Mr. Prashant Thakur[/caption]
Talking about what makes Pune, the next realty destination, Prashant Thakur, Head – Research, Anarock Property Consultants, says, “Pune is well-connected to Mumbai – the financial capital of India, is also well networked to other major cities across the country as well as the world. With respect to Gross Domestic Product (GDP), Pune is ranked 6th in the top 10 wealthiest cities in India. Pune city is the second highest in the state of Maharashtra after Mumbai in terms of GDP Contribution. The major sectors contributing to the city’s growing economy include manufacturing, education, tourism, and culture.”
Pune has been able to create one of the strongest human capital and economic growth engines among Indian cities. With 811 colleges, it is often called the “Oxford of the East”. This has resulted in more than 30% graduate workforce, which has triggered the IT revolution in the city. Almost all of the top IT companies in the country have their presence here, making it the 2nd biggest software hub in the country. The city also has a strong manufacturing base across auto and engineering. Thus, Pune is among the top five foreign direct investment (FDI) destinations in India. It is also one of the successful start-up destinations in India with more than 400 local start-ups. Pune’s educated citizens have also been instrumental in driving participative governance, which is again one of the best across Indian cities.
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Mr. Suresh Castellino[/caption]
Stressing on the uniqueness of Pune and what makes it a realty haven, Suresh Castellino, Executive National Director, Capital Markets & Investment Services at Colliers International India, “Pune was a small city characterized by its strong industrial belt, which included companies such as Tata Motors, Finolex and Bajaj. It was also well known for its cantonment and Head Quarters of Southern Command for the Indian Army. Its slow pace of life and great weather made it pensioner’s paradise. Lot of retired citizens from Mumbai and other metros wanted to retire in Pune. But, in the last decade and a half, the city has gone through a transformation. The development of Mumbai – Pune expressway and coming up of Hinjewadi as the large IT/ITeS catchment has attracted domestic as well as international IT majors, such as Infosys, Wipro IBM and Accenture. The IT corridor now spreads from Baner and Balewadi in the west of the city to Yerwada, Kharadi and Magarpatta to the east. The growing IT / Commercial office market which absorbs over 3 million sq ft per annum attracts young professionals from across the country to work in Pune. This has in turn fuelled the demand for housing and propelled the capital and rental values for residential housing in Pune.”
Pune Snapshot
- The second biggest software hub in the country.
- Strong manufacturing base across Auto and Engineering.
- One of the top five FDI destinations in India.
- The successful start-up destination in India, hosting more than 400 start-ups
- Pune City Connect forum brings corporate and citizens together to work on CSR activities on city level issues.
- Pune has over 811 colleges, more than 30% graduate workforce which has triggered the IT revolution in Pune.
- The educated citizens of Pune have been instrumental in driving participative governance, one of the best across Indian cities.
Ar. Kriti Sadani[/caption]
Commenting on the road and traffic planning, Architect Kriti Sadani of Kriti Associates said, “At most of the roads in Pune, traffic is not segregated, footpaths don’t exist and when they do, they are either too small or are encroached by hawkers or parked vehicles. Bus bays should strictly be used by buses and footpaths should strictly be used by pedestrians. Intersections and turnings are the point of conflict. More traffic control systems and signals have to be planned. At many places we have good roundabouts and traffic signals, but then unplanned landscaping, beautification or advertising banners on them blocks the visibility. The other main challenges are preserving the cultural value, water management and urban flooding. In the race of improving infrastructure and cityscape, one should not ignore the cultural importance of the city. Approach to development should first critically analyse the historical assets in cities as well as finding practical solutions to bridge the gap between heritage and urban development. Increased rainfall intensity causes urban flooding which would become a norm rather than exception unless corrective measures are taken. Water bodies will have to be protected and suitable drainage will have to be planned. Though, Pune has a four dam system of Khadakwasla, Panshet,Temghar & Varasgaon but every year starting February, the city starts seeing water cuts. The holistic water management would need correct decisions at both political and urban planning level.”
