4 Factors Now Define Pune Real Estate..!

Pune Real Estate: 
Changing Demographics, 
Steady Demand...!

by Mr. Kishor Pate, CMD - Amit Enterprises Housing Ltd.

Pensioner's Paradise

We already know that Pune is no longer just a 1. Pensioner's Paradise (though it still is the #1 city of choice for retiring people in Maharashtra). 

At least three other factors now define Pune - 

2. The growth of the Information Technology (IT) , 

3. The massive spread of organized retail and 

4. The Pune city's changing demographics.

The last factor has had a significant impact on the demand for real estate in Pune, both in terms of sizes and types of houses. 

Services industry

Mr.Kishor Pate,
 Amit Enterprises Housing 

Until the late 1980s, residential real estate demand in Pune was driven largely by people who were working in a rather laid-back services industry. The modus operandi for home purchase in those years predominantly revolved around saving up a sizeable financial corpus and purchasing whatever home was affordable in that budget, preferably with little or no leverage.

Pay scales were moderate to low, and a comparison with the far more favourable pay scales prevalent in Mumbai was inevitable. As a result, there was a more or less constant flight of talent and capital from Pune to Mumbai. 

International employment opportunities

At the same time, lack of international employment opportunities prevented Pune's qualified youth from exploring their fortunes abroad.

As a result, the Pune city's residential real estate market catered to a very basic level of requirements. There was little incentive for developers to be adventurous in unit sizes, specifications & locations. 

Property rates - and therefore property investment potential - remained low as the city awaited new market triggers.

Then, in 1990, Pune began to emerge as a destination for Information Technology companies. 

At first, this was limited to Business process outsourcings (BPOs) who sought to capitalize on Pune's considerable English-speaking manpower and its low property rates. Nevertheless, the economic impact was visible almost immediately. 

Young people who, in the previously existing scenario, would not have reached any kind of impressive earning capacity before their mid-thirties began earning hitherto unheard-of salaries at the ages of 20-24.

Ready availability of home loans..!

This, coupled with the traditional desire for home ownership and ready availability of housing loans, had a 360-degree effect on the requirement for homes in Pune. 

It also had an impact in terms of locations. IT / ITES companies prefer to set up shop in the less expensive outskirts of a city, and people who work in these industries prefer to live close to their workplaces. With the emergence of Hinjewadi, areas around it suddenly sprang into sharp focus and demand for more central areas began slowing down.

The effect of the It revolution on Pune's real estate market has indeed been tremendous. Today, Pune's developers are catering to an entirely different set of demographics than they did 15 to 20 years ago. The onus is now large flats with ultra-modern amenities, and on locations which offer fast access to the city's IT hubs. Simultaneously, the MIDC in Pimpri-Chinchwad is boosting demand for homes in its vicinity, driven by well-paid employees from those industries.

Property investment

Today, the annual demand for houses in Pune is close to 46,000 flats, where it was less than 20,000 flats per annum just 15 to 20 years ago. 

While Mumbai is staggering under the weight of unsold units all across the city, supply % absorption of houses in Pune continues to make both property development and property investment eminently viable.

 Even in such a vibrant market environment, Pune's property rates remain relatively rational....home ownership in this city is a dream which can be translated into reality.

Despite their proximity to each other, Mumbai and Pune are two very different markets. 

Mumbai's legendary space crunch has made residential property there exorbitantly costly, driving more and more aspiring middle-income home buyers to the outer fringes. 

Meanwhile, Mumbai continues to grapple with its notorious infrastructure deadlock. Prices in most areas of Mumbai have stagnated and there is considerable pressure from the market to bring them down. If Mumbai does see a correction in prices - which is very likely in the near future - its residential real estate market will pick up pace again.

Pune residential realty markets

On the other hand, Pune's residential property market has maintained its momentum even in a challenging economic environment. Various research agencies have confirmed that Pune has prevailed as one of the best-performing residential real estate markets over the past two years. 

Residential sales have remained healthy enough to sustain the viability of the city's real estate market, encouraging Pune's developers continue to launch fresh residential projects in all budget categories - affordable housing, mid-income housing and even in the super-luxury category.

About the author..

Mr. Kishor Pate is CMD at Amit Enterprises Housing Ltd, Pune

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