Thursday, April 10, 2008

Residental property prices to go up in Pune

Pune-based real estate developers have decided to increase the per-square-foot charge for residential construction between Rs 50 and Rs 400 from April 20 due to the increasing cost of construction and heavy taxation by Pune Municipal Corporation (PMC). This was announced today by Lalitkumar Jain, president, Promoters and Builders Association of Pune (PBAP).

Pune, over the last two years, has experienced a boom in the real estate industry. However, availability of land has remained a problem as the new Development Plan (DP) for Pune has not been sanctioned and executed for quite some time.

The city saw construction of 60 lakh sq.ft commercial space for the information technology (IT) industry last year, which has generated employment for more than 60,000 people. There has also been extensive recruitment in industrial areas like Ranjangaon, Pirangut, Chakan and Talegaon - an addition of close to 25,000 new jobs. The services and retail sector has recruited more than 25,000 new employees last year.

While more than one lakh new jobs were added in the city, the builders have developed only 35,000 new flats in and around Pune. "There is a huge demand-supply gap, which has led to the sudden price rise over the last two years. In addition, steel prices have gone up from Rs 32,000 per tonne to Rs 52,000 per tonne while the cement prices have been increasing consistently. PMC, too, has increased the development and premium charges for residential projects from 200% to 400%. All this has led to heavy cost escalation for Pune-based builders," Jain added.

PBAP, which represents more than 80% of Pune's real estate developers, has prepared a report that explains the possible ways to tackle the price hike. The report has requested the central government to take cost cutting measures for cement and steel prices.

Jain said: "There is resentment among middle class households over increasing real estate prices. The industry cannot sustain such a situation where costs are not coming down. If housing becomes more costly, nobody will buy a flat in Pune and the industry may come to a halt in the near future."


Anonymous said...

Buyers can not afford even current rates. So any further hikes will not be bothering them as anyway housing is out of their acpacity now.

Let greed itself take down all builders to bottom.

Anonymous said...

Good blog. Keep up the god work

Anonymous said...

A 3 bed apt in CLOVER HIGHLANDS at NIBM costs Rs90lakhs to purchase. The same is avail for rent at Rs25000/mnth.

The sale price is salvating greed froth created by builders and estate agents.

The rental price is the REALISTIC affordable price for the property. Considering that rentals should accrue a 6% profit. The Rs 25000/mnth rent means that the mortgage on the property shouldn't be more than Rs23000/mnth or at 10% interest rate the flat shouldn't cost more than Rs20 Lakhs.

I know the figure of Rs20lakhs sounds absurd but then look at how many apts are laying vacant in PUNE.

Anonymous said...

Very right.

What is not coming into news is deals have started to happen in Pune at reasonable rates where both buyer and seller are aware of actual market conditions. The rates were 1900~2200 in Kothrud, 1600~1800 in Aundh Annexe, 2000 in Baner etc.