Pune’s new residential launches in the first half of 2016 shrunk by 32 per cent over the corresponding period in 2015, said real estate think tank Knight Frank India, in its first half-yearly analysis report ‘India Real Estate’, released on Monday. Unsold inventory pressure has eased off during the last six months, reaching a five-year low at 55,220 units.
According to the report, price growth across most locations in Pune during last 12 months has been tepid and has slowed further in the last six months. However, this year, lack of new supply and steady demand for may put upward pressure on prices in the coming months. In Pune, developers have shifted focus to the budget segment as its share in new launches jumped from 12 per cent to 27 per cent in the last two years. The budget segment includes properties with ticket sizes below Rs 25 lakh.
Shantanu Mazumder, Director–Pune, Knight Frank India said, “The Pune residential market has been witnessing phenomenal changes since the past two years with the demand for housing shifting from areas around the city centre to far-flung locations. Pune continues to remain one of the best performing markets for the residential segment with minimal quarter to sell unsold inventory. This can be attributed to the uncertainty over the DCR (Development Control Regulation) rules and unsold inventory at the end of 2015 both of which saw a halt in new launches thus allowing developers to focus on completion of existing projects.”
In the luxury segment, new launches have plummeted from a high of 450-500 units in 2012 to zero units in 2016.
Mazumder added that the budget segment witnessing an upsurge over the premium segment is also indicative of the fact that the end-users are driving demand. We expect new launches to grow strongly in the coming six-month period, as most of the developers who were waiting for the final notification of the revised DCR norms will finally launch their projects.
Across India, new launches across top eight property markets have declined 9 per cent to the lowest in the last three years as developers became cautious because of the huge unsold inventory that has been piling up since 2013. On the contrary, Mumbai Metropolitan Region has witnessed a 29 per cent on-year rise in number of residential launches during the first half of 2016.
The first half of the year has seen 2 million sq ft of office space being delivered, compared to 2.2 million sq ft in the same period last year. The lack of new supply led to fall in office transactions by 7 per cent in H1 2016 compared to H1 2015. Hence, despite a strong latent demand for office space, the number of transactions fell below the previous year’s level.
Nationally, vacancy levels in office space in the top six cities fell marginally from 17 per cent in first half of 2015 to less than 15 per cent in the same period in 2016, the report said.