www.99acres.com PUNE RESIDENTIAL MARKET UPDATE JANUARY - MARCH 2020 Market Sentiment INSITE 99acres India’s No.1 Property Portal FROM CBO’S DESK The calendar year 2020 began with some Real Estate (Regulation and Development) hopes of a revival for the residential realty Act 2016, Goods and Services Tax (GST), market in India with an increase in property and more lately the liquidity crisis amongst enquiries in January and February. Sales NBFCs and developers. The industry expects volume, too, reported growth over the home buyers to returning to the market only previous months in most metro cities, gradually as social distancing restrictions get barring Delhi NCR and Mumbai, where lifted, even though prices are likely to come supply overweighed demand. New housing down. Pro-realty measures announced by the launches remained low as the liquidity crisis Government, including loan moratorium and continued troubling developers; however, repo rate cut by 75 basis points have helped the silver lining was the upcoming festive soothe the sentiment of uncertainty among season in March. Fast-forward less than a homebuyers, but the industry is looking to month and the outbreak of novel COVID-19 in more support from the government. India turned tables as construction activities Currently sitting with an unsold inventory came to a sudden halt, and restrictions on of around 6.24 lakh residential units and site visits shrunk property sales significantly. 15 lakh under-construction homes in top The announcement of the 21-day lockdown eight metros, the real estate industry would further marred hopes of a quick revival in need more definite growth stimulators business activities. The event is most likely such as further cuts in borrowing costs for to delay project deliveries by at least 2-3 homebuyers, staggered/deferred payments quarters, defer any new launches planned of various levies, support to NBFCs to and drive real estate prices downwards in improve their liquidity which in turn would most markets. mean better access to capital for developers, The real estate sector in India has and penalty exemptions for the delay in project completions for developers. It will Maneesh Upadhyaya effectively survived several past challenges starting with demonetisation, be interesting to see how the market Chief Business Officer followed by the implementation of behaves post-COVID-19. 99acres.com COVID-19 AND REAL ESTATE: A SNAPSHOT The outburst of novel Coronavirus in India has undoubtedly been detrimental to the economic health of the country, and both real estate and construction sectors have been at the receiving end, like many others. The initial impact was noted with reducing number of site visits, which gradually converted into fewer sale conversions. The subsequent 21-days nationwide lockdown put a temporary break on the construction work of over 15 lakh housing units across the top eight cities alone, further delaying project deliveries by a minimum of 2-3 quarters. IMPACT ON HOMEBUYERS IMPACT ON DEVELOPERS • Stalled work on under-construction units to further • Construction work comes to a halt due to curtailed delay completion timelines imports from China, soon followed by the lockdown in India • Reduced payment capacity amid economic slowdown and job cuts • Lack of sales to impede cash flows, further straining the financial health of developers • Festive offers postponed to the subsequent quarters • New launches and festive offers deferred for at least • Deal closers become challenging in absence of physical 2-3 quarters movement • Possible identification of COVID-19 outbreak as a • Reduced payment capacity amongst homebuyers amid Force Majeure event under Real Estate (Regulation and economic slowdown and job cuts Development) Act, 2016, to bring some relief • Extension of project completion deadlines amongst the IMPACT ON SELLERS biggest requests by the developer community • Reduced demand for under-construction units, and restrictions on site visits IMPACT ON REAL ESTATE AGENTS • A possible hike in negotiations in the favour of buyers • Direct hit on business during COVID-19-induced lockdown • Governmental initiatives resulting in reduced home loan interest rates, extended timelines to pay property • Increased dependence on digital platforms for taxes and deferment of EMIs via loan moratorium for networking three months to benefit homeowners 99acres India’s No.1 Property Portal NATIONAL MARKET OUTLOOK INDICATORS Capital Values Rental Values Supply HOME BUYING SENTIMENT While and January and February saw moderate recovery in sales across metro cities, barring Delhi NCR, the month of March saw site visits and transactions coming to a halt due to the outbreak of COVID-19 in India. Enquiries in the affordable segment stayed afloat; however, sale conversions are expected to remain bleak until the next quarter. DELHI NCR PROPERTY PRICES Barring Hyderabad, Bangalore and