THE GERA PUNE RESIDENTIAL REALTY REPORT THE YARDSTICK FOR PUNE REALTY VOLUME 9 | ISSUE 1 | JUL - DEC 2019
CONTENTS
FOREWORD 4
INVENTORY OVERVIEW 7
NEW LAUNCHES 9
DEMAND AND SUPPLY GAPS 13
CYCLE ANALYSIS 15
PRICES 18
AFFORDABILITY 20
10 SUB MARKETS WITH MAXIMUM PRICE CORRECTION 22
HOME SIZES 23
SALES OVERVIEW 24
INVENTORY OVERHANG 26
INVENTORY VALUE AND SQUARE FEET 27
BREAKUP OF THE MARKET BY JURISDICTION (PMRDA, PMC, PCMC) 30
CONCLUSION 32
ANNEXURES 33
APPENDIX 34 The Gera Pune Residential Realty Report | Volume 9 | Issue 1 | Jul - Dec 2019
FOREWORD
ROHIT GERA MANAGING DIRECTOR GERA DEVELOPMENTS PRIVATE LIMITED
The real estate industry prior to RERA used to be highly forgiving and flexible.
When it came to rules and approvals, developers did not have any deterrent to build following the rules, often leading to illegal construction affecting customers years later. Today development control rules are meticulously studied by customers with RERA giving transparency to customers, further, courts have come down heavily on illegal construction by developers. In addition to the development control rules, other laws governing development including those around the environment are now essential to follow meticulously.
In the past finance was easily available and rolling over debt, ever-greening of loans, moving money from one project to the next land parcel were all considered as standard industry practices for a large number of developers. Today, loan rollovers are virtually impossible, fiscal discipline is mandatory and RERA ensures funds cannot be taken out of the project. In case of default, use of construction finance for other uses is now considered a serious, often criminal offense.
In a buoyant market, the herd mentality around the product led to every developer imitating the next if the project did well. Today, customers are more discerning, they will not accept a mediocre product, the wrong product in the wrong location with the wrong specifications or pricing can cause a project to flop and expensively so. Successful product launches now are a product of deep understanding about the market based on customer needs and how much a customer trusts the developer.
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Customers are no longer willing to buy homes from any developer. Those with a track record are finally getting rewarded with early stage sales driven by high demand from customers. The developers who took customers for granted and did not invest on customer service and product quality have been emphatically relegated to the sidelines.
As a result of all these changes, many developers are facing an existential threat.
However, in the midst of all this change, there is a positive story that is developing. Developers who have adapted to the new order are being rewarded by customers with buoyant sales and price premiums. Finally customers have turned discerning, punishing those who have taken them for granted while rewarding those who have been customer focused.
The turn around in the market is visible from the perspective of the increases in new inventory added. Developer confidence seems to be returning with launches in the premium, premium plus and luxury segments.
Affordability has also increased substantially at 3.71 times annual income. This is certainly a strong increase in purchasing power. This is perhaps one of those lucky periods where customers with purchasing power have access to homes built by genuine developers with a strong track record and governance standards.
The stressful situation for a large number of developers is real, but it is due to customers moving en masse to quality developers and has little correlation with other narratives doing the rounds. What was earlier a commodity market has clearly transformed into a discerning consumer market in short span of time.
The stress can be explained by looking at the minimum number of projects that it took to sell 10,000 homes over the last few years. In 2017, it took 40 projects with the highest sales per project to cumulatively sell 10,000 homes. By 2019, that number has dropped to 17 projects. This means in 2017, the projects with the
5 The Gera Pune Residential Realty Report | Volume 9 | Issue 1 | Jul - Dec 2019
highest sales had an average sale of 250 homes in the year, however by 2019, this average has increased to 588 homes. This trend continues to show up to sales of 30,000 homes.
Essentially this means while some developers have grown their market share and taken a larger share of the sales, what is left to sell is divided over more developers, thereby leaving many developers in a bad shape.
The other impact is that discerning customers with a good credit rating have moved to these top developers while customers with a weak credit history have no other choice but to buy from other developers with an equally weak credit rating leading to a magnified impact. So there is a weeding out not only at the supply end but also at the demand end.
The sector seems poised at a cross road. We have seen an increase in supply that is more than the demand. If the union budget brings in any incentives for purchasing of homes through demand stimulation incentives, the industry could see a big change for the positive for many more developers. If however this doesn’t happen, the prolonged stress can lead to many more fatalities along the way leading to further consolidation of the sector.
ROHIT GERA
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INVENTORY OVERVIEW
Project launches accelerate by ~12% in the last 6 months. Gross inventory at a lifetime high.
FIG. 1 - INVENTORY OVERVIEW FIG 1 INVENTORY OVERVIEW 336186 350000 325843 3490 304905 3630 305689
3312 3557 292842 3525 300000 89887 240432 2683 104452 210094 250000 86900 79760
2335 104565
200000 165650 1813 67181 55337
150000 41329
100000 Total Residential Units
50000 0 0 1 1
Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19
Sold Stock (% of total stock) Inventory for Sale (no of units) No of Projects Total Stock
Total inventory is at an all time high, however number of projects at 3490 is still 5% below peak of 3733 in June 17 – indicates increase in the average size of project.
The inventory for sale has also risen after falling since June ’17 indicating supply outstripping demand.
