Possible Market Slowdown in Pune

On one hand, Pune is emerging as a parallel real estate market to Mumbai due to various supporting factors while on the other hand, the city may be showing signs of a possible slowdown. Many new projects have been shelved which indicate a possible slowdown in the market. Decline in project clearances and a decrease in demand due to rising inflation are other indicators of a possible stagnation.

Indications of slowdown

There are several factors affecting the real estate market in Pune in a negative way. To start with, inflation is a major factor affecting consumer sentiments. Inflation coupled with government apathy has led to increase in property prices which is eventually passed on to the consumer. Real estate players claimed that various policies and regulations in 2013 put additional burden on builders and customers.

This also means that, similar to Mumbai, the question of affordability has slowly started creeping into customers’ minds. Although there were new launches in Pune last year, builders had to tweak their strategy in accordance with the slow market. Overall sales during the festival season too was lesser than expected.

Apart from customers, builders too faced the brunt of the slow economy. In order to combat cost escalation, several builders took up part completion of projects and stopped extending it. Hence, projects projects with multiple phases were divided into sub-phases and these sub-phases were completed.

Another factor indicating a possible slowdown is the number of projects being cleared. The rate at which projects are cleared by the Pune Municipal Corporation’s (PMC) building permission department fell by about 12%.

Positive trends

Despite this grim reality, certain positive trends were also noticed. The Pimpri-Chinchwad Municipal Corporation (PCMC) had acted tough last year against builders in regards to illegal building construction. This forced builders to be more meticulous in planning their projects, especially those who had been setting up illegal constructions till now. This was partially responsible for the delays in submission of projects for clearances. While the delays indicate a slowdown, people can look forward to more meticulously-built housing units.