InsiteQuarterly Real Estate Analysis for PUNE October - December 2015 Price Trends Growth Drivers Supply Analysis INTRODUCTION The 99acres.com Pune Insite report brings to you major Capital Growth movements in the real estate market of the city, in Oct-Nov-Dec 2015 as compared to Jul-Aug-Sep 2015. The report not only captures the significant trends Dighi Kharadi across various localities in Pune, but also brings to you 7% the analysis and the insights that will make this report 2% valuable for investors and end users. The report also Kalyani Nagar includes an in-depth supply analysis to enable sellers 2% and buyers determine the direction of the market. Aundh 1% Undri Content -2% Sinhagad Road City Highlight : 06 -2% Supply Analysis: 08 Pune 0% Methodology We have reported quarterly price movement of capital and rental values measured in per square feet for the analysis City Insite Report of Pune’s residential market. Effort has been made to Oct - Dec 2015 provide comparable and accurate city level data, since Falling sales volume prices and rents are floating and at any point may vary from the actual numbers. RESTRICTS growth; price correction on the cards 99acres Insite 2 3 Realty Round-Up Capital Rental Values Values Supply Delhi NCR Delhi NCR Mumbai Kolkata Bangalore Chennai Mumbai Pune Pune Hyderabad Hyderabad Chennai Bangalore Kolkata * Capital values represent quarterly change * Rental values represent yearly change * Supply is basis properties listed on 99acres.com 99acres Insite 4 5 PUNE Capital Analysis Rental Analysis City Highlights Top Performers in Pune (Capital Values) • Native home buyers in Pune have always been keen on owning a property, rather than renting one. The Erandwane rental market has been majorly driven by the floating The last quarter of 2015 attested a stagnant property market, indicating a possible price correction in 3% population driven to the city on account of the budding Vitthal Nagar the future. The year which began on a positive note for Pune saw the graph declining for both demand and 3% IT/ITeS and manufacturing industries. Baner-Pashan average capital rates due to crumbling customer sentiments and falling sales volume. 3% 7% Link Road Dighi • Though the city enjoyed robust demand for rental properties, availability of surplus ready-to-move-in • Much like Bangalore, the presence of IT/ITeS and Alandi 4% inventory in almost all parts of Pune led to stagnant manufacturing industry was a saviour for Pune’s Q-o-Q Price Index rental rates between Oct-Dec 2014 and 2015. residential market, which is otherwise suffering due Veerbhadra • Affordable localities around the fringes of the city, to negative market sentiments. The city witnessed Nagar 4% 6% such as Undri and Sinhagad Road topped the some housing demand from end-users, while Nigdi preference chart of home seekers, thus recording a investors adopted a wait-and-watch policy. Jan-Mar’15 1% Kondhwa 4% nine to 10 per cent hike in rental values in the last • Despite the heavy discounts offered by developers that one year. While Undri is famous among those working flooded the market this festive season, Pune’s realty graph 4% 5% in East Pune, Sinhagad Road is preferred by migrants Apr-Jun’15 Wadgaon Pimpri failed to improve in Oct-Dec 2015. Increased enquiries and 2% Sheri working in West Pune. comparatively better sales volume infused some positivity • Rental markets of prime localities such as Viman Nagar, in the market but were not enough to get the city back on Sopan Baug and Aundh were hit by inflated ‘ask’ rates the growth chart. Developers abstained from increasing Jul-Sep’15 • Though Pune’s residential real estate market remained by the landlord community. Preference for economical property prices fearing customer withdrawal. 1% stagnant in Oct-Dec 2015, as against the previous rental options shifted buyers to neighbouring areas • Central Government’s initiative to revive Pune’s metro quarter, almost half of the localities tracked recorded offering ‘value for money’. project in September 2015 uplifted consumer sentiments positive price movement. Oct-Dec’15 • Dhanori, for instance, recorded an eight per cent hike but there was an ambience of uncertainty and distrust 0% • With focus on the ‘Make in India’ campaign, Pimpri in rental values in the last one year. The locality is at a among stakeholders regarding its timely execution. Chinchwad, which boasts of a flourishing manufacturing distance of about 5 km from Viman Nagar and offers • Pune Municipal Corporations’ (PMC) proposal to provide hub, emerged as one of the most coveted investment properties at almost half the rental cost. While a 1,000 more TDR (Transfer of Development Rights) against land zones in Pune. sq ft apartment in Dhanori can be rented out for around acquisition for the long-pending High Capacity Mass *The graph represents Q-o-Q change in average capital values in Pune Rs 14,000-15,000 a month, a similar apartment in Viman • Three of the