The total number of units under development had reached a peak level of 327,670 units in Jun ’17. Since then, on account of a reduction in new project launches, the total inventory contracted for next 2 years and finally rebounded by ~3% to 301,731 units in Jun ’19 from 292,842 in Dec ’18. In Dec ’19 it grew further by
7 The Gera Pune Residential Realty Report | Volume 9 | Issue 1 | Jul - Dec 2019
~12% to 336,186 units surpassing the peak in Jun ’17. This suggests that the market has accelerated in the last six months in terms of construction activity. From a peak inventory available for sale at 107,402 apartments in Jun ’16 the inventory available for sale currently stands at 89,887 apartments. Inventory available for sale grew by ~12% as well over Jun ’19 (when it was 80,062 units). However, inventory levels are down by 16% to 89,887 units in Dec ‘19 from the Jun ‘16 peak.
Since the implementation of RERA, number of live projects in Pune has reduced from the peak of 3,733 projects in Jun ’17 to 3,490 in Dec ’19. As of Dec ’19, the total number of projects on hold (where work has commenced and presently stopped) has reached 249 (the figure of 3,490 live projects excludes these 249 projects). These 249 projects consist of 40,023 apartments and based on our prior data, 23,466 apartments are sold. This means approximately ~24,000 families are stuck with incomplete projects at present.
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NEW LAUNCHES
New Launches at a 4-year high
At a city level, new launches have increased significantly by 37% (FIG 2). This indicates optimism amongst the developer community. As highlighted above, there is an overall increase of 37% in new launches (99,541 apartments launched in the 12 months ended Dec ’19 compared to the 72,503 launched in the 12 months ended Dec ‘18). Due to this increase, new launches have hit a 48-month-high (it was at 93,978 units in the 12 months ended 2016). FIG NEW UNITS LAUNCHED FIG.(Number 2 - NEWof units) UNITS LAUNCHED (Number of units)
124000
11 1 1 104000
84000
64000 0
44000
24000 Jan 15 Dec 15 Jan 16 Dec 16 Jan 17 Dec 17 Jan 18 Dec 18 Jan 19 Dec 19
On assessing the new launches of inventory by zone (for definition of zone see Page 34 of report), almost all zones with the exception of Zone 3 has seen an increase in new supply. The maximum increase is seen in Zone 5 where new supply has dou- bled in the 12 months ended Dec ’19 (3,258 apartments launched) compared to 12 months ended Dec ’18 (1,625 apartments launched) followed by Zone 6 where new supply is up by 65% over the same period (30,772 units in 2019 compared to 18,608 units in 2018).
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TABLE 1 - NEW STOCK ADDED IN ZONES (numbers in units) Zone Jan ’16-Dec ’16 Jan ’17-Dec ’17 Jan ’18-Dec ’18 Jan ’19-Dec ’19 % change over Dec ‘18 1 12,693 7,581 9,979 11,843 19% 2 15,482 8,206 14,687 16,361 11% 3 16,294 10,965 13,303 12,742 -4% 4 16,615 11,802 14,301 24,565 72% 5 2,689 2,380 1,625 3,258 100% 6 30,205 18,661 18,608 30,772 65% Overall 93,978 59,595 72,503 99,541 37%
Looking at the data of new launches by segment, there is a significant increase in new inventory launched in the Premium Category (For the definition of various categories see TABLE 9 in Annexures). New inventory launched in the Premium category grew by ~140% (from 8,767 units launched in 2018 to 21,011 units launched in 2019). Launches in the Premium Plus and Luxury segment also witnessed healthy growth rates of 44.5% and 31.9%. The other significant part is that launches in the Budget segment declined by ~10%. While maximum inventory launched is still in the Budget segment (31,324 units in 2019), clearly the demand has migrated to more aspirational segments like the Value segment which also witnessed a good growth rate of ~85%. As we shall see later, this finding is corroborated clearly in demand data collected directly from potential customers who visited the CREDAI PUNE exhibition in Dec ’19.
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FIG NEW UNITS LAUNCHED (NumberFIG. 3 - ofNEW units) UNITS LAUNCHED (Number of units)
11 1 120000
100000 1
80000 0
60000 0
40000 1 01 0 1 0 0 1011 20000 0 1 1 1 1 1 0 10 10 0 1 1 100 1 Jan 15 Dec 15 Jan 16 Dec 16 Jan 17 Dec 17 Jan 18 Dec 18 Jan 19 Dec 19
Lu ury Premium Plus Premium Value Budget Overall
The share in new launches has dropped to 31.47% in the budget category (from 48% in 2018) while in the Value it has increased to 28% (from 21% in 2018) and in the Premium segment it has increased to 21% (from 12% in 2018). In the Premium plus and Luxury segment, shares remain relatively stable in the last 2 years.
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FIG. 4 - % SHARE OF NEW UNITS LAUNCHED BY SEGMENT FIG. 4 - % SHARE OF NEW UNITS LAUNCHED BY SEGMENT 60%
50.64% 49.53% 48.83% 50% 48.16%
40%
31.47% 30% 22.63% 23.49% 20.77% 20.67% 27.77% 20% 17.54% 21.11% 14.49% 18.06% 17.78% 15.25% 10% 6.69% 6.45% 12.09% 6.02% 4.28% 2.94% 4.36% 4.59% 4.41% Jan '15 – Dec '15 Jan '16 – Dec '16 Jan '17 – Dec '17 Jan '18 – Dec '18 Jan '19 – Dec '19
Budget Value Premium Premium Plus Luxury
FIG. 5 - NEW UNIT LAUNCHES JUL ‘19 - DEC ‘19 FIG. 5 - NEW UNIT LAUNCHES JUL '19- DEC '19 (Top(Top 2020 Micromarkets Micromarkets with thewith Fresh the Supply Fresh Launched) Supply Launched)
8000 7316
7000
6000
5000 4645
4000 3146
3000 2746 2389 2327 2264 2105 1884 1774 1716 1657 2000 1635 1607 1519 1287 1265 1215 1006
1000 887
Narhe Wakad Manjari Kharadi Dhayari Wagholi Bavdhan Hinjewadi Ambegaon Dehu & Environs Kanhe & Environs Alandi & Environs Bhosari & Environs Dhanori/Lohegaon Bhugaon & Environs Kondhwa & Environs Balewadi/Mahalunge Undri/Mohammadwadi Sinhagad Road & Environs Pimple Saudagar & Environs
Please refer to Annexures for the detailed geographical classification.
