Highest Ever Launch of New Homes in Pune Residential Realty Market
Gera Developments released the July 2022 edition of their bi-annual report, titled ‘The Gera Pune Residential Realty Report’. The report is based on primary and proprietary research conducted by Gera Developments and covers all existing projects in a 30-km radius of the city centre. As per the report, the effect of the pandemic has totally been eliminated when it comes to new projects being launched. Fresh supply launched remained at an elevated level and conclusively above pre-covid levels for two consecutive 6 monthly periods in the running. For the 12 months ended Jun’21, a total of 64,617 units were brought to the market. This has risen by 80% to 115,996 homes being brought to market in the 12 months ended Jun ‘22. This is the highest 12 month new inventory ever introduced into the Pune market. Explaining the overall trend in the market, Rohit Gera, Managing Director, Gera Developments, said, “After years of prices falling, we have now seen home prices continue to rise for the last 2 years. This is a good sign as affordability continues to be near all-time highs as well. Sales and new project launches are at all-time highs. The last 12 months saw more than 1.15 lakh homes being brought to market and over 1.05 lakh homes being sold. Both numbers are all time high records. The luxury segment too, saw an increase in sales and new launches – in fact to compensate for the years of being in the doldrums. While on one hand, we saw positive sentiment translating to robust sales and positive price movement after years of shocks created by man and God, we are now faced with a war, supply chain disruption, inflation, global challenges, a stock market rout, rising interest rates. In addition to this, we also have the Government to thank for a massive increase in the FSI leading to a potential over supply. The acronym VUCA is extremely applicable to the Pune Real Estate market. VUCA stands for Volatile, Uncertain, Complex, Ambiguous. And in our view, cautious optimism is the way to go in this VUCA world” Talking further to Realty+ Rohit Gera stated, “Green high rises is the practical solution for future. It has been noted world over that horizontal spreads and urban sprawls are burdens on infrastructural expenditure. Whereas construction of high rises with proper mass rapid transit system in place augments the other civic mechanisms in a far better fashion. Most cities are moving in this direction and I deeply believe that sustainability and green housing is absolutely essential, and the order of the day.” The report also suggests affordability levels have seen a slight reduction however, on an overall basis, the affordability continues to be very strong at 3.61x annual income. Over time interest rates and prices (from Dec ’14 onwards) have trended down, while incomes have risen thereby increasing the affordability significantly. The other impact of affordability is that customers now can move to the bigger developers who have the capabilities to deliver on promises. When affordability was low, customers had no choice but to settle for lesser known developers leading to a fragmented market. Comparing sales velocity in H1 2022 to H1 2021, there is a 31% increase in sales (from 40,669 units to 53,398 units). Sales velocity increased by 24% in the last 12 months compared the previous 12 month period (from 85,378 units to 1,05,625 units) The PremiumPlus and Luxury segment has done exceedingly well with high double digit growth rates of 75% and 74%. The segment that is still underserved is the Budget segment and one should expect to see an increased supply in this segment going forward. At 53,398 units offtake at a six monthly level is the highest that we have seen in the last 7.5 years. The least growth in offtake is seen in the Budget segment (+4%). At an overall level, the inventory available for sale is 74,818 apartments, 30% below peak of 1,07,402 apartments seen in Jun ’16. Ready inventory constitutes 5.19% of the units available as on Jun ’22. Ready inventory for sale has come down from 8,369 homes in Jun ’20 to 3,880 in Jun ’22. This low level of ready inventory is also at historic lows. The End + ready inventory now constitutes 6.5% as on Jun ’22 – 50% lower than what it was 5 years ago when it constituted ~13% The average prices of homes across the city have increased by 8.11% in the last 12 months. There is a rise in prices across the board especially in the new projects where prices have gone up by ~ 24% in the last 12 months. 70 projects have been launched in the Luxury segment (Average price ~Rs 10,000+ Psf) which has contributed to the significant rise in the average prices across the city.
Tags : Highest Ever New Homes Pune Residential Realty Market Rohit Gera Managing Director Gera Developments the Luxury segment Gera Developments