Ahmedabad, which posted a one percent uptick in capital ‘asks’, each, all metros saw prices remaining stable, QoQ. Unlike KOLKATA expectations, property prices may dwindle in the short- AHMEDABAD to-mid term due to dented home buying sentiment. Eventually, the COVID-19-infused slowdown might also mar the pace of realty growth across metros. MUMBAI PUNE RENTAL LANDSCAPE HYDERABAD Mumbai, Pune, Bangalore and Hyderabad posted a 3-4 percent growth in rental ‘asks’, YoY. Surplus housing stock in Delhi NCR kept rental rates under check. A slowdown in sales in the upcoming quarters may drive the rentals across cities. Bangalore and Kolkata were the most lucrative for rental income with the yield ranging between 3.65 and 3.75 percent. BANGALORE CHENNAI SUPPLY With sales limiting to the first two months of the quarter and developers missing on the opportunity to boost absorption around the festive season, unsold inventory remained largely unchanged at 6.24 lakh units in the top eight metro cities. There are about 15 lakh delayed under-construction units, which have been stalled 99acres temporarily due to COVID-19 crisis. India’s No.1 Property Portal * Capital values represent quarterly change * Rental values represent yearly change * Supply is basis properties listed on 99acres.com MARKET MOVERS Infrastructure projects receive an impetus The extension of metro lines from Swargate to Katraj, Vanaz to Ramwadi, Shivajinagar to Shevalevadi and Man to Pirangut are seen as future growth stimulators for housing demand in neighboring localities. Besides, the recently proposed 170 km-long ring road and a new airport also have the potential to augment the realty sentiment. Stamp duty reduces by one percent A revision in the stamp duty rate by one percent brought it down to six percent in the city with effect from April 1, 2020, until FY-end 2022. Prospective homebuyers welcomed the move. No tax for housing units up to 500 sq ft The Pimpri Chinchwad Municipal Corporation’s (PCMC) decision to waive off the property tax on residential structures measuring up to 500 sq ft has COMMERCIAL come as a respite to about 1.5 lakh families. The ruling applies to both the regularised and unregularised properties for the fiscal year 2020-21. REAL ESTATE Town planning schemes on the cards The proposal of four new town planning schemes along the planned OUTLOOK Peripheral Ring Road (PRR) augurs well for the real estate market of South Pune. The Pune Metropolitan Region Development Authority (PMRDA) • Grade A office space transactions declined owing to a demand-supply would implement the schemes over 500 hectares of land in Holkarwadi, disequilibrium. While the demand for small-sized offices measuring Vadachiwadi and Autande Handewadi. between 500 sq ft and 2,000 sq ft witnessed growth, the market had an overweighing supply of large floor plates. • Baner and Balewadi accounted for nearly 60 percent of the office space deals in Jan-Mar 2020, followed by Kharadi at 40 percent. • Pre-leasing by corporates and co-working operators remained a popular trend in Pune. For instance, Smart Works pre-leased 5,000 sq ft of co-working space in a project by Malpani Builders in Baner. • AP 83, a commercial project worth Rs 400 crore by Amar Builders in Koregaon Park and Solitaire Edge, the retail cum office space by a city- based developer in Viman Nagar were a few mega commercial projects announced in Q4, FY 2019-20. 99acres India’s No.1 Property Portal * Capital values represent quarterly change * Rental values represent yearly change * Supply is basis properties listed on 99acres.com PUNE’S REALTY AT A GLANCE Property Rental Prices ‘Asks’ Price movement in key micro-markets Localities Jan-Mar 2020 QoQ YoY Rental % Change % Change Yield Wakad 6,180 - 6,770 1% 1% 3% Demand Supply Baner 6,820 - 7,880 1% 3% 3% Hadapsar 5,100 - 7,010 -1% 1% 3% Kharadi 6,290 - 7,300 2% 0% 3% Wagholi 4,180 - 4,870 1% 1% 3% Hinjewadi 4,930 - 5,840 0% -1% 3% * Property prices represent quarterly change * Rental ‘asks’ represent yearly change * Supply is basis properties listed on 99acres.com * Demand is basis queries received on 99acres.com Undri 4,590 - 5,440 1% 1% 3% Pimple Saudagar 6,820 - 7,670 2% 0% 3% Bavdhan 6,390 - 7,240 2% 2% 3% Kiwale 4,590 - 5,270 -2% -3% 3% * Average ‘ask’ rates have been calculated as per listings posted on 99acres.com ** Rental Yield has been calculated for a 1,000 sq ft apartment INSITE : Pune 11 99acres DEMAND & SUPPLY India’s No.1 Property Portal DYNAMICS 99ACRES’ 20% OUTLOOK 10% 29% The Jan-Mar 2020 quarter started on a positive note with aggressive new launches and smooth sales in Pune. Close to 7,500 new units were added to the city. Property registrations also increased due to improved market sentiment and a reduction in the stamp duty rate by a 32% percent starting April 2020. While the first two months of the quarter accounted for nearly 5,000 conversions, March took a hit due to COVID-19 outbreak.