Tag Archives: Rohit Gera

Cutting edge of Pune realty market amidst slowdown-II

Posted on by Track2Realty

Rohit Gera, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtyBy: Rohit Gera, MD, Gera Developers

Track2Realty Exclusive: The gradual steady price rise philosophy in Pune property market also helps keep speculators away from the projects. We do not get too many instances of investors booking entire buildings or investing in projects with a view to exit in a few months with profit booking.

The other aspect about the Pune market is the fact that there are an extremely large number of developers in the city. CREDAI Pune Metro has over 325 members registered. This leads to a situation of hyper competition. No single developer has a market share in excess of 2 per cent.

As a result of this intense competition, developers are not able to follow any run away pricing policies and as such, the prices continue to rise in moderation. In fact, if one is to consider risk adjusted returns when factoring land at current market prices, the margins earned by developers is not attractive. The profitability is buoyed by the land appreciation which does not have true value addition done by developers.

When one turns attention to the supply side, we find that the total stock of projects that were under construction and projects that were ready but had stock to sell rose from 1.78 lakh apartments in December 2011 to 2.03 lakh apartments in June 2012 and increase of 14 per cent in 6 months.

While this figure certainly is a big jump, the corresponding supply of stock remained steady at approx. 20 per cent. This indicates that developers continue to launch stock that sees regular absorption.

The 2008 meltdown has certainly got developers to focus far more closely on the phasing of the projects. New phases in projects get launched only when older phases get reasonably sold. Each phase now is smaller than phases in the past. This too keeps the overall over supply situation reasonably under control.

Moreover, Pune continues to remain a destination for end users to own homes to occupy. This leads to the arrival of retail, leisure and other infrastructure sooner than if projects in any area were to be full of investors.

All in all, I believe that these characteristics of the Pune realty market will continue to contribute to Pune being a sought after destination for home owners to purchase homes.

Cutting edge of Pune realty market amidst slowdown-I

Posted on by Track2Realty

Rohit Gera, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtyTrack2Realty Exclusive: The Pune realty market in many ways is very different from many other cities in the country. Pune has showed tremendous resilience and a quick bounce back in the aftermath of the 2008 global crisis. In many ways, Pune depicts the behaviour of an extremely mature market leading to low levels of volatility in terms of capital values of the homes.

On the demand side, we see demand from a variety of sectors–IT, manufacturing/industrial, services all generate significant employment in and around Pune and as such, these multiple sectors all contribute to the employees who need housing.

When faced with weak global cues, the economy has looked to internal consumption.  This is reflected in the various companies in Pune–those such as the IT companies who focus on the international market were affected, however, the manufacturing companies have made up for the lack of demand caused due to the IT companies. The multiple drivers of demand therefore bode extremely well for the Pune realty market.

The demand gets translated to supply through the real estate developers. Here too, one sees some significant traits that contribute to the buoyant nature of Pune’s realty market. Developers in Pune have realized the sensitivity around affordability of the customer. Historically, Pune has been a cost conscious market across all sectors.

And from that perspective, the real estate customer is no different. As a result of this, developers have produced homes that fit close to the customer’s affordability and need in terms of size of homes too. As an example, if one is to look at 2 bedroom or 3 bedroom apartments, it is not unusual to find 2 bedroom apartments of sizes of 1300-1400 square feet and 3 bedroom apartments of 2200-2400 square feet. In Pune, this would be the exception.

The other interesting feature is the rate of increase in the prices. By and large, developers raise property prices in a steady gradual manner. This helps in maintaining the sales volumes but also importantly, when prices see a correction during down turns, the severity of the same is blunted since the prices did not rise sharply in the first place.

…..to be continued