by Mr. Arvind
Jain, Pride Group
* Pune,
located less than 200 kilometres from Mumbai, is a far more rational market and
has been performing very differently.
The ratio
of supply and absorption is much better in this city because prices are still
within the budgets of mid-income buyers.
Over the
past 3 years, an increasing number of property investors who were previously
focused solely on Mumbai have shifted focus to Pune.
Reasons
are..
The
reasons are not hard to understand. Mumbai’s real estate market is caught in a
cycle of unrealistic property price escalation that can not last much longer.
 |
| Arvind Jain, Managing Director – Pride Group |
Such a
scenario is called a ‘bubble’ because it will eventually burst. Paradoxically, one of the foremost reasons
why real estate prices in Mumbai have gone through the roof in the first place
is excessive investor activity.
Oversupply
and lack of demand..
Today,
Mumbai’s property market is facing oversupply and lack of demand.
In the
short to medium term, I expect this market to see a downward correction in
pricing as the current price levels are beyond the reach of most buyers.
Mumbai’s
luxury homes market continues to perform well. But, it takes more than good
performance in one niche segment for the overall market to bounce back.
The
highest demand in Mumbai is for homes in the Rs. 65 lakh to 80 lakh bracket,
and there are very few options available in this budget range. Considering the
lack of demand for the overpriced properties in most areas, it is logical that
there will be a mark-down in prices very soon.
Pune,
located less than 200 kms from Mumbai, is a far more rational market and has
been performing very differently. The ratio of supply and absorption is much
better in this city because prices are still within the budgets of mid-income
buyers.
The city
has been steadily adding new areas to its real estate development landscape,
and the supply coming up in these areas helps to keep prices in other areas at
rational levels.
These
positive dynamics have acted like a ‘detour’ sign for property investors. They
can see where Mumbai’s real estate market is headed and prefer to plunge their
capital into the prospering neighbour city of Pune.
Going by
experience, these investors are not looking at saturated areas where price
growth has slowed down. The maximum growth is in the city’s developing areas
which have more competitive rates & therefore the highest demand.
Investment
Opportunities in Pune..
Also,
these investors are looking at large projects by reputed players.
The
safest & most promising investment opportunities in Pune today lie in
townships. These provide residential products which include all the right
ingredients for protracted capital appreciation as well as rental income.
While
prices in the centrally located townships are no longer attractive to property
investors, they are drawn to the ones coming up in strategic upcoming areas.
These properties are available at lower rates and have the highest potential
for appreciation over the next 3-5 years because the city's population growth
is headed towards them.
About the
author..
Mr.
Arvind Jain is Managing Director at Pride Group
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