Gera’s Realty Report for July to December 2014 discloses the ‘Realty’ Story of the Top 10 developers of Pune
Quantitative and qualitative analysis of the market highlights the consumer preferences towards Pune’s Top 10 developers (1) and the rest of the sector
Highlights of the report..!
· Overall market in terms of gross stock shrinks by 2.1% while unsold inventory increases by 1.2% and prices remain virtually stagnant from July to December 2014.
· The top 10 developers have approx. 10% of the gross stock across the market
· Unsold stock for the top 10 developers is consistently lower across all stages of work, indicating that customers are preferring to rely more on reputed developers with a track record during challenging times.
· In early stage projects, while the market sold about 35% of the total inventory, the top 10 developers sold approx. 45% of their inventory of early stage projects.
· This trend continues all the way to ready properties where the market has a sellout of 81%, the top 10 developers have a sellout of 95.5%.
· Comparing the market share of gross stock, the top 10 developers have a market share of 32% in June 2014 and 36% in December 2014 of the premium plus and luxury segment
Gera Developments, one of the pioneers of the real estate business and the creators of premium residential and commercial projects in Pune, Goa and Bengaluru, today released the Gera Pune Realty Report for the period July 2014 to December 2014.
The all-inclusive report, an industry benchmark, highlights a paradox of sorts between the performance of the overall real estate residential market and the top 10 developers (1) over the last calendar year. Gera’s realty report showcases how all the recent indicators and analysis parameters point towards a challenging scenario.
The rate of price increase for 2014 has dropped substantially over 2013 and the last 12 months have seen the slowest increase in rates of only 5.3% as compared to 14.1% and 14.8% over the two prior years. Increases in residential property prices for 2014 are now below inflation.
Over the past 6 months, the gross stock has reduced from 245,369 units to 240,433, a reduction of 2.1% (indicating that projects were being launched slower than the rate of completion).
During the same period, the unsold stock has increased from 66,350 units to 67,181 units, an increase of 1.2%. For the first time in 3 years, the total number of projects has reduced from 2761 in June 2014 to 2683 in December 2014.
Mr. Rohit Gera, Managing Director, Gera Developments said, “While the overall numbers show a level of stress, we decided to assess whether there was any change in consumer pattern for different segments of developers. We decided to use the list of top 10 developers announced by Bloomberg TV India with JLL in the last quarter of 2014. We found that there is clearly a differentiation between the top 10 developers and the rest, with the top 10 developer group sales outperforming the overall market. While sales for the overall market has declined by 18% (the sales for January to June 2014 was 54568 units while from July to December 2014 was 44424 units), the sales for the top 10 developers has seen a marginal decline of only 1.4%, lending further credence to the fact the customers prefer reputed developers with a consistent track record. The numbers therefore clearly indicate that the market is rewarding the more reputed developers who have a track record. It seems the home buyers prefer investing in projects by these developers. While reasons for this are not covered by this survey, one can assume that challenging times lead consumers to veer towards safety. This is also evident from the fact that the early stage projects – those with the longest time to delivery are seeing slower sales than before.”
Though the macro findings paint a rather grim picture of the so- called isolated Pune real estate market, it is interesting to note that the stress has not been felt across the spectrum. Further comprehensive analysis of the Top 10 developers(1) in the residential real estate market reveals that these players have received continued support from customers and have managed to brave the headwinds.
Key comparative highlights are as follows:
- The Top 10 developers(1) on an average have approximately 10% of the gross stock across the market.
- The Top 10 developers(1) have a market share of 32% in June 2014 and 36% in December 2014 of the premium plus and luxury segment of the overall gross stock
- In terms of unsold stock numbers, it was evident that their unsold inventory was consistently lower across all stages of work,
- In terms of movement, for the overall market, projects in the early stages had sold approximately 35% of the totally inventory while in comparison The Top 10 developers(1) had sold 45% if their inventory.
- In the case of ready properties where the market has a sellout of 81%, the top 10 developers had a sellout of 95.5%.
- While sales for the overall market had declined by 18% from Jun’14 to Dec’14, the sales for The Top 10 developers(1) had a marginal decline of 1.4%
A deeper analysis of the unsold inventory in early stage projects tells the complete story. The unsold inventory in early stage projects has risen from 41.4% in December ’12 to 65.1% in December ’14 (Table 1). While the increase in the unsold stock for the early stage projects is 22.35%, the increase in the overall unsold stock % is 6.07%. Clearly consumers are being far more careful and purchasing projects which are past the early stage of progress. The findings on the supply and overall stock indicate that the rates at which projects are being launched are much slower than the rate of completion of existing projects.
Mr. Gera further added that “The overall real estate market has been sluggish and in spite of this the state government has increased the ready reckoner rates for calculation of stamp duty and added a further burden on the home buyers. There has already been a drastic reduction in the development charges and premiums collected by the Pune Municipal Corporation on account of the sluggish market. Further pressurizing the industry will only slow things down further leading to lower revenues rather than enhanced revenues which is the objective of the new government. We hope that the union budget being presented in February will address some of the concerns that afflict the industry. The real estate sector, with its backward linkages to the manufacturing as well as service sectors and also the skilled employment sector has the potential to boost the GDP however, home buyers need to see reason to convert their need to demand.”
On an overall macro level the key highlights of the Pune residential real estate market were as follows:
- On an average, the rate across all the micro markets* in Pune was Rs 5061 per/sft in December, 2014.
- Amongst the Top 20 micro markets(2) Wagholi, Bhosari, Pradhikaran and neighboring areas witnessed maximum infusion of new supply which was followed by Dehu and Alandi
- In terms of new supply the top 5 micro-markets were all in the non- PMC area. This is indicative of the growing fringe areas of the city and city limits.
- A category wise scrutiny reveals that towards the upper end of the pricing spectrum the unsold stock percentage increases. That being said there was a net reduction in the unsold inventory in the premium plus and luxury segments whereas the budget and value segments witnessed a net increase in their unsold inventory.
In conclusion, the reduction in the base interest rates of 25 basis points while positive will not do much to move the overall market.
While the stock market has already responded to the new government and the changes that are taking place, the real estate market has been far more circumspect. This is probably because the speculators and short term investors have moved out of the real estate sector over the past few years. The genuine home buyers have seen difficult times with high interest rates as well as high inflation and low salary increases and this effect has led to home buyers taking a far more cautious approach this time around.
Consumers are taking a more wait and watch approach and are waiting for more money in their hands so that they can afford to buy their dream home. In the immediate term, the real estate industry along with the rest of the country has its hopes resting on the budget being unveiled in February.
(1) Top 10 Developers as announced by Bloomberg TV India with JLL in the last quarter of 2014
Sr.No
|
Developer Name
|
1
|
Amit Enterprises
|
2
|
Gera Developments Pvt Ltd
|
3
|
Goel Ganga
|
4
|
Kolte Patil
|
5
|
Kumar Properties
|
6
|
Marvel Realtors
|
7
|
Panchshil
|
8
|
Paranjape Schemes
|
9
|
Pride Purple
|
10
|
Sukhwani Associates
|
* The city was divided into 6 zones each consisting of numerous neighborhoods / micro-markets – Reference real estate report
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