Pune’s real estate market over the past few years has been witnessing a steady slowdown. The market, which normally sees absorption of around 20,000-22,000 units every six months, has been witnessing absorption of lesser than 15,000 units on a half-yearly basis. While realtors blame the wait-and-watch policy of buyers and the global slowdown for the trend, buyers on the other hand blame artificial inflation in the market for deferring their investments. .
Most new launches are concentrated in the newly developed and fringe areas of the city such as Yavat, Pirangut, Susgaon, Lavale, Moshi, Chakan, Hinjewadi and Dehu Road. Announcement of the Pune Metropolitan Regional Development Authority (PMRDA) had propelled the same, but when it comes to absorption of the projects, the figures paint a sorry picture.
One of the major reasons for the unsold inventory and subsequent stress in the market, is the government’s failure to provide proper infrastructure in the developing areas. “While real estate growth has indeed occurred in fringe areas, basic infrastructure like roads and public transport have failed to keep up. Their absence has made the areas unlivable and the buyer will not get the benefit of price.
Many buyers are holding on as they hope that prices will go down once the government announces increased Floor Space Index (FSI) in the fringe areas. Lack of clarity in the matter is a serious hindrance to the market.
Rise in unsold inventory is a combination of both global and local issues, that while the downturn of the global economy is responsible for many buyers holding back, closer home, the mushrooming of realtors and market complexities are responsible for the apparent rise in unsold inventory. Anyone with access of land ventures into the real estate industry and try to juggle their activities through the booking amount. But such operators are not able to sustain their activities for long, giving rise to unsold inventory in the trade, most unsold inventory are from under-construction sites which are in financial difficulty.