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DEMAND AND SUPPLY GAPS
2BHK+ segment most undersupplied
As mentioned earlier, we have seen that there has been a significant increase in new supply in the Premium segment. This is possibly due to migration of demand to higher bedroom types.
Data comparing demand and supply gap across the last 2 years clearly indicates where the supply is migrating in response to shifts in demand. In 2018, there was clearly an oversupply in the 1BHK product segment and a clear undersupply in the 2 BHK segment. The market recognizing this mismatch launched 2 BHK inventory leading to an oversupply in 2 BHK. The 2 BHK+ segment is now seeing undersupply where demand is ~27% and supply is ~15%. Demand Data is collected annually from the CREDAI PUNE exhibition.
13 The Gera Pune Residential Realty Report | Volume 9 | Issue 1 | Jul - Dec 2019
FIG.FIG. 66 -- DEMANDDEMAND SUPPLYSUPPLY GAPGAP (2018) (nos represent % of inventory) (nos represent % of inventory)
UNDERSUPPLY
60% OVERSUPPLY 54.16%
50% 48.47%
40% 38.22%
30% 28.01%
20% 8.51% 7.22 % 10% 6.13% 3.72% 1.20% 0.98% 0.55% 1.04% 0.22% 0.58%
1 BHK 1.5 BHK 2 BHK 2.5 BHK 3 BHK 3.5 BHK 4 BHK
Demand Supply
FIG.FIG. 66 -- DEMANDDEMAND SUPPLYSUPPLY GAP (2019) (nos represent % of inventory)
(nos represent % of inventory)
OVERSUPPLY
60%
OVERSUPPLY 50.74%
50% 46.88%
40% 33.28%
30% UNDERSUPPLY in the 2BHK+ segment 20.80% 20% 9.76% 8.48 % 9.62% 10% 4.64% 5.44% 4.00% 2.35% 2.33% 1.08% 0.60%
1 BHK 1.5 BHK 2 BHK 2.5 BHK 3 BHK 3.5 BHK 4 BHK+
Demand Supply
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CYCLE ANALYSIS
Availability ratio just above Dec ’13 low.
One way to look at the real estate cycle is through the lens of “replacement ratio”. The replacement ratio is the new supply added divided by the number of apartments sold. A replacement ratio of 1 indicates that demand and supply are in consonance i.e. inventory being sold is being replaced by new inventory. When the ratio is more than 1 – supply is being added faster than sales and when replacement ratio is less than 1 – sales are faster than inventory addition. The current replacement ratio is 1.17 whereas the replacement ratio hit its peak at 1.455 in Jun ’15. This indicates that supply is greater than demand i.e more units are being added than being taken out.
FIG.FIG. 7 - RELATIONSHIP BETWEEN BETWEEN PRICE PRICE & AVAILABILITY& AVAILABILITY RATIO RATIO
5500 40% Availability Ratio rising 5400 after bottoming out 34.29 %
33.21 % 35% 5300 32.32 % 32.06 % 30.52%
5200 28.43 % 27.94 % 30% 5096 27.24% 27.01 % 26.74%
5075 26.29% 26.53% 5100 26.34 % 4984 5000 5061 25% 4909 4900 4900 4806 4786 20% 4800 4740 Price 4685 curve flattens 4700 15% 4582 4600 4555 4530
4500 10% Dec '13 Jun '14 Dec '14 Jun '15 Dec '15 Jun '16 Dec '16 Jun '17 Dec '17 Jun '18 Dec '18 Jun '19 Dec '19
Avg Price psf Availability Ratio
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FIG.FIG. 88 -- REPLACEMENT RATIO V/S PRICEPRICE
5200 1.455 1.500 5096 1.400 5100 5061 5075 4984 1.300 5000 1.200 4909 1.230 4900 1.167 1.101 4900 1.031 1.100 4786 4800 1.054 1.000 4806 4740 0.982 1.018 0.984 4685 0.952 0.900 4700 0.869 0.800 4600 4582 0.784 4555 0.700 0.687 4530 4500 0.600 Dec ‘13 Jun ‘14 Dec ‘14 Jun ‘15 Dec ‘15 Jun ‘16 Dec ‘16 Jun ‘17 Dec ‘17 Jun ‘18 Dec ‘18 Jun ‘19 Dec ‘19
Avg Price psf Replacement Ratio
Market in Consolidation mode – 17 Projects account for 10,000 units sold
The Market is clearly consolidating. In 2019, 17 projects were needed to sell 10,000 units from the total yearly offtake of 94,383 units. In 2017, 40 projects were needed to sell 10,000 units (2017 yearly offtake was 76,149 units).
TABLE 2 - PROJECTS NEEDED TO SELL Year 10,000 Units 20,000 Units 30,000 Units 2017 40 142 317 2018 27 107 256 2019 17 59 150
We looked at 20 of the top developers in Pune in terms of brand name and repute. To ensure consistency and uniform comparison we maintained the same list of developers over the past 5 years. We then calculated what was their share in the yearly offtake of Pune. The data clearly indicates that over the past their share in sales has gotten stronger especially post RERA. These developers have very successfully managed to take away sales from other developers. Clearly, the reason why most developers are in bad shape is because they are unable to compete effectively with these top players. The Pune market consists of 3490 projects of which 2386 (68%) projects are less than 100 units.
