Wednesday, October 11, 2017

Slowdown in Pune real estate market to continue

According to Cushman & Wakefield, Knight Frank & Gera Research Reports:

Demonetisation, Real Estate Regulatory Act and GST combined has had a telling effect on new property launches in the city.

As per a study by Cushman & Wakefield (C&W), real estate services firm, Pune saw a decline of 28% in property launches in the affordable segment (definition of which has changed).

Overall, the city has witnessed a dip of 41% in new launches.(see box)

This the third such report that points to a slowdown in new property launches.

In July , a study by property consultancy firm Knight Frank had shown a year-over-year decline of 9% in new home launches in the first half of 2017 and a sequential fall of 30%.

Later, home developer Gera's research report pointed to a similar trend in its half-yearly survey.

The report had shown that new unit launches fell by 26% in the period between January and June 2017 over the same period the previous year.

The agency - Cushman & Wakefield - also predicted that the scepticism to launch new projects will continue for some more time.

Click here to read more

Related Stories:

1) Flat buyers will now be covered in case builder goes `bankrupt'

2) Some builders in Pune haven't gone out of business yet

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  1. All this slowdown is builder inflicted only - jacked up rates, poor infra, delayed or no possession, non adherence to Govt norms, manipulation of FSI/TDR which leads to non-approval of OC etc.
    No matter how many exhibitions builders held with ToI, Sakal etc. they simply can't stop the crash in real estate.
    Some latest news which state the same what has been mentioned in this blog.

    Housing sales fall 35% in 8 cities; supply dips 83% -

    These eight cities are Gurgaon, Noida, Mumbai, Kolkata, Pune, Hyderabad, Bengaluru and Chennai.

    Housing demand unlikely to revive in the next 12-18 months: Report

    Residential sales in the top 10 cities – Ahmedabad, Bengaluru, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, MMR, NCR and Pune – have declined at a compound annual growth rate of 8 per cent since 2011 and the trend appears set to last well into fiscal 2019 or beyond, portending more pain for developers, it says.

    A crisis is building up in India’s real estate sector -

    The great Indian construction slowdown -
    The stalling rates in real estate projects is hovering near a nine-year high

    India’s construction sector appears to be facing its worst slowdown since 2008.
    For three consecutive quarters, the stalling rate in the realty sector has been in double digits, with the total value of stalled realty projects touching Rs1.27 trillion in the September quarter.

    All these news indicates that it''s best not to buy property now, wait for prices to crash & then buy ready possession flat with OC with less loan as more down-payment can be arranged by being on rent & investing the balance amount.
    Builders abandoning the projects is only increasing every passing day. Most critical thing would be builders himself going absconding leaving buyers in lurch like the recent cases in Mumbai.

    Btw, Ravi several projects in Pune are not registered with RERA. Any idea why builders still haven't registered their projects ?

    1. What is your opinion about buying resale flat?

    2. Who can afford 70-80k EMI for 20 years....
      No one....

    3. Resale is good option as long as entire project is legally clear, the age of building is less than 7 years (<5 is ideal), has good infra, the construction quality is good & the prevailing annual rents in that same building should be atleast 6.5-7% of the flat price which is being offered.

      Apart from this, you need to observe things like no dues certificate from bank, & ensure that the flat is not mortgaged to some 3rd party lender for loan taken for something else (not flat EMI).

  2. IMO the way Indian RE works there will be no correction in the market.
    Max 5% in the existing launced projects. Resale does not correct as the people who bought flat are not in diaterssed situation and can hold and they will hold since their current returns <4%. New launches will launch at lower rates -15% lower but this will be still beyond reach of the common salaried class. And the slowdown to continue for prolonged period.

    1. 27% price fall has already happened Sandy & this will only continue.
      Now as you said Indian RE, let me give you major price fall example in tier 3 cities which some say remain safe. In Nagpur, one of the most sought after location is Shivajinagar. The prices here have crashed from it's peak of 11k psf to 5k psf.

      And if you want to see the situation in Pune, the prices of flats at Blue Ridge, Hinjewadi can be compared with that of last year. Infact, all major locations around IT hubs has taken a big beating.
      Same is the case with areas like Whitefield in Bangalore.

      Btw, did you observe one thing - builder ads were almost absent even during this Diwali week !!

    2. With due respect, please share the details of some projects where prices have gone down..... Please note that it is not to challenge your observation or experience........only reason is that I am desperately looking for a 3 BHK and your experience will
      be helpful.....

    3. Vikas, I believe you buy home for living in it. As you are desperate to buy 3BHK, I think you are want to buy the flat to utilize it rather than invest in it.
      This is the main reason. If you "need" it, buy it where you see fit. If you "want" it, then be careful and then your question is valid.

    4. Thanks for your insights sir.. Definitely I need a 3BHK but I don't want to take decision in a hurry. I was hopeful that prices will go down after demonetization...that why i have been waiting very patiently.....but still there are no downward i thought of taking help from someone like "TheMonk" as his observations are always up to the mark....if i still have to pay more than 1 Crore for a carpet area of less than 1100 sq feet and that too after 1 yrs of demonetization, i would love to stay on rent for my lifetime...........

    5. 1C for 1100 i.e. approx. 10k per square ft! Sure that is expensive.
      I would see the solution rather different way. "Earn - Save - Invest" and get out of the rat race. Is it worth to take a loan and get enslaved 10-30 years at the work place or spend less than EMI on rent and get free from the work in your early 40s.... Later u can decide to buy home at your convenience with upfront cheque (i.e. without loan) with "take it or leave it" attitude towards the seller in terms of negotiation.
      Don't get trapped by peer pressure.

    6. Very true sir.....But i already have had several meeting with different builders with upfront cheque (i.e. without loan) with the very same attitude of "take it or leave it" but i never got a call back.....seems like builders have already earned hell lot of profits....that's why they are not ready to negotiate........ lets see how it goes...... and yes i am not going to get trapped by peer pressure as you have advised. Thanks for your lovely advice......cheers.....

    7. Ha ha.. exactly and our govt is still trying to bring black money from Switzerland. The black money is actually in the 'builderland', that is why they can sit on the inventory, even if the market is down.
      Anyway, my good wishes to your apartment buying process.

  3. Builders has raised property rates too high to grow their own brand. falls info. given to customers of booked flats in actual no such bookings made at their end.redevelopment projects rates are unnecessarily increased seems previous owners all expenditure is taken by new buyers.

    1. Several flat buyers in redevelopment projects have gone to court as builders have abandoned the project & neither is paying them the rent as per agreement. One such builder against whom multiple such cases have been filed is Kumar/KUL.