What makes Pune such an attractive property investment destination, despite the fact that Mumbai – India’s legendary real estate par excellence – is right next door? A few years ago, the reasons for this were not as obvious as they are now. Today, they are – more than ever.
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.
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.
It is true that residential sales have slowed down even in Pune. However, it is also a fact that they have remained healthy enough to sustain the viability of the city’s real estate market. This is why 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.
Thanks to the sustained viability of the Pune property market, it will not see a price correction. The excessive speculative investment activity which caused prices to rise faster than they should have in earlier years has now been curbed. Pune’s developers are now actively discouraging mass purchase of units to speculative investors so that the market retains its rationality.
The investors who remain are operating from sufficiently wide investment horizons. This means that they will hold on to their properties for at least 3-5 years before they will put them on the resale market. In the interim, they are content to earn very satisfactory rental incomes from their properties. Property investment which is conducted in such a manner does not cause the wild price fluctuations and erratic supply patterns that speculative investment does.
Pune is a property investment market that provides options to wide spectrum of investment budgets, as the city has a steady supply of options in all price brackets. Meanwhile, the city’s eminently healthy rate of employment generation – especially from the IT/ITeS, manufacturing and automobile sectors – ensures demand and property purchasing ability.
Even in high-ticket luxury housing, the investment potential in Pune is high and rising. Similar to Mumbai, luxury housing in Pune has its own segment of wealthy buyers as well as its own upper-crust residential locations.
The future supply in these prime locations – which include Sahakarnagar, Prabhat Road, Boat Club Road, Kalyaninagar and Koregaon Park, is extremely restricted due to lack of land parcels. Prices in these elite neighbourhoods will continue to rise as the available stock is absorbed. This will ensure that investment in Pune’s luxury housing segment will continue to be extremely attractive.
(The writer is CMD, Amit Enterprises Housing)