Pune | July , 2024: Gera Developments Private Limited (GDPL), pioneers in Real Estate business, and award-winning creators of premium residential and commercial projects in Pune, Goa, and Bengaluru, released the July 2024 edition of their bi-annual report titled, “The 13th Gera Pune Residential Realty Report”. It is based on primary and proprietary research conducted by GDPL, and covers all existing projects in a 30-km radius of the city centre. The report is an outcome of over a decade of research, and is the longest-running, census-based study of the residential markets of Pune.

According to the latest edition of the report, for the period of Jan to June 2024, the rise in home prices has impacted affordability, but is driving buyers to more reputed developers. The fall in Sales Volume, combined with the rise in Inventory Overhang has put a slight pressure on sales momentum, indicating the need for a balanced approach towards the marketplace.

Between June 2023 and June 2024, the number of under-construction projects in Pune rose, as did the average project size over the past decade. Projects under development show significant increase of 9.61% after a 10-year low in June 2023. As of Jun 2024, there are 3,12,748 apartments under development across the Pune region. This is an increase of 2.65% over Jun 2023, when the apartments under development amounted to 3,04,688 units. The average size of projects has increased by 44% – from 89 apartments per project, up to 128 apartments per project, over the decade between Jun 2014 to Jun 2024.The data also points towards the continuing trend of preference for larger homes, with developers launching homes sized at an average of 1,238 sq ft.

Speaking on the findings of The 13th Gera Pune Residential Realty Report July 2024 edition, and the latest trends in Pune’s residential real estate market, Mr. Rohit Gera, Managing Director, Gera Developments Private Limited, said, “While the real estate market continues to show performance, the increase in prices of homes by 8.92%, coupled with the increase in home sizes driven by 1,400+ sq ft homes, is starting to affect customer affordability. Affordability has gone down to 3.98x annual income while 5 years ago affordability was 3.79x annual income in Jun 2020. Clearly, we are seeing pressure on affordability though it’s nowhere close to the peak of 5.30 and continues to remain good at present. This shows up in the sales volume having come down by 3.6% compared to the last 12 months. The replacement ratio of 1.05 indicates that the quantum of new supply is greater by 5% compared to sales.”

Mr. Gera further added, “On the other hand, the preference for near-ready and ready inventory is a sign that the market is leaning towards a low-risk delivery – a characteristic of developers with a strong brand, also driving the capacity of reputable developers to launch large projects. This reiterates the continued trend of market consolidation. The increase in inventory overhang years from 8.7 months from Jun 2023 to 9.7 months in Jun 2024 indicates a little pressure on overall sales momentum throwing caution to the wind.”

Here are the key highlights of The 13th Gera Pune Residential Realty Report, encompassing trends from Jan 2024 to June 2024:

#1: Projects under development surged by 9.61% since June 2023; Inventory Value now at Rs 61,849Cr.

The number of under-construction projects has surged by 9.61%, from 2,227 in June 2023 to 2,441 in June 2024. The increased inventory and prices have pushed the value of unsold inventory to Rs 61,849Cr as of Jun 2024 from 49,423Cr in Jun 2023. As of June 2024, 3,12,748 apartments are being developed across the Pune region, marking a 2.65% increase from 304,688 units in June 2023. Despite a 4.56% decrease from the peak, the total number of projects has dropped 35% from 3,733 in June 2017 to 2,441 in June 2024.

The total Inventory Value available for sale has increased significantly by 25%, from Rs 49,423 crore in June 2023 to Rs 61,849 crore in June 2024.

#2: Inventory Available for Sale increases by 7.3% to 75,598 units; highest growth in prices of homes in new projects
In June 2014, Near-ready- and Ready-stage inventory constituted 23% of 66,683 units of total inventory for sale. By June 2024, this has dropped to a 10-year low of 4.5% of 75,598 units, in the wake of the Ready-stage inventory at 2,384 units, down from 7,498 units in June 2014.