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FIG 9. SHARE IN YEARLY OFFTAKE OF THE TOP 20 DEVELOPERS FIG. 9 - SHARE IN YEARLY OFFTAKE OF THE TOP 20 DEVELOPERS
24% 22%
20%
16% 15% 16% 14% 13%
12%
8%
4%
Jun '15 Jun '16 Jun '17 Jun '18 Jun '19
This trend of large projects being launched is evident if we look at the number of projects with a size >500 units. This number has doubled since 2014.
FIG.FIG 10.10 -NUMBER NUMBER OF OF PROJECTS PROJECTS ( (SIZE SIZE >500 >500 UNITS) UNITS)
160 148
140 123
120 112 103
100 91
80 73
60
40
20 2014 2015 2016 2017 2018 2019
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PRICES
Prices rise in core market (>= 100 units of inventory)
Overall market prices have broadly remained flat over the last 6 months after witnessing an erosion of ~11% from peak levels seen in Dec ‘15. In Jun ’19 average market price was ₹4,555 psf which has gone down to ₹4,530 psf (a reduction of 0.54%).
The average Pune market price is at a 6-year low. The average price in Dec ’13 was ₹4,806 psf. However, the overall market was also much smaller in Dec ’13 at 2,335 ongoing projects while in Dec ’19 there are 3,490 ongoing projects.
Looking at the price trend over the last 8 years, the Top 15 markets with the maximum CAGR in price have been set forth in Table 3. The market that has seen the highest CAGR is Akurdi & neighborhood at 8.40% followed closely by Erandwane. FIG. 11 - SIX MONTHLY PRICE MOVEMENTS FIG 10 SIX MONTHLY PRICE MOVEMENTS
5500 8 29% 5096 7 66% 5061 5075 4984 4900 6 46% 5000 4910 6 07% 6 01% 4806 4786 4740 5 50% 4685
4582 10% 4555 4530 4464 4500 8% 3 08% 4211 6% 2 16% 3970 4000 4% 0 41% 0 28%
3666 2% 3475 3500 0% 0 58% 0 54% 0 97%
1 17% 2% 1 69% 2 20% 2 21% 2 33% 3300 4% Jul 11 Dec Jul 19 Dec Jan 11 Jun Jan 12 Jun Jul 12 Dec Jul 13 Dec Jul 14 Dec Jul 15 Dec Jul 16 Dec Jul 17 Dec Jul 18 Dec Jan 13 Jun Jan 14 Jun Jan 15 Jun Jan 16 Jun Jan 17 Jun Jan 18 Jun Jan 19 Jun
6 month % change Average Price
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While the above chart constitutes all live projects ongoing in Pune (3,490 at last count), 68% (2,386) of the projects in Pune are small with less than 100 units of inventory being built.
We looked at the price history of only those projects which are >=100 units and where the most sales are happening. The chart below maps out the trend in the prices of this subsection of the market. In line with the overall market this subsection peaked in Dec ’15 and proceeded to trend down. However, over the last 18 months (Dec ’18 onwards), this subsection is seeing a good recovery in prices with a growth in prices of ~2.6%. This is line with what we had predicted earlier i.e. the cycle has bottomed out.
FIG.FIG 121 - SIX MONTHLYMONTHLY PRICE MOVEMENTS (Prj Size >=100 units) P S 100
5000 10% 4777 4751 4774 4798 4764 4765 4730 4718
4800 4676 4672 4652 4653 4661 8% 5600 6 63% 4475 5 86% 4400 6% 4 99% 4264 4 48% 4 96% 4200
3999 4% 4000 1 60% 1 66% 3777 2% 0 93%
3800 0 68% 0 56% 0 04% 3598 3600 0% 3400 2% 0 23% 0 19% 0 25%
3200 0 71% 0 97% 0 97%
3000 4% Jul 11 Dec Jul 19 Dec Jan 11 Jun Jan 12 Jun Jul 12 Dec Jul 13 Dec Jul 14 Dec Jul 15 Dec Jul 16 Dec Jul 17 Dec Jul 18 Dec Jan 13 Jun Jan 14 Jun Jan 15 Jun Jan 16 Jun Jan 17 Jun Jan 18 Jun Jan 19 Jun
% increase last 6 Months Price Per Sq Ft ( SA)(Prj Size >=100 units)
19 The Gera Pune Residential Realty Report | Volume 9 | Issue 1 | Jul - Dec 2019
AFFORDABILITY
Affordability Index shows highest affordability compared to the past 8 years
We looked at the trends in affordability over time and data indicates that affordability is at an all-time high as on Dec ’19 at 3.71x Annual Income (Monthly income is assumed to be 2x EMI) making this the best time to buy a home. Over time interest rates and prices (from Jun’15 onwards) have trended down, while incomes have risen thereby increasing the affordability significantly.
FIG.FIG 13 1 - AFFORDABILITY AFFORDABILITY INDEX INDEX V/S V S PRICE PRICE
6000 5 50 0 1 0 0 0 5500 00 5 00 0 5000 1 0
4 50 0 0 0 0 1 00 4500 10 0 4 00
4000 0 11 1
0 3 50 3500 1 3000 3 00 Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19
Price (in ₹ psf) Affordability Inde
We evaluated the salary needed to buy a home based on the then prices psf in Jun ’11 considering interest rates at that time. We then increased this salary based on the consumer price index and compared the new cost of the home with the increased salary. In Jun ’11, the salary needed to buy a 1,000 sq. ft. home was 4.83 times. This peaked in Dec ’14 where the salary needed to buy the same 1,000 sq.ft.
