It’s less than a month since the demonetization of 500 and 1000 rupee notes were announced. Real estate markets across India are feeling the pain and Pune's story is no different. Considered as the second largest city in Maharashtra after Mumbai, Pune has bloomed into an IT and education hub. The large end-user demand for homes in the city comes from the young working population it attracts from around the country.
Not behaving any differently from its counterparts, Pune property market too has been derailed due to demonetisation. Homebuyers are anticipating price correction and have put their home-buying plans on hold. And developers and brokers are feeling the heat in the pleasant 28 degree celsius.
“Since demonetization, I have seen that at least 5-10% deals have got cancelled. The number of enquiries and the foot falls has also dropped by 30%. People are hoping that the banks will bring down the interest rates and hence are not in a hurry to buy homes”, says Ravi Sharma, President, Realtors Estate Association, Pune.
But realtors and developers in Pune rule out the possibility of any price correction.
“This entire hype created by the media about price correction is prompting people to hold back their purchases. In last one year prices in Pune have already come down by 2.2%. Unlike Mumbai, the ready reckoner rates in Pune are almost in sync with the market prices. In fact, in some areas ready reckoner rates are higher than the market value of the property”, says Rohit Gera, Managing Director, Gera Developers.
While that may be true, the resale market in Pune which is dependent on the cash component is set to be hit.
“It is evident that the resale residential market has slowed down and that even in the primary sales segment, projects by smaller developers on the outskirts have been affected. By and large, all such builders who have in the past based their business model on cash components have taken a hit. Sales by well-established developers who have for long been dealing on via transparent official transaction channels are not going to see any impact, though the temporary slowdown in sentiment will obviously affect the whole market”, says Sanjay Bajaj, Managing Director – Pune, JLL India
Experts also believe that there might be a price correction soon in the resale market. But across the board, there seems to be a consensus that primary market prices may not come down. In fact, many realtors believe that the Goods and Services Tax (GST), once implemented, might actually lead to the increase in the property prices.
Interestingly, demonetization hasn't deterred some developers like Paranjpe Schemes and Godrej Properties from launching new projects. While others are offering innovative payment options in a desperate move to gain back buyers. These are the signs of Pune's real estate market desire to stay buoyant even during this rough phase.
Edited by Neetika Bajaj, Assistant Editor, NDTV