E-Paper
Launches of new real estate projects in Pune fall by 30 per cent: report
According to the latest Gera Pune residential realty report for the period January 2021 to June 2021, Covid-19 induced lockdown and restrictions imposed to curb the virus spread has adversely affected new launches in Pune’s residential realty sector during June 2021
According to the latest Gera Pune residential realty report for the period January 2021 to June 2021, Covid-19 induced lockdown and restrictions imposed to curb the virus spread has adversely affected new launches in Pune’s residential realty sector during June 2021.
While the new residential property launches have declined by a significant 30 per cent, the available inventory for sale plunged to a nine-year low, which according to the report, was mainly due to the robust sales coupled with a lack of new supply to replace the sales.
For every 100 units sold only 59 units was added, stated the report.
The report is an outcome of the census-based study of the residential realty market of Pune. It is based on primary and proprietary research conducted by Gera developments and covers all existing projects in a 30-km radius of the city centre.
Talking about the latest trends in Pune’s residential real estate market, Rohit Gera, managing director, Gera developments, said, “The market has been in an ongoing state of consolidation. With the number of new project launches declining, the unsold inventory has plunged to a seven-year low. Going forward, we believe that price rise seen in the past one year will gain further momentum. The surge in residential real estate prices will be due to decline in adequate inventory to meet the growing demand. Whenever demand outstrips supply, prices tend to go up.”
According to the report, fewer new schemes and units were launched in the first half of 2021, which saw a fresh supply of 26,611 units. This was 26 per cent higher than the same period in 2020. However, sequentially it has come down by 30 per cent compared to second half of 2020.
Comparing it with pre-Covid times, it is still half of what it was in December 2019 just before Covid hit the country, indicating supply squeeze prevailing in the Pune residential real estate space, stated the report.
In fact, comparing the period from January 2020 to June 2021 against the corresponding period, there is a reduction of 39 per cent in new inventory being added to the market.
“With new project launches at unprecedented lows, the robust demand will face supply-side bottlenecks. This has already propelled a 3.73 per cent surge in property prices on an average, over the past 12 months. However, as new project launches firm up, the prices, while maintaining their upward bias, will stabilize in the medium term,” further added Mr. Gera.
He also underlined the increase in cost structure for developers. “In addition to the supply crunch, there is a tremendous increase in the cost structures for developers. The last 15 months have seen slower construction and project launches and as a result, the overhead costs for developers have increased. More significantly, the cost of several raw materials including the most critical items such as cement and steel have risen by 25% - 40%,” he further went on to say.
According to report, inventory levels plunged to a 9-year low in June 2021. The report stated, the inventory available for sale has also reduced to 59,224 units, a reduction of 21% from 75,421 units a year ago. The total number of ongoing projects has also dropped significantly from a peak of 3,733 projects in Jun 2017 to 2,730 in Jun 2021. Assessing the percentage inventory available for sale indicates that 79.5% of the total inventory has been sold. This means, the level of 20.5% of the unsold inventory is the lowest level seen in the last decade.