Development Aspirations
Pune aspires to create a model neighborhood of livability and sustainability matching global standards in the selected local area (Aundh-Baner-Balewadi – ABB) by fully deploying all 24 smart city features in a “future ready” manner. Future ready is critical because as the area develops, it will undergo a 4x population growth by 2030 (from 40,000 to 160,000). Some examples of planned initiatives are-
Taking public transportation percentage from current 18% to 50% through 100 e-buses, 26 km BRT route, 54 bus stop overhaul and 100 e-rickshaws; take NMT to 8% from 1% through 27 km bicycle tracks, 60 km footpath redesign and place making.
Increase in open public space from 4% to 10% of total city area through 13 parks and 3.4 km riverfront development. Creating 45,000 jobs in the start-up hub for mixed use and walk-to-work as well as an interconnected ABB with a suite of citizen services/ e-governance on top of it (ABB card, e-ABB customer services, 911 emergency, pan-area Wi-Fi connectivity).
Pune has achieved maximum progress in projects launched under the smart cities mission. PMC is the only municipality to have raised Rs 200 crore via bond issue. The city recently set up a Command and Control Centre to monitor over 2,000 buses.
Real-estate Market Scenario
| Key Projects Launched | Area |
| Tata Primos | Vadgaon Maval |
| Paranjape Athashri Balewadi | Balewadi |
| Paranjape The Lofts | Hinjewadi |
| Rama The Highlands | Moshi |
| Godrej 24 | Hinjewadi |
| Geras Adara | Hinjewadi |
| Rohan Abhilasha Building B & D | Wagholi |
| Godrej Greens | Undri |
| Purvanchal Phase2 C D E | Wagholi |
| Atulaya Building No. 8 | Jambhul |
| Somani Dream Home | Punawale |
Mr. Rohit Gera[/caption]
“Currently, the Residential asset class is making a recovery from demonetisation and the impact of RERA implementation. We are seeing recovery in sales volumes in projects across micro markets in Pune. The demand for office space remains steady by corporates; however the market today has limited supply to offer. Due to this mismatch, we have seen rentals increase and vacancy reduce. The challenge would be to bring in adequate supply for absorption in 2018 and early 2019. Retail asset class at one time, did see a huge supply over hand in the eastern micro market of Pune. There are five large format malls in operation, within a 4-5km radius. Currently, one of those malls has been converted to an office building and the other three retails assets are slowly stabilizing. On the western side, there continues to remain demand for retail spaces as the west of Pune currently lacks a large format retail mall,” explained, Castellino.
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Source: Anarock Property Consultants[/caption]
During the turmoil of last year, Pune still performed better than NCR and MMR that witnessed a decline between 3-7%, in the average prices. Whereas, the average price in Pune remained either stagnant or corrected marginally in only a few pockets. According to Thakur, average price now ranges between INR 5,200 to INR 5,500 per square foot in Pune. Currently, around 1.92 lakh dwelling units are under construction in the city. City comprises an approximately 95 to 97 thousands of unsold units, constituting an inventory overhang for 35 to 38 months. The affordable segment (< INR 40 lakh) predominated the new supply in Q3 2017 by constituting 44% of the overall new supply.
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Mr. Tushad Dubash[/caption]
Giving his outlook, Tushad Dubash- Director, Duville Estates said, “Pune’s real estate market has been performing much better than many other major cities. Included in the ‘100 Smart Cities’ list, Pune is gaining increased importance on the back of the implied infrastructure. The residential property market will remain positive, and areas that offer better affordability and returns on investment will pick up. IT/ITeS continues to be the key demand driver for residential real estate in Pune, and the Kharadi micro market is a strong example of this. Technology will play a key role as residential developers explore newer ways to optimize space utilization within their projects. The proposed plan for the development of Pune Metro will have an effect on the prominent areas on the city’s CBD belt along with areas of Hinjewadi, Aundh, Pimpri-Chinchwad, Kharadi and Viman Nagar. As 2018 kicks off, Developers and Consumers alike will have grown accustomed to the new industry landscape created by GST and RERA, and it will be interesting to see the positive impact that this has on the industry in the year ahead.”
