gera pune realty report july13

7/29/2019 Gera Pune Realty Report July13

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Jan 2013 - June 2013

PUNE RESIDENTIAL REAL ESTATE REPORT


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Based on confidential primary research conducted for Gera Developments Pvt. Ltd.

The period between January 2013 and June 2013 witnessed a significant infusion of supply in the form

of 494 new projects alone adding 27,008 units and 25,215 units were added to existing projects. This

led to the Pune Realty market expanding by 20.30% from December 2012 to June 2013 (as against 12%

in the previous 6 months). The total number of units gross supply (considering both, under

construction and in ready projects with stock to sell) is 252,054 spread over 2273 projects. All in all this

is a significant expansion of the market. Of the total stock, 79.48% is currently sold out. The total unsold

stock now stands at 51,725 units. The sold stock in December 2012 was 80.15% while the sold stock in

July 2013 was at 79.48%.

Even with substantial supply being added, the market continues to show remarkable stability in terms of

sellout the average unsold stock has remained steady in the range of 21% since June 2011 (Fig 1)

126240 (78%) 133589(80%)147605(79%)

167938(80%)

200329(79%)

35510 (22%)33871(20%)

39473(21%)

41583(20%)

51725(21%)1779

16411750

1813

2273

0

1000

2000

Jun 11 Dec 11 Jun 12 Dec 12 Jun 13

0

50000

100000

150000

200000

250000

300000

No.ofProjects

Residentia

lUnits

Fig 1 - Overall Supply SituationUnsold Stock

Sold Stock

No of Projects

Total Units - Gross Supply

June 11 (1,61,750), Dec 11(1,67,460),June 12 (1,87,078), Dec 12 (2,09,521), June 13 (2,52,054)


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Over the last 6 months, the average market price has risen from Rs. 4211 per sf. up 6.01% to Rs. 4464

per sf. The average prices a year ago were Rs.3970 per sf . (the YoY increase, Jul 12 to Jun 13 has been

12.44%). Even though the absolute prices have gone up, the speed of increase has reduced. The last 12

months has seen a price increase of 12.44% where as the price increase for the previous 12 months was

14.87%. This trend is also reflected in the more sensitive, six monthly price momentum which at 6.01%

is slowly trending downwards (Fig 2a & 2b)

The total unsold stock of 51,725 is approximately 6 months of inventory which is a very comfortable

situation from an inventory overhang perspective.

The inventory overhang position has increased to 6 months on an overall basis. When viewed in

isolation, this can be viewed as a cause for concern, however, since this is happening on account of an

increase in supply and not on account of demand tapering off indicates that while there is no major

cause for concern, on an overall basis, the overall market will not see substantive price rises in the near

future. This is true for the market as a whole and indiv idual micro markets will see varying price rises

around the moderate market increments.

6.46% 5.50%

8.29%

6.07% 6.01%

34753666

3970

4211

4464

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

3000

3500

4000

4500

5000

Jan'11 -Jun 11 Jul'11 -Dec'11 Jan'12 -Jun'12 Jul'12 -Dec'12 Jan'13 -Jun'13

%

Change

AveragePric

e(Rspsf)

Fig 2a - Six Months Price Movements

6 month % change Average Price

12.32%

14.24%

14.87%

12.44%

3666

3970

4211

4464

0.00%

5.00%

10.00%

15.00%

20.00%

3000

3500

4000

4500

5000

Jan'11 -Dec '11 Jul '11 -Jun '12 Jan '12 -Dec '12 Jul '12- Jun '13

%Change

AveragePrice(Rspsf)

Fig 2b - Yearly Price Movements

12 month % change Average Price


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MARKET SUPPLY/AVAILABILITY

BREAK UP OF SUPPLY BY SIZE OF APARTMENTS

When we look at the total unsold stock and divide it based on the size of the flats, we find that the

maximum number of unsold apartments (15,478) is in the range of 751 sf. to 1000 sf. In fact, out of a

total unsold stock of 51,725, 60% of the flats are below 1000 sf. This clearly indicates that the

developers are focusing on the value and affordable segments of the market.

