Pune Residential Market Slows in First Half of 2016
According to a Knight Frank India report, "India Real Estate," released on Monday, Pune experienced a 32% year-over-year decline in new residential launches during the first half of 2016. This downturn contrasts with the same period in 2015. However, the report also highlights a positive trend: the city's unsold housing inventory has decreased to a five-year low of 55,220 units over the past six months.
Price Trends and Shifting Builder Focus
Price growth across most Pune locations has remained moderate over the last six months compared to the preceding 12 months. The report suggests that sustained demand coupled with limited new supply could exert upward pressure on prices in the coming months. Interestingly, builders have increasingly shifted their focus towards budget-friendly housing, with the share of new launches in this segment rising from 12% to 27% in the last two years. Properties priced below Rs 25 lakh fall within this budget segment.
Nationwide Trends and Mumbai's Exception
Across India's eight major property markets, new launches declined by 9%, hitting a three-year low. This nationwide slowdown is attributed to developers' cautious approach in response to the significant unsold inventory accumulating since 2013. However, the Mumbai Metropolitan Region stands out as an exception, registering a 29% year-over-year increase in residential launches during the first half of 2016.
Commercial Sector Performance
In the commercial real estate sector, Pune saw 2 million square feet of office space delivered in the first half of 2016, compared to 2.2 million square feet during the same period in 2015. The limited new supply has contributed to a 7% year-over-year decline in office space transactions. This slowdown occurred despite substantial underlying demand for office space.
Vacancy Rates
Knight Frank's report also indicates that vacancy rates in the six major cities decreased slightly, from 17% in the first half of 2015 to 15% during the same period in 2016. This reduction suggests a modest improvement in the overall occupancy of commercial spaces.