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house at the increased salary and increased rates was 5.27 times. Since Dec ’14, the consistent reduction in rates and the salary increments (linked to CPI) have led to a situation where the house cost is 3.71 times the salary. This makes affordability at an all time high. We are already seeing a price rise in the core (>= 100 units) market and expect the affordability index to get worse in the future.
TABLE 3 - PRICE APPRECIATION IN MICROMARKETS OVER 8 YEARS Price in ₹ Price in ₹ 8 Yr Price Cluster psf (Dec ‘19) psf (Dec ‘11) CAGR Akurdi/Nigdi/Nigdi Pradhikaran 7,000 3,673 8.40% Erandwane/Karve Road/ 11,765 7,178 6.37% Karvenagar/Kothrud Bopodi/Khadki/Dapodi/ 6,171 3,775 6.34% Kasarwadi/Phugewadi Purandar/Saswad/Wadki/ 3,179 1,958 6.24% Bhivari/Bopgaon Hadapsar 6,458 4,148 5.69% City (Centre) 11,042 7,125 5.63% Vishrantwadi/Kalas 5,599 3,621 5.60% Pimpri/Kalewadi 5,567 3,622 5.52% Wakad 5,752 3,814 5.27% Baner 7,340 4,892 5.20% Dehu/Gahunje/Kiwale/ Ravet/Talawade/Tathawade/ 4,495 3,011 5.14% Punawale/Marunji/ Sangawade/Mamurdi/Urse Market Yard/Lullanagar/ Salisbury Park/Mukund 11,948 8,033 5.09% Nagar/Gultekdi Navi Sangvi/Old Sangvi/ Pimple Gurav/Pimple Nilakh/ 6,131 4,154 4.99% Pimple Saudagar/Rahatani Kharadi 6,055 4,131 4.90% Anand Nagar/Dattawadi/ Hingne/Sinhagad Road/ 6,341 4,327 4.89% Vadgaon Bk
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10 SUB MARKETS WITH MAXIMUM PRICE CORRECTION (Over 24 months)
FIG. 14 - BOTTOM 10 MICROMARKETS WITH THE LOWEST PRICE FIG 1 BOTTOM 10 MICROMARKETS WITH THE LOWEST PRICE GAINS IN THE LAST 2 YEARS GAINS IN THE LAST YEARS
0 00% Warje Narhe Aundh Manjari Dhayari 2 00% All Markets City (Centre) Fursungi Uruli Devachi
4 00% Erandwane Environs Aranyeshwar Environs Viman Nagar Yerawada 3 27% 3 86% 4 27% 4 43% 6 00% 4 89% 5 17% 5 11% 5 41% 6 21%
8 00% 6 66% Aranyeshwar & Environs 7 10% Aranyeshwar BalajiNagar Bibvewadi Dhankawadi Padmavati Sahakar Nagar Parvati Satara Road Swargate
Erandwane & Environs Erandwane Karve Road Karvenagar Kothrud
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HOME SIZES FIG.FIG 15 1 - AVERAGEAVERAGE SIZESIZE OFOF UNITSUNITS LAUNCHEDLAUNCHED IN IN NEWNEW PROJECTS PROJECTS
1200
1000
1
800
600
400
200
H2 2014 H2 2015 H2 2016 H2 2017 H2 2018 H2 2019
Home sizes launched have increased to 863 sq. ft. after a period of decline.
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SALES OVERVIEW
Offtake at a 4-year high. Increase of 15% over the last 12 months.
TABLE 4 - SALES OFFTAKE – 12 MONTHLY
Size Jan ‘17-Dec ‘17 Market Share Jan ‘18-Dec ‘18 Market Share Jan ‘19-Dec ‘19 Market Share Overall 76,149 100% 81,907 100% 94,383 100% < 600 19,670 26% 24,145 29% 25,690 27% 600-800 17,934 24% 17,527 21% 18,782 20% 801-1000 18,218 24% 19,981 24% 24,658 26% 1001-1200 11,570 15% 12,070 15% 14,431 15% 1201-1400 3,490 5% 2,968 4% 3,992 4% 1401-1600 2,331 3% 2,570 3% 3,454 4% 1601-1800 1,079 1% 1,029 1% 1,275 1% 1801-2000 529 1% 361 0% 496 1% 2000+ 1,328 2% 1,256 2% 1,605 2%
Assessment of sales offtake based on size of apartment shows that the overall offtake has increased by ~15%, the share of the <600 sq. ft. segment in the offtake has decreased from 29% in 2018 to 27% in 2019. Similarly, the share in offtake of the 600-800 sq. ft. segment has also gone down from 24% in 2017 to now 20%. This segment (<600 Sq. ft.) along with the 600 - 800 sq. ft. segment is primarily targeted by the Pradhan Mantri Awaas Yojana. The share of the 801-1000 segment has also increased to 26% in the last 12 months.
Overtime, the share of offtake in the <800 sq. ft. basket has remained consistent has gone down from 50% (2017 & 2018) to now 47% in 2019.
