Pune: Even in the flat growth environment, Pune has maintained its status as a safe residential realty investment destination. The average capital value appreciation rate in Pune is projected to be in the range of 12-15% for the year ahead.
With areas such as Hinjewadi, Marunji Road, Kharadi and its surrounding areas to see maximum appreciation in the next one-two years, said a report from property consultancy firm Jones Lang LaSalle (JLL) India.
Cities like Delhi, Mumbai, Bangalore, Hyderabad and Chennai have been witnessing extreme volatility in terms of demand and supply over the last two years.
With assured returns on houses at a constant rate of year-on-year appreciation, Pune has been a favourite location with investors who are averse to high risks, said the report. Delhi NCR's residential real estate prices saw massive depreciation during the last two years while Mumbai has witnessed a marginal appreciation in the same period.
The Report says that overall, demand as well as the number of residential project launches in Pune reduced in 2014. It also emerged that the city is a largely mid-segment market when it comes to residential property.
The 'sweet spot' for buyers in this segment lies between Rs 4,500 and Rs 5,200 per square feet (psf). In other words, a 1,000 sq ft flat costing about Rs 50 lakh forms the median ticket size in the city.
"Pune's 'mid-segment market' categorization also stems from the fact that most buyers prefer to book houses in the pre-launch stage, especially at rates around Rs 4,600 psf. Sales went down in projects located in and around suburban Hinjewadi once a price level of Rs 5,500 psf was reached. Interestingly, township projects are in great demand with buyers and investors - but here too, buyers prefer to book properties during the pre-launch stages", said Sanjay Bajaj, managing director, Pune, JLL India.
"Some other cities in the country witnessed a very high rate of appreciation while the Pune real estate market in comparison showed steady appreciation. As a result when other cities have seen a sharp correction this volatility was not experienced in Pune because the Pune market did not have runaway price increases. The current market situation is seeing caution being exhibited by a section of home buyers and as a result there has been a reduction in the total sales. We find that home buyers continue to be keen on achieving the dream of owning a home and at the same time see value in building their assets through payments of EMI rather than paying rent," said Rohit Gera, vice president CREDAI, Pune Metro and managing director, Gera Developments.
In Pune, to enhance slowing sales and entice more mid-segment buyers, developers have launched offers like the 20:80 and 40:60 schemes, especially during the festive season. Such offers have been popular with many Mumbai developers, but were not available to buyers in Pune until some months ago.
Developers had tried to entice the luxury or upper-segment buyers into some projects, but did not elicit an encouraging response. The current inventory level stands at 16 months, which is slightly higher than the last six year's quarterly average of 15 months.
However, sales within the Pune residential market decreased from 38,800 units in 2013 to 34,870 units in 2014 with a fall of 10%. The market has witnessed a total inventory of 67,500 units in the city. The sales volumes are expected to recover from second half of 2015 onwards after the lull of more than two years.