Realty prices may go up in Pune

Buying residential property in the city may get more difficult as prices have been showing a rising trend over the last few months. Realty sector players as well as industry observers have attributed the rise in prices mainly to the yawning gap between demand and supply in the city.

The trend, interestingly, is spotted right in the midst of concerns over the unabated increase in the home loan interest rates and concerns over the possibility of the global economic situation after US credit rating downgrade hitting India.

According to an in-house study by city-based Gera Developments, of the total 1,74,981 apartments announced this year, 78% are sold out and 22% are currently available as unsold as against the position in December 2010. The sellout ratio has moved up by 3% in six months, indicating that the market is robust and the buying momentum has not abated. "A sellout of 78% is a healthy sign for the market across most price ranges; this indicates a full recovery of the cost of construction of the project," Rohit Gera, managing director of Gera Developments told TOI. "Market does not indicate any levels of distress that would lead to further lowering of prices," he said.

While the rate of growth of prices on an average may slow down, notwithstanding some structural shift in the overall economy, we will not see a reduction in prices, he added.

According to data collated in the report on the top 20 micro-markets (specific localities) constituting two-third of (67%) of the unsold stock highlights that fringe areas of Pune – such as Wakad, Hinjewadi, Kharadi or Hadapsar — seem to be witnessing the highest price rise in the last six months. The 20 micro-markets saw an average increase in prices of 18.5% in the last 12 months, the report said.

Vinay Phadnis, chairman of Phadnis Group which recently launched a 900-unit residential project in the city, said the realty players are not unduly worried about a possible hit following the global economic situation. With supply much lower than demand, home prices will remain stable or even rise, he said. "Considering the addition to the city's work force, we estimate that there is a need for about one lakh houses in the city and surroundings every year. However, the realtors in the city are turning out barely 70,000 units, thereby leaving a substantial demand unmet," Phadnis said.

Sanjay Bajaj, managing director for Pune at real estate advisory and research company Jones Lang LaSalle India, said the demand for homes does not come from the IT/ITeS sector alone. Pune's manufacturing sector, which features a number of international names, also drives residential demand. This fact has always given Pune's residential property market an edge over cities which have less diversified demand.

"Pune continues to figure among the most prime cities for residential investment in India. Though the growth of property values cannot be compared to that of neighbouring Mumbai, Pune has the advantages of being a stable market with a consistent demand coming from a number of strong and dependable business sectors," Bajaj said.

source: http://articles.timesofindia.indiatimes.com/2011-08-18/pune/29900451_1_realty-prices-home-prices-residential-property-market