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FIG.FIG 16 1 - SALES SALES BY SEGMENTBY SEGMENT (in number of units - yearly) (Number of units)
120000
100000 1 1 0 80000 1
60000
1 0 0 1 40000
01 0 1 0 0 0 20000 1 1 10 1 1 01 1 1 1 1 00 1 1 1 1 0 1 001 0 1 0 0 Jan 14 to Dec 14 Jan 15 to Dec 15 Jan 16 to Dec 16 Jan 17 to Dec 17 Jan 18 to Dec 18 Jan 19 to Dec 19
Lu ury Premium Plus Premium Value Budget Overall
As mentioned earlier, overall offtake has increased by 15% in the last 12 months. The segment leading the growth in offtake is the Premium segment (For definition of segments see TABLE 9 In Annexures) with an overall volume growth of 34% in the last 12 months. The Budget + Value segment has displayed a growth of 32% in the same period. There certainly appears a trend towards premiumization in the Pune residential market. The Budget+Value segment occupy ~ 64% of the overall pie in sales volume. However, this percentage has been gradually reducing over time. In the 12 months ended Dec ’15, 72% of all units sold were in the Budget+Value segment while in Dec’19 this share has come down to 64%
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INVENTORY OVERHANG Overall Inventory overhang increases to ~12 months
TABLE 5 - INVENTORY OVERHANG (in months)
6 Months Ended Dec ’15 Jun ’16 Dec ’16 Jun ’17 Dec ’17 Jun ’18 Dec ’18 Jun ’19 Dec ’19
Total 14.13 13.93 13.34 13.90 13.69 12.49 11.69 9.75 11.96 Budget 11.80 11.96 10.96 11.43 11.38 9.67 10.37 7.77 9.21 Value 14.33 13.46 13.59 14.73 14.31 14.73 13.00 11.63 13.42 Premium 18.40 17.49 17.22 14.97 15.43 12.50 12.41 10.59 13.01 Premium Plus 20.28 16.86 15.52 20.05 17.23 16.26 11.47 10.46 14.64 Luxury 13.64 19.65 20.09 24.28 22.15 20.59 17.48 16.43 15.33
The inventory overhang (based on the offtake rate for 6 months) has increased from 9.75 months in Jun ’19 to 11.96 months in Dec ’19. This is on account of the rapid introduction of new inventory.
The budget segment continues to have the lowest inventory overhang of 9.2 months. While inventory months has gone up for all segments, the major improvement is seen in the Luxury segment where the inventory overhang has gone down to 15.33 months.
The table below sets forth a comparison between the Inventory Available for Sale and the trailing 12 months offtake. The 12 months ended Dec’19 would be the first time in the last 5 years where the offtake for last 12 months is significantly greater than the entire inventory available for sale (it was almost at par in the 12 months ended Dec ’18)
TABLE 6 - INVENTORY AVAILABLE FOR SALE V/S OFFTAKE 12 Months Ended Inventory Available for Sale 12 Months Offtake Dec ‘15 104,565 88,815 Dec ‘16 104,452 93,995 Dec ‘17 86,900 76,149 Dec ‘18 79,760 81,907 Dec ‘19 89,887 94,383
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INVENTORY VALUE AND SQUARE FEET
Market Size expands by ~16% to ₹43,818 Crores
FIG. 17 - VALUE OF INVENTORY FOR SALE (in ₹Cr) & AREA (in Cr sq. ft. ) FIG 1 VALUE OF INVENTORY FOR SALE (in ₹ Cr) & AREA (in Cr sq. ft.)
60000 12 55329 55000 9.10 9.46 10 10.25 50000 8.43
7.08 48526 49214 7.40 8 45000
43818 50000 5.49 6
Value (in Cr) 39085 35000 37898 4
30000 Unsold Area (in Cr Sq ft )
2 25000 27400
20000 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19
Value (in Cr) Unsold Area (in Cr Sq ft )
Inventory available for sale has increased by ~14% over Dec ’18 to 8.43 Cr sq. ft. while value of that inventory has increased to INR 43,818 Cr. The weighted average price has increased by 1.5% over Dec ’18 ( Dec ’18 – 7.4cr sq. ft. inventory worth 37,898 Cr, Dec ’19 – 8.43cr sq. ft. unsold worth 43,818 Cr)
27 The Gera Pune Residential Realty Report | Volume 9 | Issue 1 | Jul - Dec 2019
End stage and Ready Inventory for sale at a 5 ½ year low at 10,769 units
FIG.FIG 18 1 - INVENTORY INVENTORY FOR FOR SALE SALE BY BY STAGES STAGES
70000 89,887 104,452 86,900 100,012 107,402 60000 80,062 79,546 104,565 79,760 91,281 50000 1 1 0 1 0 1 1 1
67,614 0 40000 1 55,684 66,683 1 0
51,725 30000 00 1 1 Inventory for sale (Units) 1 1 1 0 1 20000 110 1 1 1 1 0 00 0 1 10000 0 1 1 1 0 1 1 0 0
Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19
EARLY MID END READY Total Inventory for Sale
We have classified projects into 4 stages based on construction status i.e., Early, Mid, End and Ready. End & Ready segments form 2.62% & 9.37% (~12% combined) of inventory available respectively in Dec ’19. In Dec ‘18 combined they formed ~16% of the inventory available. In Dec ’18 the total inventory in this basket was 12,782 units while in Dec ‘19 this has decreased to 10,769 units. The inventory in this basket is also at a 5 ½ year low (In Dec ’13 End stage and Ready inventory was 10,769 units).
Early stage Inventory forms ~22% of the total available units in Dec ’19.
As seen in Table 6, Dehu area and neighborhood consist of 11% of the total inventory available for sale. The top 5 markets contain 1/3rd of the total inventory available for sale.