In contrast, Early-stage inventory is at a 5-year high of 25,016 units, up from 19,116 units in June 2019, reflecting a consumer preference for lower delivery risk. Ready inventory dropped 74% from a peak of 9,005 homes in June 2018 to 2,384 in June 2024, and Near-ready-stage inventory declined from 3,691 homes to 1,000 homes.

#3: Highest growth in prices of homes in new projects; homebuyers attracted most to PremiumPlus segment

The average prices of homes across the city have risen by 8.92% in the last 12 months, driven by new projects, where prices have risen by as much as 15.39%. This takes the increase in rates to 19.95% over the past 24 months, and 28.06% over the past 36 months. Since bottoming out in 2019, prices have grown at a CAGR of 7.9%, reaching Rs 6,298 per sq ft in June 2024 from Rs 4,644 per sq ft in June 2020.

New projects have seen the highest price growth, increasing at a CAGR of 8.3% from Rs 5,460 per sq ft in June 2020 to Rs 7,499 per sq ft in June 2024. Existing projects and new phases are also catching up, with respective CAGRs of 7.2% and 6.91%.

Segment-wise, the PremiumPlus segment experienced the highest price rise at a CAGR of 7.58%, with prices growing from Rs 6,205 per sq ft in June 2020 to Rs 8,310 per sq ft in June 2024. At 33% cheaper than the Luxury segment, but being almost as aspirational, this segment holds the most appeal with buyers as it offers value for money.

#4: Yearly new launches increase by 5.8%; PCMC accounts for 42% of all new launches in Pune
New home launches rose by 5.8% over the past 12 months, totaling 99,166 units. The maximum quantum of new launches has been in the Budget segment (priced at Rs 5,081 per sq ft or lower), where launches have seen a significant increase of 16.2%.

Zone-wise, the maximum increase is seen in Zone 3 (Sinhagad Road, Ambegaon, Narhe, Dhayari), where new launches have increased by 27%, closely followed by Zone 1 (East Pune – Kharadi and Wagholi), where launches have increased by 25%. PCMC (Zone 6) now accounts for 42% of all new launches in Pune followed by Zone 4 (West Zone – Balewadi, Baner, Hinjewadi etc) which accounts for 21%.

#5: Units sized 1,000+ sq ft witness a 12% sales growth

In the past 12 months, Sales Velocity dropped by 3.6%, driven by a 19% decline in units sized 1,000 sq ft and below. Conversely, units over 1,000 sq ft saw a 12% increase in sales, from 48,796 to 54,634 units, even as the share of three bedrooms accounted for 27% in the overall new units launched, showing a preference for larger homes. The 1,401+ sq ft segment grew by 37%, now making up 21% of all sales. The 801-1,200 sq ft range accounts for 52% of sales. Home sizes of units launched in new projects continue to expand with the current average of 1,238 sq ft with a carpet area of 917 sq ft.

#6: Consumer preference for bigger developers with a strong brand continues

The trend of large projects (>500 units) continues with currently 189 projects accounting for 13% of the 3,12,748 units under various stages of construction. This number has improved substantially over time – in Jun 2018, they used to account for only 8%. Small projects (100 units or fewer) fell by 44%, from 2,433 in June 2018 to 1,362 in June 2024.

This shift highlights consumer preference for reputable developers, boosting large project demand. Projects selling over 500 units rose from 1, eight years ago to 11 this past year.

To conclude, sales volume has also come down by 3.6% compared to the last 12 months. While the Replacement Ratio stands at 1.05—indicating the quantum of new supply being greater by 5% compared to sales—the Inventory Overhang has improved significantly in the PremiumPlus (from 16.26 months in 2018 to 7.23 months in 2024) and Luxury segments (from 20.59 months in 2018 to 10.22 months in 2024).

Prices continue their stellar runup in the last 12 months impacting affordability to go down to 3.98x annual income. Although the pressure on affordability is nowhere close to the peak of 5.30, homes continue to remain accessible to most buyers.