Pune’s real estate market held its own in 2014 and its residential sector in fact out-performed most other markets in India. Appreciation in both mid-range and high-end properties was in excess of 30%, which was much higher than Bangalore, Delhi and Mumbai. However, it was not all smooth sailing. For instance, there was an increase of unauthorized construction on the city’s peripheries, which the city authorities have to begin clamping down on earnestly. However, the fact that the authorities are taking such action is a good thing for the market in general and has added to Pune’s credibility quotient.
We saw rapid development of the city’s suburban and even peri-urban markets. More national-level players launched projects in these areas, which were previously the stronghold of local builders. Another interesting trend in 2014 was that some established areas like Koregaon Park and Sahakarnagar, which had next to no new options for luxury home buyers, saw new augmentation of supply once more.
There will be a bit of a shake-up on the Pune real estate market in 2015 as it aligns itself to various new regulations, but this is a necessary process which will be seen in most cities of Maharashtra. The benefits given to both developers and buyers in the last Union Budget will kick in during the upcoming fiscal, and this will add to the already positive sentiment. We will see increased purchasing activity in areas like Undri, Wagholi and Ambegaon, where affordability is driving demand. Most of the city’s rapidly developing areas will see healthy appreciation in residential values.
2014 was a good year for Pune’s real estate market. In fact, it was one of the few cities that were not seriously impacted even during the slowdown. When most markets went back into recovery mode post the general elections, Pune garnered the most attention from investors. Commercial real estate absorption increased visibly during the year, led by the IT/ITeS, BFSI and manufacturing sectors. Residential properties in both established and new locations were in big demand during the latter part of 2014, and luxury projects did especially well. Also, project launches across categories were toned down so as to aid absorption of existing stock.
In 2014, Pune ramped up its reputation as India’s new ‘Township City’, and the new trend of township properties being seen as the hottest new concept for both the city’s end users and property investors from all over took further hold. Living in these projects has become the latest lifestyle statement. Though townships generally take a longer time to be completed, most developers in Pune with such projects on the anvil were able to maintain a full-on pace of construction. As a result, buyers were encouraged by the fact that they were able to obtain possession dates within attractively shorter periods. This fact also increased investor interest in this category.
The single-most influential factor that will drive Pune’s real estate market in 2015 is job creation. A lot of large domestic and multi-national companies will either be entering or expanding their operations in Pune during 2015. This will result in a lot of commercial space absorption from IT/ITeS and manufacturing companies, which will directly influence residential sales as well. Areas that were still emerging in 2014 will see rapid further establishment in 2015 thanks to accelerated infrastructure development.
The State elections did not have much of an effect on the city’s real estate market as a whole. Historically, Pune’s real estate market has never been very affected by political influences at the State level. Pune is a very steady market and buyer decisions are not dictated by political sentiment, but rather on perceived value. Though very politically aware and enthusiastically wired into the electoral process, Pune’s property buyers saw the State elections as a separate event which had little or no correlation to their investment decisions.
However, the overall momentum of the market always depends to an extent on factors such a pending clearances being granted. There was definitely more momentum to be seen on the residential side after the State elections – especially in terms of affordable housing, since this has now become a political platform.
Some of Pune’s larger developers were a bit over-aggressive in launching luxury projects in 2014, and we will see supply in this segment slowing down in 2015 as existing inventory still needs to be sold. Affordable housing will once again be in full gear in the new year, thanks not only to the new government’s determined push on its ‘Housing For All’ agenda but also because the last Union Budget made budget housing very attractive again. We will see many new launches in this category in 2015, but buyers will be more cautious in their purchase decisions because of the alerts now being sent out about the rash of illegal projects on the city’s outskirts. The highest demand for homes will come from IT employees and industrial workers, since both these sectors will be expanding in the city in 2015.