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TABLE 7 - MICROMARKETS WITH THE HIGHEST INVENTORY FOR SALE (in no. of units) % Share in Cluster Unsold Dec ‘19 Unsold Stock Dehu/Gahunje/Kiwale/Ravet/ Talawade/Tathawade/Punawale/ 10,230 11% Marunji/Sangawade/Mamurdi/Urse
Bhosari Pradhikaran/Chikhali/ Chikhali Pradhikaran/Moshi/Moshi 6,361 7% Pradhikaran
Alandi/Alandi Road/Bhosari/ Bopkhel/Charholi/Dighi/Dudulgaon/ 5,412 6% Wadmukhwadi
Kanhe/Somatne Phata/Talegaon/ 3,881 4% Wadgaon Maval/Kamshet
Manjari 3,833 4%
Hinjewadi 3,734 4%
Wagholi 3,686 4%
Undri/Mohammadwadi 3,631 4%
Kondhwa/Pisoli/Yewalewadi 3,570 4%
Balewadi/Mahalunge 3,259 4%
Bhugaon/Bhugawade/Bhukum/ Chande/Chandkhed/Ghotawade/ Kasar Amboli/Kasarsai/Lavle/Maan/ 3,113 3% Nande/Paud/Pirangut/Rihe Road/ Urawade
Anand Nagar/Dattawadi/Hingne/ 2,754 3% Sinhagad Road/Vadgaon Bk
Dhanori/Lohegaon 2,612 3%
Wakad 2,550 3%
Kharadi 2,457 3%
29 The Gera Pune Residential Realty Report | Volume 9 | Issue 1 | Jul - Dec 2019
BREAKUP OF THE MARKET BY JURISDICTION (PMRDA, PMC, PCMC)
FIG.FIG 19 0 - AVERAGEAVERAGE PRICES PRICES (in ₹ P ₹ psf) (extended boundaries of PMC) (Extended boundaries of PMC)
8000 7186 7039 7075 7000 5650 5434 6000 5075 4984 4786 4799 5000 4820 4769 4797 4763 4000 4582 4530 3905 3853 3000 3706 3455 3482 2000 1000
Jan 15 – Dec 15 Jan 16 – Dec 16 Jan 17 – Dec 17 Jan 18 – Dec 18 Jan 19 – Dec 19
PMC PMRDA PCMC Overall
TABLE 8 - GROSS INVENTORY (in no of units) – EXTENDED BOUNDARIES OF PMC
Dec ‘14 Dec ‘15 Dec ‘16 Dec ‘17 Dec ‘18 Dec ‘19
PMC 71,122 78,881 78,519 111,523 106,069 126,360
PMRDA 117,495 160,775 174,049 123,364 117,982 125,053
PCMC 50,784 63,557 70,745 68,313 62,644 78,795
Overall 240,433 304,905 325,843 305,689 292,842 336,186 Inventory
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FIG.FIG 20 - SHARESHARE ININ INVENTORYINVENTORY (with extended boundaries of PMC) PMC
60% 53% 53%
50% 40% 40% 40% 38%
36% 36% 37% 30% 26% 24%
20% 21% 23% 21% 22% 22% 10%
Jan 15 to Dec 15 Jan 16 to Dec 16 Jan 17 to Dec 17 Jan 18 to Dec 18 Jan 19 to Dec 19
PMRDA PMC PCMC
31 The Gera Pune Residential Realty Report | Volume 9 | Issue 1 | Jul - Dec 2019
CONCLUSION
In our view, we are seeing clear signs of greenshoots in terms of a price rise in projects in the core market (projects sized greater than 100 units)
While the overall market (all projects put together) is flat in terms of prices it is doing excellent sales while launching new inventory. In our view the cycle turned in the recent 6-12 months.
The offtake of the last 12 months is considerably greater than the current inventory available for sale. We are also seeing a migration of demand from lower bedroom types to higher bedroom types which is currently an under-served market.
This is one impact of affordability i.e. when your overall budget increases due to rising income & falling interest rates, customers seek a higher-grade apartment. We are seeing this trend playing out. Higher grade apartments are also associated with developers with a strong brand name and excellent track record who customers trust to deliver.
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ANNEXURES
Dehu & Environs Sinhagad Road & Environs Dehu/Gahunje/Kiwale/Ravet/Talawade/ AnandNagar/Dattawadi/Hingne/Sinhagad Tathawade/Punawale/Marunji/Sangawade/ Road/Vadgaon Bk Mamurdi/Urse
Alandi & Environs Kanhe & Environs Alandi/AlandiRoad/Bhosari/Bopkhel/Charholi/ Kanhe/SomatnePhata/Talegaon/Wadgaon Dighi/Dudulgaon/Wadmukhwad Maval/Kamshet
Bhosari & Environs Kondhwa & Environs BhosariPradhikaran/Chikhali/Chikhali Kondhwa/Pisoli/Yewalewadi Pradhikaran/Moshi/Moshi Pradhikaran
Bhugaon & Environs Pimple Saudagar & Environs Bhugaon/Bhugawade/Bhukum/Chande/ Navi Sangvi/Old Sangvi/Pimple Gurav/Pimple Chandkhed/Ghotawade/KasarAmboli/Kasarsai/ Nilakh/Pimple Saudagar/Rahatani Lavle/Maan/Nande/Paud/Pirangut/Rihe Road/ Urawade
TABLE 9 - PRICING CLASSIFICATION FOR EACH SEGMENT (in ₹ psf)
SEGMENT Jun ‘13 Dec ‘13 Jun ‘14 Dec ‘14 Jun ‘15 Dec ’15 Jun ‘16 Dec ‘16 Jun ‘17 Dec ‘17 Jun ‘18 Dec ‘18 Jun ‘19 Dec ‘19
