Gera Developments released the January 2023 edition of their bi-annual report, titled ‘The Gera Pune Residential Realty Report’. It is based on primary and proprietary research conducted by Gera Developments and covers all existing projects in a 30 km radius of the city center. The report is an outcome of the longest-running, census-based study of the residential realty market of Pune.
According to the latest Gera Pune Residential Realty Report for the period June 2022 to December 2022, on the surface, all parameters look very strong. Home prices at an average rate of Rs. 5,461 per sq. ft. are not even 8% above the previous peak of Rs. 5,096 in December 2015. The salary increases over this period have more than compensated for the increase in interest rates. Home prices have seen an increase of 10.85% in 2022. The average rates have increased from Rs. 4,926 per sq. ft. in Dec '21 to Rs. 5,461 per sq. ft. in Dec '22. Fresh supply launched in the last six months remains at an elevated level however, compared to the six-monthly period ended Dec ’21, fresh supply has decreased by 22%, and compared to the six-monthly period ended Jun ’22, it has decreased by 13% indicating that new launches are happening at a healthy level but not at the furious pace seen in the past.
Overall inventory for sale is healthy at 72,129 homes i.e., 23.21% of the total inventory under development which is 310,725 homes. This gross inventory number has been reasonably stable since Dec '15. The replacement ratio is also stable at 0.95. Inventory overhang is at an all-time low of 8.37.
Talking about the findings of The Gera Residential Realty Report January 2023 edition and the latest trends in Pune’s residential real estate market, Rohit Gera, Managing Director, Gera Developments, said, “The Pune real estate market has had a good 2022 - this is in line with other real estate markets across the country. Rising interest rates have not had much of an impact on the overall market adversely; while some sales may have been affected, the salary increase over this period has more than compensated for the increase in interest rates. The future, however, has greater uncertainty due to macroeconomic and global factors. We see increased global headwinds and layoffs affecting employment in the IT sector. We believe a larger issue in addition to affordability (which at the present time is not a cause for concern), is job security.”
“Regardless of affordability, job insecurity may cause people to put off their decision to make a large purchase like a home. While thus far India seems relatively less affected, and we are being touted as a beacon of hope for the rest of the world, layoffs in the tech sector and a corresponding erosion of sentiment would have an impact on the sales of homes.”
“The introduction of the unified development control rules has led to a substantial increase in the development potential across the Pune Municipal Corporation and Pimpri Chinchwad Municipal Corporation jurisdictions. One of the outcomes of this is the increased sizes of projects.”
He further added, “The big impact of this increased development potential will be seen once the unified DC rules are made applicable in the PMRDA region. The PMRDA has the largest area under its jurisdiction. These areas have lesser development, and the rates are generally lower. Higher densities lead to greater cost of construction as densification effectively leads to taller buildings, additional parking created in podiums, etc.”
He also underlined the increase in the cost of construction for developers and said, “The increased densification will therefore lead to an increased cost of construction as well as potentially increased supply. Thus far, supply is running in tandem with demand and hence the market continues to be buoyant. On the surface of it, things look very good. Time will tell which, whether job security and oversupply, take the market down.”
