Pune real estate in 2013
The Pune real estate market showed tremendous resilience in the face of head winds from both supply and demand. On the supply side, the first six months saw an increase in the total market supply by nearly 21 per cent. Year 2013 saw the largest increase in supply and inherent demand was also demonstrated. While the launches of new projects have continued unabated over the course of the year, the demand has seen a slight drop on account of the negative sentiments, inflation and economic slowdown. The outcome of supply being up and demand showing a marginal decline has led to a multiplier effect to the sales numbers of the developer community. However, despite this, the prices across most micro markets have been trending upward through the year. This indicates that there is clearly a demand and developers are overall comfortable with their inventory thereby, being able to retain pricing with an upward bias. Inspite of poor sentiments and comparison to Mumbai, the Pune real estate customers continued to buy homes. Though the numbers were less it was not reduced to an extent which caused price correction. Year 2014 will continue to see demand for housing.
Trend in prices
The wakeup call to the UPA government has led to a number of policy steps being undertaken over the last quarter. This, followed by the outcome of the state elections indicating the likelihood of an NDA government being formed at the centre, has led to a mood of cautious optimism for 2014. With inflation at current levels, finance not being available to developers leading to high costs of finance, delays in approvals leading to higher holding costs, does not has much head room for prices to drop. We expect that prices will continue to see an inflation-led increase across micro markets (barring the odd case of developer distress) through the year. However, a clear mandate to the NDA government will set the stage for a smart recovery of sentiment and correspondingly purchase of homes in the second half of the year leading to a steeper price increase during the second half of the year. I anticipate that with the NDA government, as is indicated by the recent state elections, we will see a boost in the realty sector in the second half of the year 2014. There is an inherent need for homes across the country and while this need has translated to marginally lower demand during 2013, it is a matter of time before the need converts to demand. Hopefully, 2014 will be the year this happens in a big way.
Rohit Gera, MD, Gera Developments. "The views expressed in this article are the author's own."
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