she added.
Real estate developer Rohit Gera said (despite the potential for capital appreciation) the maximum stress of the subdued demand the city is witnessing 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.