Fig 3 shows the number of unsold apartments broken up by size of the apartments over the last 4

reports. There is a notable increase of supply in the 501-750 Sq.ft. size segment, with stock climbing up

sharply by 28.72% (from 11,145 in Dec-12 to 14,346 in June 13). Roughly 60% (8983 units) of the 15,748

units unsold are from the fresh supply launched during the past six months. This jump is clearly due to

the fresh supply launched in this size segment.

479

9554

10163

7362

2985

2101

1227

597

9477 1

2036

9121

4428

2408

1406

735

11145

12564

8672

3903

2533

2031

1428

14346

15478

10322

4245

3284

2622

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

Lessthan500

501-750

751-1000

1001-1250

1251-1500

1501-2000

Above2001

Unsold units - Dec 11

Unsold units - June 12

Unsold units - Dec 12

Unsold units - June 13

60% of stock under 1000 Sq Ff

category ( June 2013)

No of Projects : Dec 11 (1641) June 12 (1750) Dec 12 (1813) June 13 (2273)

Unsold Apartments: Dec 11 (33,871) June 12 (39,473) Dec 12 (41,583) June 13 (51,725)

Fig3: Size wise Breakup


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BREAK UP OF SUPPLY BY BUDGET

Roughly 53% of the stock is below the 40 lakhs cost bracket while 87 % of the stock is under 75 lakhs.

Approx. 13% of the unsold stock is above 75 lakhs. The presence of almost 1 3.15% of unsold apartments

in the 75 lakh+ bracket (as against 11.52% in December 2012 & 7.2% in June 2012) confirms that there

has been a consistent shift towards catering to the high end segment of the market (Fig 4), however,

the shift is more in the 3 & 4 bedroom segment. There are 3318 unsold apartments between 75 lakhs

and 1 Cr (which stood at 2089 in December 2012 & 1369 in June 2012) while there are 3488 apartments

unsold above 1 Cr (which stood at 2705 in December 2012 & 1474 in June-2012 ). Unsold stock has

increased in both these cost brackets. The Pune Realty Market is in an expansion mode with more

premium homes being launched.

322

6475 7

842

7650

7837

6504

1369

1474

256

6694

9351

7180

6752

6556

2089

2705

92

8020

11709

7759

7826 9

513

3318

3488

0

2000

4000

6000

8000

10000

12000

14000

Less than

10Lacs

11 - 20Lacs 21 - 30Lacs 31- 40Lacs 41 - 50Lacs 51 -75Lacs 75 -1Cr Above 1 Cr

Fig 4 : Unsold Apartments across

2,273 projects = 51,725 (June 13)

Unsold units ( June 12 )Unsold units ( Dec 12 )

Unsold units ( June 13 )


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AVERAGE PRICES OF APARTMENTS BY SIZE

On analyzing the price points across the market, we find that larger apartments are selling at higher

prices (Fig 5). This is explained by the fact that larger apartments are coming up in more c ity centric and

prime locations. These larger homes also come with higher specifications and amenities that furtherraise the prices. In fact the prices of the larger sized homes have increased at a rate greater than the

lower sized homes which further reiterates the demand for premium homes is picking up pace on the

back of home buyers looking to upgrade.

3222

3759

3880

4295

4886

5450 7

328

7371

4927

3367 4

102

4075 4

621

5151 6

285

8334

9225

5408

3603

4061

4305

4935

5475 7

011 8

669 9

781

6145

0

2000

4000

6000

8000

10000

12000

1 BHK 1.5 BHK 2 BHk 2.5 BHK 3 BHK 3.5 BHK 4 BHK 4.5 BHK Others

Fig 5 - Bedroom wise Price Breakup (Rates are Simple Averages,

Rates in Rs/sf = Simple Average)Simple Average -June 12Simple Average -Dec 12

Simple Average -June 13

No Of Projects : June 12 (1750) Dec 12 (1813) June 13 (2273)


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The average rate across all micro markets put together is Rs 4448 psft. The micro markets that have

witnessed the maximum increase in prices over the last 24 months are listed below ( Fig 6)

Top Ten Highest Gainers (In the last 24 months)

The micro markets that have witnessed the lowest 24 month growth are listed below ( Fig 7)

Bottom 10 Lowest Gainers (In the last 24 months)

