During 2013, the investment potential for residential properties in the financial capital of Mumbai remained largely flat and unexciting. Most serious property investors in Mumbai who chose residential property are now content to exit with moderate profits. Pune, on the other hand, showed an almost uniform appreciation of 14-16% in property prices. Vacancy levels in Pune stand at between 20-22%, while in Mumbai they are close to 35%. As a result, investors are staying invested.
One question being asked by investors interested in Pune real estate is whether they should prefer mid-income or luxury housing. To be sure, Pune has a number of options in both segments. Mid-income apartments are definitely the faster-moving product on the market. However, luxury housing in Pune has been getting a lot of exposure of late, mainly because it is a much more vibrant segment in this city than in Mumbai.
It has been argued that Pune has seen far too many luxury projects being launched in the last two to three years. However, the fact is that these projects are not aimed primarily at property investors but at NRI and HNI buyers who are purchasing such homes for personal use. Property investors focused on Pune have always been more interested in acquiring mid-range flats which they can dispose of faster. This is a limited perspective, usually brought on my budget constraints.
There is, in fact, a very high demand for luxury property in Pune from self-use buyers, which is why developers continue to see sense in launching premium housing. It must be remembered that as long as there is demand, supply will follow. And as long as the demand is from buyers who wish to own such properties for personal use, there is no glut on the market – these units will not be put up for sale again for a very long time.
For this reason, investment in luxury property in Pune does make sense for long-term investors. These are premium offerings in locations which will eventually not be able to accommodate further development. However, it is a play which requires high investment power and the ability to hold on to the property for at least five to seven years. After such a period, the real estate development potential of a location which is popular today will be almost exhausted and demand will begin peaking.
There is no doubt that demand for luxury housing in Pune is very sustainable. An increasing number of multinational companies are recognizing Pune’s unique advantages in terms of trained manpower, cheaper real estate costs and reduced logistical hassles. The result is that more and more high-paying jobs are being created every year, which leads to a steady demand for high-end homes. At the same time, more and more NRIs from Pune who have completed their high-paying tenures abroad are returning every year.
Obviously, luxury homes in key areas such as Aundh, Baner, Sahakarnagar, Model Colony, Aundh, Koregaon Park, Kalyaninagar and Viman Nagar will become increasingly valuable over time. But within a span of five to seven years, even newer areas will have been made valuable because of increased infrastructure and accelerated saturation. Investing in a luxury property in such an area today can pay off handsomely over the long term.