Affordability has gained preference over all other factors and developers have tweaked their strategy accordingly. Almost 52% of the launches across the country were in the below INR 40 lakh category followed by the INR 40-80 lakh category which recorded the next highest at 32%. Bengaluru, Mumbai Metropolitan Region (MMR), National Capital region (NCR) and Pune account for approx. 16-19% of the total launches in the sub INR40 lakh category across the country. New asset classes like senior housing, student housing are newer asset and Pune will witness lot of development in these emerging asset classes in near future.
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Mr. Gopal Sarda[/caption]
Gopal Sarda, Group CEO, Kolte-Patil Developers Limited said, "Despite the challenging times facing the sector over the last few years, Kolte-Patil's performance has been consistent. RERA and GST will improve buyers' confidence and benefit transparent, organized developers like us. Besides, lower home loan rates and implementation of Credit Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY) has made home loans easily accessible and affordable to consumers. The sector is at an inflection point and an opportune time for us to reach out to our customers with attractive offers. "
Retail Realty
The main streets of Aundh and Pimpri-Chinchwad in Pune recorded moderate leasing activities stated a recent report by Cushman & Wakefield. Owing to the stable demand and supply scenario across all main streets, the rents remained stable during this quarter. However, due to continued interest from lifestyle retailers and limited availability of quality supply, the rents in the prime main streets of M.G Road and J.M. Road are expected to strengthen in the upcoming quarters. Despite being a key commercial and residential hub, Wakad lacks a large-scale retail development. The recent 1.6-msf land acquisition by Phoenix Mills in the location will spawn a large retail market in west Pune in the next few years.
“On the Retail front, Phoenix Mall has purchased a property in Wakad for development of a large format retail space, which will mainly cater to the Western Pune population. Ascendas and Raheja have signed up for land in Kharadi for development of large format IT/ITeS office campus. Magarpatta is also developing a large format office Campus on Sinhagad Road,” elaborated, Castellino.
Office Realty
With no new supply and limited Grade A availability, Pune witnessed a 27% decline quarter on quarter (q-o-q) in gross absorption, reports latest research by Cushman & Wakefield. Meanwhile, net absorption increased by 17% from the previous quarter to more than 400,000 square feet (sf). Majority leasing (about 41%) was concentrated in the sub-market of SBD East, largely driven by companies from the information technology-business process management (IT-BPM) sector (64%), followed by co-working operators (18%).
The overall vacancy rate declined steeply to 7.6% at the end of this quarter because net absorption was high. The sub-markets of SBD East and the CBD recorded a major drop in vacancy levels, which led to a 2.0% rise in weighted average rentals compared to the previous three quarters.
New supply of 1.6 m. sf. expected to become operational in the upcoming quarter, of which about 78.0% is pre-committed, mostly by IT-BPM occupiers. The city’s vacancy levels are expected to decline further in the forthcoming quarters due to steady leasing and limited incremental supply addition. The rental values are likely to strengthen due to sustained demand for quality spaces.
City Statistics
- The city added around 3.11 Lakh units between 2010 and Q3-2017.
- The market seems to have recovered marginally after 10 quarters, with total absorbed units exceeding total new launch supply in Q3-2017.
- 2nd half of the year has notice more inquiries and traction in the ready-to-move-in properties across the cities since it doesn’t have the implication of RERA as well as GST
- Around 84% supply was added in the sub-INR 80 Lakh range, with a slight skew towards INR 0-40 Lakh range in the Pune residential real estate market since 2010 till Q3 2017.
- Majority of available supply in the primary market of Pune falls under ‘< INR 40 lakh’ budget range, which is around 44% of total available inventory, followed by ‘INR 40 lakh - INR 80 lakh’, ‘INR 80 lakh - INR 1.5 cr.’, and ‘> INR 1.5 cr.’, with 42%, 11 %, and 3%, respectively.