Location Price appreciation 24 months

Katraj/Khed Shivapur 1.76%

Koregaon 15.98%

Undri 16.50%

Aundh 16.55%

Ghorpadi (Sopan Baug) 19.62%

Boat Club Road/Tadiwala Road/Koregaon Park/Kalyani Nagar 20.63%

Market Yard/Lullanagar/Salisbury Park/Mukund Nagar 21.10%

Keshav Nagar/Mundhwa 23.38%

Purandar/Saswad 23.96%Lavle 25.26%

Location Price appreciation 24 months

Bakori/Bolhai/Shirsatwadi 75.67%

Vishrantwadi/Kalas 50.88%

Erandwane/Karve Road/Karvenagar/Kothrud 49.01%

Pimpri/Kalewadi 48.31%

Khadakwasla/Kirkitwadi/Kolhewadi/Nanded/Nanded Phata/Panshet 45.46%

Akurdi/Nigdi/Nigdi Pradhikaran 45.26%

Baner 42.23%

Kondhawe Dhawade /Shivane/Uttam Nagar 40.93%

Ambadvet (Ahead of Pirangut)/Mulsi/Tamhini Ghat 40.14%

Dehu/Gahunje/Kiwale/Ravet/Talawade/Tathawade/Punawale 39.44%


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The chart (Fig8) of newly launched units (new projects + new phases of old projects), clearly suggests

that market expansion is happening evenly. The top two areas with the maximum new supply are

Wagholi and Chakan, both border East Pune and West Pune. The next two areas with maximum supply

(Bhosari and Dhanori/Lohegaon), are also bordering East and West Pune respectively. In fact, from the

top 10 areas where maximum units have been launched, 5 are from West Pune and 5 are from East

Pune.

3700

3243

2965

2955

2697

2503

2

378

2054

1977

1832

1742

1724

1672

1570

1500

1475

1466

1457

1352

1276

0

500

1000

1500

2000

2500

3000

3500

4000

Wagholi

Chakan

Bhosari

Dhanori/Lohegaon

Undri

Dehu/Gahunje/Kiwale/Ravet/Tal

Ala

ndi/Alandi

Kondhwa/Pisoli/Ye

walewadi

Kanhe

/Somatne

NaviSangvi/OldSang

vi/Pimple

Chinchw

ad/Dange

Ambegaon

AnandNagar/Dattawadi/Hingne

Balewadi

Hinjewadi

Fursungi

Wakad

Koregaon

Khadakwasla/Kirkitwadi/Kolhewa

Narhe

Fig 8 - New units Launches (Top 20 micromarkets with the

Fresh Supply Launched)


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Conclusion

The Pune residential market continues to show resilience amidst a negative economic environment at a

macro level. At a local level, the fact that developers have launched projects in more numbers than ever

before and the sellout ratio continues to be at the average market sell out indicates that the demand

continues from home buyers. The price increases have also tapered off marginally in line with the

reduction in inflation over the last 6 months.

All in all, the market currently seems to be in a state of equilibrium, however, the absolute number of

unsold units can lead to a situation of oversupply if the macro economic conditions deteriorate

drastically. The depreciation of the Rupee in the recent past makes it attractive for NRIs to invest in

India thereby providing developers an alternative customer base.

Our past report of January 2013 had predicted an annual price rise of 13% to 17% with a bias on the

higher side on the expectation of a reduction in home loan rates and pro-reform budget stimulus. Thishowever did not happen. The first 6 months have seen an increase of only 6%.

Looking forward, we believe that the next 12 months have more risks than the last few years on account

of the impending national elections as well as the macro economic situation. Further, the current

macro-economic situation does not seem to leave any room for policies leading to a reduction in the

interest rates. We also expect the cost structures for developers to be negatively impacted on account

of the Real Estate Regulation legislation that is currently being considered by the Government. The draft

in its current form will lead to a price rise this is a fallout of the populist move by the Government to

regulate developers and the effect of price rises for the home buyer can be considered collateral

damage.

Disclaimer: As with other investments, real estate too carries a certain amount of risk. Readers are advised to undertake their

own due diligence and make their decisions based on their own research rather than rely on the article above. Any views offered

above are of the Company and being a real estate developer, there may be a developer side bias in the article.

gera pune realty report july13

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