Amit Enterprises Housing
Given the current market dynamics, ready-to-occupy flats are certainly desirable choice for the risk-averse, as well as for those in a hurry. However, ‘desirable’ does not necessarily equal ‘feasible’, since such flats are quite expensive in our metros.
In cities like Mumbai, Delhi and Bangalore, ready-to-occupy flats are certainly not options for everyone. On the other hand, more rational markets like Pune are seeing quite a lot of absorption of ready-to-move-in flats because the prices of even such flats are still within one’s budget.
Currently, the demand in Pune is more or less equally balanced between under-construction and ready-for-possession flats. That said, we are definitely seeing a noticeable predisposition for fully-constructed budget flats in the less expensive areas as well as for luxury homes in lifestyle housing locations such as Sahakarnagar, Koregaon Park, Viman Nagar and Aundh.
Under-construction flats are preferred by mid-income home buyers as they are more cost effective. Buyers on a tight budget tend to favour these options for the economic advantage, even if they have to stay in rented housing for the duration.
Buyers focused on under-construction flats in Pune are aware of the fact that rates increase as a project nears completion. Those who can wait for a while definitely avail of the early-mover advantage by booking under-construction projects. We must remember that Pune’s residential property market is driven primarily by the middle class, with its implied limitations in spending power.
Investors are also more aligned towards under-construction properties, since the price advantage adds to the overall profit they hope to generate. Investors invariably come into the picture at an early stage of the project cycle, while end users come in at every point in time.
Investors seek to lock in the cheaper purchase price at the under-construction phase of a project, and then benefit from the price advantage of selling a ready-to-move in flat when the project is complete.
One can understand the philosophy behind this strategy if one looks at the price difference between a flight ticket booked months in advance and that of a similar ticket bought on the day of flight. There is no difference in the distance traveled or the quality of services offered – yet the previous option is more cost-effective than the latter.
The demand for ready-to-occupy properties in Pune is driven by the IT/ITES sector and some components of the manufacturing sector. Everyone is under pressure, but the salaries that many people draw in these segments mean that they can afford the luxury of a ready-to-move in flat.
Fundamentally speaking, buyers who can afford ready-for-possession flats do not fall in the category of those who are overly focused on home loan interest rates or similar market dynamics.
Middle-income buyers are not motivated by their need for greater convenience, but by their ability to pay for a home. Seen in this context, the greater demand in Pune will always be towards affordable housing options.
The author is the CMD- Amit Enterprises Housing Ltd.