- Along with the affordable segment, mid-segment also witnessed a slight increase in availability, while demand maintained a status quo.
| Micro Market | Q3-2017 Price Range (INR/Sqft) | Q3-2017 vs Q2-2017 % Change in Average Price | 1BHK Rental Range (INR/month) | 2 BHK Rental Range (INR/month) | 3 BHK Rental Range (INR/month) |
| Hadapsar | 5,200 - 6,200 | 2% | 8,000 - 11,500 | 12,000 - 18,000 | 20,000 - 25,000 |
| Kharadi | 5,400 - 6,500 | 0% | 9,000 - 12,000 | 14,000 - 20,000 | 20,000 - 28,000 |
| Manjri | 4,200 - 5,400 | -1% | 6,000 - 8,000 | 10,000 - 14,000 | 12,000 - 17,000 |
| Mundhwa | 4,800 - 6,000 | 1% | 8,500 - 10,500 | 13,000 - 17,000 | 18,000 - 25,000 |
| Wagholi | 4,000 - 4,800 | -1% | 5,500 - 7,000 | 7,000 - 12,000 | 12,000 - 18,000 |
| Chakan | 3,000 - 3,600 | -1% | 4,000 - 6,000 | 6,000 - 9,000 | 9,000-15,000 |
| Chikhali | 4,000 - 4,900 | 2% | 6,000 - 7,500 | 7,500 – 9,500 | 9,500 – 12,000 |
| Dhanori | 4,600 - 5,500 | 4% | 7,500 - 9,000 | 12,000 - 15,000 | 14,000 - 18,000 |
| Moshi | 3,800 - 4,500 | -1% | 5,500 – 7,000 | 7,000 – 10,000 | 11,000 - 13,000 |
| Punawale | 4,600 - 5,500 | 3% | 6,500 - 8,000 | 8,000 - 11,000 | 11,000 - 14,000 |
| Ravet | 4,300 - 5,300 | 1% | 7,000 - 9,000 | 9,000 - 12,000 | 12,000 - 15,000 |
| Talegaon | 3,300 - 4,000 | -2% | 4,500 – 6,000 | 6,000 - 9,000 | 10,000 - 15,000 |
| Kondhwa | 4,900 - 5,800 | 1% | 7,500 - 10,000 | 11,000 - 15,000 | 15,000 - 20,000 |
| Sinhagad Road | 5,500 - 6,500 | 1% | 7,000 - 9,000 | 10,000-13,000 | 12,000-16,000 |
| Undri | 4,300 - 5,200 | 1% | 6,000 - 8,000 | 8,000 - 12,000 | 12,000 - 15,000 |
| Baner | 6,500 - 7,500 | 2% | 10,000 - 12,000 | 12,000 - 18,000 | 18,,000 - 25,000 |
| Bavdhan | 5,500 - 6,600 | 1% | 8,000 - 12,000 | 12,000 – 16,000 | 16,000 - 20,000 |
| Hinjewadi | 4,700 - 5,800 | 0% | 8,000 - 11,000 | 11,000 - 15,000 | 12,000 - 18,000 |
| Wakad | 5,200 - 6,500 | 2% | 9,000 - 11,000 | 13,000 – 17,000 | 17,000 - 21,000 |
Source: Anarock Property Consultants
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Mr. Abhijit Jagtap[/caption]
Putting things in perspective, Abhijit Jagtap, Director, Enerrgia SKYi Group Of Companies stated, “For past 4-5 years, real -estate markets have gone through a difficult time. So there has been an oversupply especially in the higher price category of residential. In the context of Pune anything above 70-80 lakh faced over supply as a result of which, the market has gone through a cost correction but has again picked up. The demand from IT sector has helped Pune to grow. It is a migratory market. People come from different places to work over here in banking/automobile/IT sectors and this has helped the residential areas to grow in Pune.”
There is a mismatch in supply and demand in the commercial office space sector. The office space supply across markets of Pune is short of demand and is expected to balance out by year 2019. On the residential front, developers have reduced launches of new projects and are focusing on completing existing projects, thereby reducing future supply considerably. Also, due to pressure of delivery because of RERA regulations the sizes of the phases of developments being launched have reduced. Supply has been increasing in the mid-income to the affordable housing space that is seeing a steady demand.
