The Statistics Behind Pune's Real Estate Market

The Statistics Behind Pune’s Real Estate Market

Kishor Pate, CMD – Amit Enterprises Housing Ltd.

Like any other city’s Pune’s real estate development pattern is driven by its demand profile. The demand profile is defined by the type of buyers who are on the market for buying real estate. Residential real estate demand in Pune is driven by two broad categories of buyers, namely end users and investors.

Approximately 25% of buyers in Pune are pure investors, meaning that they purchase properties solely for the purpose of benefiting from rental income and capital appreciation. Speculation, which is the opportunistic buying and selling of real estate in short periods of time, is actively discouraged by Pune’s developer community. Long-term investors tend to stay invested for at least 5-6 years. The remaining 75% of buyers are the end users who purchase homes for their personal use.

If we take a cumulative look at the geographic origins of both end users and investors, it turns out that 60% originate from Pune itself, while as much as 30% are from neighbouring Mumbai. Pune is a very attractive market for property buyers from Mumbai, both as investments and for personal use, as this city presents a very attractive counterpoint to the very expensive Mumbai real estate market.

The reason for this high interest from Mumbai is that real estate investments in Pune show a much better growth than what is seen in the financial capital, and many Mumbaikars are also intent on relocating to Pune. The remaining 10% of buyers for Pune real estate is comprised of NRIs living abroad who invest in Pune properties either for the use of their families, their own eventual self-use upon return to India or as investments.

Apart from the demand pattern, developers who are catering to the demand for homes in Pune also take their cue from the city’s economic profile. If we look at Pune’ economic profile as it stands today, the city can be roughly stratified into the primary, secondary and tertiary sectors.

The primary sector, which is comprised of agriculture, or income generation based solely on agricultural land ownership, and other forms of base goods supply such as mining, accounts for only about 5%. This segment does not influence Pune’s real estate development pattern significantly, except in terms of low-cost housing in the rural and semi-urban areas.

The secondary sector, encompassing manufacturing industries such as automobiles, electronics  and machine tools, accounts for about 40% of Pune’s economic activity. This sector is very influential on Pune’s real estate market, as it gives rise to the bulk of demand for mid-range homes priced between Rs. 30-40 lakh. The MIDC belt in the Pimpri-Chinchwad Municipal Corporation is the predominant influence zone for such housing.

The tertiary or services sector, which includes but is not limited to IT/ITeS, BPO, KPO, banking and retail services, accounts for roughly 55%. The services sector, particularly the IT/ITeS segment, drives the demand for homes in the more developed urban areas. These homes tend to be in the price bracket of Rs. 50 lakh to 1.5 crore, and around 65% of the housing projects in Pune are currently aimed at this sector. The resultant projects see a balanced demand from both end users and investors.