Pune real estate registers 50 per cent slump in sales despite festive offers
According to Knight Frank India’s comprehensive analysis of the residential and office market performance of Pune for the period January – June 2017 (H1 2017), over the last year, the sales of flats across different segments have not picked up and have been flatlining throughout.pune Updated: Oct 24, 2017 14:18 IST
The usual fervour of buying or booking a new house during the festive season of Diwali has gone down drastically this year. According to industry experts, there has been a 50% drop in the sales of new homes during Dussera to Diwali as compared same period previous year.
According to Vineet Goyal, joint managing director, Kohinoor Group, Diwali only offered them average sales. “Last year, from Dussera to Diwali, we sold 50 to 60 apartments across all projects but this year, it has gone down to 25 apartments in the 15 days of sale in mid-segment homes which are above 60 lakhs. It is almost a 50% drop in the fortnight sale.”
Goyal said that despite the government’s push, affordable housing has not taken off at all. Kohinoor Group has 500 units under construction which will be ready by March, which are unsold inventory.
While the builders are happy with mid-segment sales, they have been facing dropping sales in the affordable housing sector as they are facing difficulty with getting bank loans against loan eligibility. The Kohinoor group had 240 cancellations last year. The builders are also pushing the banks to take risks and give out loans.
According to Anuj Puri, chairman, Anarock Property Consultants, “This festive season started on a much stronger note as compared to the same period last year, which was particularly marred by the after-effects of demonetisation, unattractive price points and execution delays.”
Puri said that the positive effects of the implementation of RERA was quite evident by a more positive buyer sentiment during this Diwali.
Though hard sales data is yet to be released by developers, buyer inquiries in Pune during the on-going festive season, especially during Diwali, went up by approximately 20% as compared to last year. However, there was a notable departure in the nature of inquiries from buyers, who were more interested in ready-to-move-in projects and projects that are in the final stages of construction, added real estate experts.
◼ Discounts coupled with government’s focus on affordable housing have led to an increase of 11% in sales year over year (YoY) in H1 2017
◼ Budget homes in vogue; more than half the new launches in the Rs 25 lakh price bracket, double its share as compared to 2016
◼ Pisoli, Chikhali, Kane Phata, Talwade are the major locations that have the maximum launches of affordable homes
◼ New completions higher by 35% in H1 2017 YoY, mainly seen in small projects less than 1 lakh sq ft
Developers too followed a cautious approach and focused on clearing their ready-to-move-in units rather than launching too many new projects, said Puri.
As per Anarock Research data, Pune has an unsold inventory of nearly 98,000 units, which might take 30-35 months to be absorbed in the primary market. North Pune has the maximum unsold inventory (33%) followed by West, South and East Pune, at 25%, 22% and 20% respectively.
While Ramesh Nair, CEO and country head, JLL India, feels that the generally slow sale momentum picked up slightly during the festive season. “This is primarily in the ready-for-possession segment of homes in the affordable and mid-segment homes categories. The high-end residential segment did not show any remarkable improvement overall. Cities like Bengaluru, Chennai and Pune performed better than the pricier metros due to more affordable price points.”
He further added, “Whatever new launches coincided with the Diwali period were at lower price points and were coupled with attractive offers and in some cases, hard discounts. Investments from NRIs, primarily US and UAE-based, increased marginally this festive season.”
Speaking to Rohit Gera, vice president, Credai said, “Over all, the customers did not come in the kind of numbers that the builders were hoping for. We have not seen great sales at par industry levels. It can be related to the confusion among customers over the implementation of GST and RERA. People expect the prices to come down and this notion is creating a lot of confusion on pricing. With people expecting interest rates to go down, it has further negatively impacted the sale of flats. Even though developers and builders have responded to the affordability segment demands and reduced the unit sizes from an average of 981 sq ft to 722 sq ft in two years along with average of price of new homes, people are still not buying real estate.”