During 2013, the
investment potential for residential properties in the financial capital of
Mumbai remained largely flat and unexciting. Most serious property investors in
Mumbai who chose residential property are now content to exit with moderate
profits.
Vacancy Levels..
Pune, on the other
hand, showed an almost uniform appreciation of 14% to 16% in property prices.
Vacancy levels in Pune stand at between 20% to 22%, while in Mumbai they are
close to 35%. As a result, investors are staying invested.
One question being
asked by investors interested in Pune real estate is whether they should prefer
mid-income or luxury housing. To be sure, Pune has a number of options in both
segments.
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| Kishor Pate, Amit Enterprises Housing Ltd |
Mid-income apartments
are definitely the faster-moving product on the market. However, luxury housing
in Pune has been getting a lot of exposure of late, mainly because it is a much
more vibrant segment in this city than in Mumbai.
It has been argued
that Pune has seen far too many luxury projects being launched in the last two
to three years. However, the fact is that these projects are not aimed
primarily at property investors. but at NRI and HNI buyers who are purchasing
such homes for personal use.
Property investors
focused on Pune have always been more interested in acquiring mid-range flats
which they can dispose of faster. This is a limited perspective, usually
brought on my budget constraints.
Demand for Luxury
Property..
There is, in fact, a
very high demand for luxury property in Pune from self-use buyers, which is why
developers continue to see sense in launching premium housing. It must be
remembered that as long as there is demand, supply will follow.
And as long as the
demand is from buyers who wish to own such properties for personal use, there
is no glut on the market - these units will not be put up for sale again for a
very long time.
For this reason,
investment in luxury property in Pune does make sense for long-term investors. These
are premium offerings in locations which will eventually not be able to
accommodate further development.
However, it is a play
which requires high investment power and the ability to hold on to the property
for at least five to seven years. After such a period, the real estate
development potential of a location which is popular today will be almost
exhausted and demand will begin peaking.
There is no doubt
that demand for luxury housing in Pune is very sustainable. An increasing
number of multinational companies are recognizing Pune's unique advantages in
terms of trained manpower, cheaper real estate costs and reduced logistical
hassles.
The result is that
more and more high-paying jobs are being created every year, which leads to a
steady demand for high-end homes. At the same time, more and more NRIs from
Pune who have completed their high-paying tenures abroad are returning every
year.
Obviously, luxury
homes in key areas such as Aundh, Baner, Sahakarnagar, Kalyaninagar and Viman
Nagar will become increasingly valuable over time. But within a span of five to
seven years, even newer areas will have been made valuable because of increased
infrastructure and accelerated saturation. Investing in a luxury property in
such an area today can pay off handsomely over the long term.
About the author
Mr. Kishor Pate, CMD - Amit Enterprises
Housing Ltd.
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Jay Kalghatgi
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