Budget < 3,913 4,000 4,122 4,247 4,144 4,060 3,991 3,899 3,808 3,719 3,633 3,728 3,705 3,685
Value < 4,892 5,000 5,152 5,309 5,180 5,076 4,989 4,873 4,760 4,649 4,541 4,659 4,631 4,606
Premium < 5,870 6,000 6,182 6,370 6,216 6,091 5,987 5,848 5,712 5,579 5,449 5,591 5,558 5,527
Premium 7,338 7,500 7,728 7,963 7,770 7,613 7,484 7,310 7,140 6,974 6,811 6,989 6,947 6,908 Plus <
Luxury > 7,338 7,500 7,728 7,963 7,770 7,613 7,484 7,310 7,140 6,974 6,811 6,989 6,947 6,908
33 The Gera Pune Residential Realty Report | Volume 9 | Issue 1 | Jul - Dec 2019
APPENDIX
Zone 1 Bokari | Bolhai | Dhanori | Ghorpadi | Kalas | Keshav Nagar | Kesnand | Kharadi | Koregaon Bhima | Lohegaon | Lanikand | Mundhwa | Nagar Road | Ranjan Gaon | Sanaswadi | Shikrapur | Shirsatwadi | Talegaon | Dhamdhere | Viman Nagar | Vishrantwadi | Wadgaonsheri | Wagholi | Yerwada
Zone 2 Bibvewadi | Fursungi | Gultekdi | Hadapsar | Kondhwa | Loni Kalbhor | Lulla Nagar | Manjari | Market Yard | Undri | Mohammad Wadi | NIBM Road | Pisoli | Salisbury Park | Saswad | Uruli Devachi | Uruli Kanchan | Wadki | Yavat | Yewalawadi
Zone 3 Ambegaon | Dhankawadi | Dhayari | Donje | Katraj | Khadakwasla | Khed Shivapur | Kirkitwadi | Kolhewadi | Nanded | Kondhawe Dhawade | Narhe | Shivane | Uttam Nagar | Warje
Zone 4 Ambadvet | Aundh | Balewadi | Baner | Baner Balewadi Road | Baner Pashan Link Road | Baner Sus Road | Bavdhan | Bhugaon | Bhugawade | Bhukum | Chandkhed | Ghotawade | Hinjewadi | Kasar Amboli | Mahalunge | Marunji | Nande | Pashan | Paud Road | Pimple Gurav | Pimple Nilakh | Pimple Saudagar | Pirangut | Punawale | Sus | Sus Road | Tathawade | Urawade | Wakad
Zone 5 Anand Nagar | Bhosale Nagar | Boat Club Road | Camp | City | Dattawadi | Erandwane | FC Road | Fatima Nagar | Ganeshkhind Road | Gokhale Nagar | Gultekdi | Hingne | JM Road | Kalyani Nagar | Karve Nagar | Khadaki | Parvati | Koregaon Park | Kothrud | Mitra Mandal | Model Colony | Mukund Nagar | Padmavati | Peth | Prabhat Road | SB Road | Sahkar Nagar | Satara Road | Shivaji Nagar | Sinhagad Road | Tilak Road | Vadgaon BK | Wakadewadi | Wanowrie
Zone 6 Akurdi | Alandi | Alandi Road | Alandi-Dehuroad | Alandi-Moshi Road | Bhosari | Bhosari Pradhikaran | Bhopkel | Chakan | Charholi | Chikhali | Chikhali Pradhikaran | Chimbali | Chinchwad | Dange Chowk | Dapodi | Dehugaon | Dighi | Dedulgaon | Kalewadi | Kasarwadi | Kamshet | Kanhe | Kiwale | Mamurdi | Moshi | Moshi Pradhikaran | Navi Sangvi | Nigdi Pradhikaran | Phugewadi | Pimpri | Punewala | Rahatani | Ravet | Sanghavi | Somatne Phata | Talawade | Talegaon | Thergaon | Wadgaon Maval | Wadmukhwadi
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Areas in Extended boundaries of PMC Ambegaon | Anand Nagar | Aundh | Balewadi | Baner | Baner Pashan Link Road | Bavdhan | Bibwewadi| Boat Club Road | City Centre | Dhankawadi | Dhanori | Dhayari | Erandwane | Fatima Nagar | Ghorpadi | Gultekdi | Hadapsar | Hingne | Kalas | Kalyani Nagar | Karvenagar | Katraj | Katraj | Kondhwa Road | Keshav Nagar | Kharadi | Kondhwa | Koregaon Park | Kothrud | Lohegaon | Lullanagar | Market Yard | Mohammadwadi | Mundhwa | NIBM Road | Padmavati | Pashan | Sahakar Nagar | Salisbury Park | Salunke Vihar | Satara Road | Shivaji Nagar and Neighborhoods | Shivane | Sinhagad Road | Sus Road | Undri | Uttam Nagar | Vadgaon| Vadgaon Sheri | Viman Nagar | Vishrantwadi| Wanowrie | Warje | Yerawada | Yewalewadi
Without Extended boundaries of PMC Anand Nagar | Aundh | Balewadi | Baner| Baner Pashan Link Road | Bavdhan | Bibwewadi | Boat Club Road | City Centre | Dhankawadi | Dhanori | Erandwane | Fatima Nagar | Ghorpadi | Gultekdi | Hadapsar | Hingne | Kalas | Kalyani Nagar | Karvenagar | Katraj | Katraj Kondhwa Road | Kharadi | Kondhwa | Koregaon Park | Kothrud | Lullanagar | Market Yard | Mohammadwadi | Mundhwa | NIBM Road | Padmavati | Pashan | Sahakar Nagar | Salisbury Park | Salunke Vihar | Satara Road | Shivaji Nagar and Neighborhoods | Sinhagad Road | Sus Road | Vadgaon | Vadgaon Sheri | Viman Nagar | Vishrantwadi | Wanowrie | Warje | Yerawada | Yewalewadi
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