Pune residential project launches down 11% in H1 2014: Report

Demand within Pune residential market expected to decrease from 38,800 units in 2013 to 34,500 units in 2014

Demand-supply mismatch is impacting the fast growing real estate market in Pune. New residential launches at Pune in the first half of 2014 shrunk by 11 per cent compared with the corresponding period in 2013, said commercial and residential property consultancy agency, Knight Frank India.

According to Knight Frank’s first half-yearly analysis report ‘India Real Estate Outlook’, demand within the Pune residential market is expected to decrease from 38,800 units in 2013 to 34,500 units in 2014 representing a fall of 11 per cent.

The city is also expected to offload its excess unsold inventory in another six to nine months as the sales volume is to increase by 11 per cent  to 19,800 units in the second half (H2) of 2014, compared to H2 2013. The sales volumes are expected to recover from second half of 2014 onwards after the lull of two years. However, the bumpy ride in demand and supply does not seem to have any significant impact on price levels.

It further says that a fall in absorption is expected to be compensated by a sharper drop in the number of new launches which are to the tune of 21 per cent.

“Positive election results, higher salary growth of IT/ITeS employees, various sops announced in the Union Budget of 2014 and with a clear intention of new government to bring back the economy back on track seem to have induced a positive change in the home buyer sentiment. The conversion time between a sales inquiry and an actual sale has reduced drastically in the past month, indicating some sort of revival in demand. We expect the sales volume to recover from H2 2014 onwards, after a lull of more than two years,” says Shantanu Mazumder, Director, Pune Branch, Knight Frank India.

He added, “Office space transactions in Pune have historically been dominated by the IT/ITeS and manufacturing sectors. However, this trend shall continue but in H1 2014, apart from IT/ITeS sector BFSI sector including support services has garnered second place in terms of shares during H1 2014. A few big-ticket deals by banking majors like HSBC, Barclays and Citibank have skewed the share towards the BFSI sector during this period.”

The agency has studied the six cities India, namely National Capital Region, Mumbai, Bangalore, Hyderabad, Pune and Chennai. These cities have been witnessing extreme volatality in terms of demand and supply over thelast two years.

While the residential market showed signs of recovery in 2012 and H1 2013, there was a sudden drop in new launches and absorption from second half of 2013.

Factors like slowing economic growth, rising interest rates by banks, weak rupee, high inflation contributed towards building a negative sentiment among buyers and resulting in a dwindling sales volume. All six cities witnessed a steep fall in absorption in the range of 14-37 per cent during H1 2014.