The new property project launches in the city of Pune fell by 30 as compared to pre-COVID times, it is only partial of what it was in December 2019 before pandemic hit the world. There is evident supply deficit widespread in the Pune real estate market specially in the residential spaces.
Recently a report was disclosed by Gera Developments demonstrating that nearly all the new residential property launches in Pune have seen a decline by 30 percent because of constraints imposed following the second wave of the COVID-19 pandemic. The accessible stock for sale fell to a 9-year low. Purposes for the reduction in commercial inventory are vigorous sales but the absence of fresh supply to reinstate the sales. For every 100 units sold only 59 new units were developed, as per the Gera Pune Residential Realty Report that was published on July 7.
According to this new report, H1 2021 saw a new supply of 26,611 units which is 26 percent greater than H1 2020. Though consecutively it has fallen by around 30 percent described with H2 of 2020, it said.
Distinguished to pre-COVID times, it is however half of what it prevailed in December 2019 just before COVID-19 struck the country. This indicates a supply contraction prevailing in the Pune residential real estate area. Relating the period from January 2020 to June 2021 against the corresponding period, there is a deduction of 39% in fresh inventory being put into the market, the report explained.
Inventory levels fell over to a 9-year low in June 2021. As per the statement, the stock ready for sale has also been decreased to 59,224 units, a decline of 21% from 75,421 units a year ago. The cumulative number of continuous projects has also declined considerably from a maximum of 3,733 projects in Jun 2017 to 2,730 in Jun 2021.
According to the Gera development report, new undertakings inaugurated over 12 months since June 2020, the premium portion has glimpsed a whopping 64% rise from 13,199 units to 21,634 units. The premium section generally encompasses an average price per square foot of Rs 4,898 to Rs 5,876. While on the other hand, the allotment segment (average price of less than Rs 3,917 per square feet), which recorded a drop of 34% in the fresh project undertaken in the past year i.e. before June 2020.
The current supply dipped from 23,390 units to 15,469 units. There is a noticeable shift in consumer priority departing to additional premium residences. Correlating the launch of premium segment estates since 2018, there is inescapably a deduction in the new launches’ gratefulness to the COVID-19 situation.
Rohit Gera, Managing Director, Gera Developments has said “The market has been in an ongoing state of consolidation. With the number of new projects launches declining, the unsold inventory has plunged to a seven-year low. Going forward, we believe that the price rise seen in the past year will gain further momentum. The surge in residential real estate prices will be due to a decline in inadequate inventory to meet the growing demand. Whenever demand outstrips supply, prices tend to go up,”
He further added “With new project launches at unprecedented lows, the robust demand will face supply-side bottlenecks. This has already propelled a 3.73 percent surge in property prices on an average, over the past 12 months. However, as new project launches firm up, the prices, while maintaining their upward bias, will stabilize in the medium term,”
He further demonstrated that there was a boost in the price for developers. “In addition to the supply crunch, there is a tremendous increase in the cost structures for developers. The last 15 months have seen slower construction and project launches and as a result, the overhead costs for developers have increased. More significantly, the cost of several raw materials including the most critical items such as cement and steel has risen by 25-40 percent,” he indicated.
