Pune Real Estate Overview

Pune is an established IT hub and a city known for educational institutes and universities. Driven by the constant influx of people coming to the city that offers opportunities in IT and manufacturing industries, Pune real estate market is seeing some changes in the current fiscal year. The significant growth in the start-up and SME ecosystem has also surged the demand for commercial property in the city. Enhanced social infrastructure, reliable buses, subways, monorail systems, SEZs, and the international airport are some drivers that have improved Pune’s attractiveness.

Pune’s Realty sector is showing some interesting new trends that we will see below:

Inventory

The total inventory under development in Pune Real Estate has reduced by 5% between June’22 and Jun’23 from 315,088 units to 297,801 units. The number of projects has reduced by 34 % over a period of 5 years. The total projects have come down from 3,733 in Jun’17 to 2,227 projects in June’23. The number of projects under development in Jun’23 is the lowest in the past decade with 2,227 projects having 297,801 units. Although the number of projects has reduced the size of the projects over the decade has increased from 89 apartments to 134 apartments. Further, the enforcement of RERA and stringent RBI regulations for financial institutions has caused small, undercapitalized developers to exit leaving larger and better-capitalized developers as major players.

Pricing

The average prices of homes across Pune have increased by 11.03% in the last 12 months. There is a rise in prices across the board, especially in the new phases of existing projects where prices have gone up by ~12.07% in the last 12 months. Prices since 2019 have grown at a compounded annual rate of 6.15% over the last 5 years rising from ₹ 4,555 per sq. ft. (as of Jun ’19) to now ₹ 5,782 (as of Jun ’23) breaking into a lifetime high.

The overall sales for the past 12 months have come down by 8% from 105,625 units in the period Jun ’21 - Jun ’22 to 97,214 units in the period Jun ’22 - Jun ’23. This indicates that homebuyers are purchasing homes at prices higher than ever before. 

Affordability

A consistent reduction in interest rates and home prices since 2014 had made homes in Pune more affordable. During this period the increment in salaries of home buyers has made homes even more affordable in Pune. Hence, although affordability has decreased in Jun’23 as compared to Jun’22, the events of the previous 5 years have kept the prices in the affordability range. Also, people can purchase larger homes (avg. carpet area 830sq ft) compared to earlier years. 

New Launches

At a six-monthly level, new supply has reduced by 16% to 46,007 units in the 6 months ended Jun ’23 compared to the 54,845 units that were launched during the 6 months ended Jun ’22 indicating that new launches while still at a healthy level are being normalized to the steady state seen in the past. This reduction can be attributed to the hangover effect of the pandemic. It does not raise red flags as other metrics like replacement ratio (0.98) and inventory overhang (9 months) fall within the healthy range.

Overall, the Pune Realty market shows healthy signs for the current year even though some metrics are showing a decrease. Real estate investment in Pune will show a healthy increment and give good returns.