Slowdown worries Pune real estate developers

Sector has faced over 20% drop in sales due to slowdown

The Maharashtra chapter of the Confederation of Real Estate Developers Association of India (Credai) expressed its concern over dropping sales in real estate market due to economic recession. The industry has faced over 20 per cent drop in sales due to slow down. According to CREDAI officials, the issues like inflation. demand supply gap, increased home loan interest rates and liquidity crunch have badly affected the business.

Commenting on the issues ,Lalit Kumar Jain, charman CREDAI said, "Today real estate sector is contributing 6.3 per cent to national GDP of our economy. Most of our time is spent on government apporovals. Due to recent scams in real estae sector, the government is very cautious and hence it has resulted into delaying the projects. We need more transparancy in this business. He added, " Over 40 per cent amount of a project has been spent on government approvals, 37 per cent on taxes and remaining is spent on construction cost. In India, projects worth Rs 1.25 lakh crore has been delayed due to policy paralysis. The risk level in the business has increased. There is no policy measures has been taken on issues like high rise buldings. The construction cost has gone up by 20 per cent.

According to Sanjay Bajaj, managing director – Pune, Jones Lang LaSalle India In Pune, new budget-to-mid income housing projects are coming up in Dhanori, Nighdi, Kondhwa Khurd, Dighi, Manjri, Mundhwa, Undri, Warje, Ambegaon and parts of Hadapsar. Many of these areas also have premium and semi-premium options, which are laregly defined by larger floor spaces and better amenities. The central areas are, strictly speaking, no longer affordable from a mid-income buyer's perspective as prices have been rising steadily with the reduction in supply.

However developers have refused to cut prices. Satish Magar, vice president CREDAI Pune said, "The input costs have been going up. The demand is adversely impacted by the slowdown."

However, according to Bajaj, the Pune real estate has performed better than most of the other metros, with supply overhang in the city being among the lowest among the seven major cities.