top ten best performing localities namely Transit Route (HCMTR) project is also anticipated to give a Nagar is available for around Rs 22,000-24,000 a month. Dighi, Nigdi and Pimpri were from the Pimpri Chinchwad thrust to the residential market. Municipal Corporation (PCMC) region. In addition to healthy • Lack of new residential developments earned Koregaon • If the plan gets approved, it would add a whopping 8,000 • In order to ease and speed up the process of acquiring investment prospects, these localities offered properties Park a moderate hike of seven per cent in yearly rentals. crore sq ft TDR for development in the city. The micro- building approvals, PMC announced a mobile at comparatively lower prices than those around central • The IT hubs, Hinjewadi and Magarpatta, too recorded markets expected to be impacted by the transport project application, wherein applicants can conveniently track business district (CBD) and IT zones. robust housing demand, leading to an eight and five per are Hadapsar, Mundhwa, Salunke Vihar and Vishrantwadi and receive faster updates. • Dighi was the top-grosser with seven per cent quarterly cent increase, respectively in rental values. among a few others. • Overall, the city saw multiple policy changes that price appreciation. However, experts opine that this was • The proposal to hike the Floor Space Index (FSI) in older could positively impact the market. However, the more of a price corrective phase, as the locality witnessed Top Performers in Pune (Rental Values) current status of unsold inventory, collapsing customer areas of Pune received mixed reviews. Where some of the a nine per cent decline in Jul-Sep 2015. Wadgaon Sheri industry stalwarts anticipate this to be a game changer for sentiments and poor state of infrastructure in the 6% • Quarterly growth in affluent locations such as Senapati Karve Nagar the city, some believe that it would not have any significant peripheral areas kept the market grim and restricted the 7% Bapat Road, Kalyani Nagar, Bhosle Nagar, Prabhat Colony, impact on the current situation of slowdown. quarterly average growth in capital rates to zero. Pimple 7% 10% Model Colony and Sopan Baug restricted to one or two per Saudagar Undri cent each. Overpriced property and low demand for the uber-luxury category were the primary reasons. Akurdi 7% • Premium areas such as Koregaon Park and Magarpatta KEY INFLUENCERS recorded negative price movement because of few takers Nigdi 7% for exorbitant projects in these localities. 9% Sinhagad Road Proposed hike Progress towards Proposed hike Provision of 4 • Alandi recorded four per cent increase in prices in the last in FSI for old the development of in TDR for realty FSI near the quarter of 2015. It scored on its affordability over Viman Koregaon Park 7% Pune Smart City in Pune projects metro corridor Nagar, located just 5 km away. A 1000 sq ft apartment in Alandi would cost around Rs 50 lakh, whereas in Viman 8% 8% Hinjewadi Dhanori Nagar, it costs around Rs 70-80 lakh. *Rental values represent yearly change 99acres Insite 6 7 Supply Analysis Similar to the general buyer sentiment across the country, Pune too witnessed an inclination towards • The mid-income housing (Rs 40-60 lakh) and luxury of about five per cent in supply of under-construction affordable homes between Oct-Dec 2015 and affordability. The non-performance of affluent locations on the capital and rental charts rubbed off its housing (Rs 1-2 crore) segments recorded a marginal dip Jul-Sep 2015. effect on the supply figures as well. The city noted increased preference for low-cost housing options and in supply of their respective inventories. While the mid- income housing comprised only of residential apartments, locations which offered the same. • Out of the total homes being constructed in the independent houses/villas constituted about a tenth of the affordable housing bracket, majority were supplied as luxury housing segment. 2BHK units, closely followed by 1BHK units. Availability of Different Property Types BHK-wise Distribution of Property • Catering to an influx of professionals in the growing 3% 2% IT/ITeS and manufacturing hubs, Pune has a demography 6% • The penchant for affordable housing led to a marginal hike much similar to that of Bangalore. With majority 3% 2% 20% in supply of smaller homes configured as 1BHK units. 6% home buyers being end-users, demand for residential With construction and labour costs going out of the 19% apartments is exceptionally high. bound, developers considered reducing the property sizes 25% 25% • Supply has continued to be in line with the market and configurations to provide low-cost homes. Due to QoQ change in supply by 95% 95% QoQ change in supply by preference. Over the last two quarters, residential Property Type growing demand for affordable housing, experts anticipate apartments captured almost the entire market share a budding market for 1BHK units in the coming time.