THE GERA PUNE - Gera Developments - Real Estate Builders ... · ROHIT GERA MANAGING DIRECTOR GERA DEVELOPMENTS PRIVATE LIMITED The real estate industry prior to RERA used to be highly

THE GERA

PUNERESIDENTIAL

REALTY REPORTTHE YARDSTICK FOR PUNE REALTY

VOLUME 9 | ISSUE 1 | JUL - DEC 2019

CONTENTS

FOREWORD 4

INVENTORY OVERVIEW 7

NEW LAUNCHES 9

DEMAND AND SUPPLY GAPS 13

CYCLE ANALYSIS 15

PRICES 18

AFFORDABILITY 20

10 SUB MARKETS WITH MAXIMUM PRICE CORRECTION 22

HOME SIZES 23

SALES OVERVIEW 24

INVENTORY OVERHANG 26

INVENTORY VALUE AND SQUARE FEET 27

BREAKUP OF THE MARKET BY JURISDICTION (PMRDA, PMC, PCMC) 30

CONCLUSION 32

ANNEXURES 33

APPENDIX 34

4

The Gera Pune Residential Realty Report | Volume 9 | Issue 1 | Jul - Dec 2019

FOREWORD

ROHIT GERA

MANAGING DIRECTOR

GERA DEVELOPMENTS PRIVATE LIMITED

The real estate industry prior to RERA used to be highly forgiving and flexible.

When it came to rules and approvals, developers did not have any deterrent to

build following the rules, often leading to illegal construction affecting customers

years later. Today development control rules are meticulously studied by customers

with RERA giving transparency to customers, further, courts have come down heavily

on illegal construction by developers. In addition to the development control rules,

other laws governing development including those around the environment are now

essential to follow meticulously.

In the past finance was easily available and rolling over debt, ever-greening of

loans, moving money from one project to the next land parcel were all considered

as standard industry practices for a large number of developers. Today, loan

rollovers are virtually impossible, fiscal discipline is mandatory and RERA ensures

funds cannot be taken out of the project. In case of default, use of construction

finance for other uses is now considered a serious, often criminal offense.

In a buoyant market, the herd mentality around the product led to every developer

imitating the next if the project did well. Today, customers are more discerning, they

will not accept a mediocre product, the wrong product in the wrong location with

the wrong specifications or pricing can cause a project to flop and expensively so.

Successful product launches now are a product of deep understanding about the

market based on customer needs and how much a customer trusts the developer.

5

Intellectual Property Rights Owned by Gera Developments Private Limited | www.gera.in

Customers are no longer willing to buy homes from any developer. Those with

a track record are finally getting rewarded with early stage sales driven by high

demand from customers. The developers who took customers for granted and did

not invest on customer service and product quality have been emphatically relegated

to the sidelines.

As a result of all these changes, many developers are facing an existential threat.

However, in the midst of all this change, there is a positive story that is developing.

Developers who have adapted to the new order are being rewarded by customers

with buoyant sales and price premiums. Finally customers have turned discerning,

punishing those who have taken them for granted while rewarding those who have

been customer focused.

The turn around in the market is visible from the perspective of the increases in new

inventory added. Developer confidence seems to be returning with launches in the

premium, premium plus and luxury segments.

Affordability has also increased substantially at 3.71 times annual income. This is

certainly a strong increase in purchasing power. This is perhaps one of those lucky

periods where customers with purchasing power have access to homes built by

genuine developers with a strong track record and governance standards.

The stressful situation for a large number of developers is real, but it is due to

customers moving en masse to quality developers and has little correlation with

other narratives doing the rounds. What was earlier a commodity market has clearly

transformed into a discerning consumer market in short span of time.

The stress can be explained by looking at the minimum number of projects that

it took to sell 10,000 homes over the last few years. In 2017, it took 40 projects

with the highest sales per project to cumulatively sell 10,000 homes. By 2019, that

number has dropped to 17 projects. This means in 2017, the projects with the

6


highest sales had an average sale of 250 homes in the year, however by 2019,

this average has increased to 588 homes. This trend continues to show up to sales

of 30,000 homes.

Essentially this means while some developers have grown their market share and

taken a larger share of the sales, what is left to sell is divided over more developers,

thereby leaving many developers in a bad shape.

The other impact is that discerning customers with a good credit rating have moved

to these top developers while customers with a weak credit history have no other

choice but to buy from other developers with an equally weak credit rating leading

to a magnified impact. So there is a weeding out not only at the supply end but also

at the demand end.

The sector seems poised at a cross road. We have seen an increase in supply that is

more than the demand. If the union budget brings in any incentives for purchasing

of homes through demand stimulation incentives, the industry could see a big

change for the positive for many more developers. If however this doesn’t happen,

the prolonged stress can lead to many more fatalities along the way leading to

further consolidation of the sector.

ROHIT GERA

7


INVENTORY OVERVIEWProject launches accelerate by ~12% in the last 6 months. Gross inventory at a lifetime high.

FIG. 1 - INVENTORY OVERVIEWFIG.1 - INVENTORY OVERVIEW

Dec ‘12 Dec ‘13 Dec ‘14 Dec ‘15 Dec ‘16 Dec ‘17 Dec ‘18 Dec ‘19

350000

1656

50

2100

94 2404

32

3049

05

Tota

l Res

iden

tial U

nits

3258

43

3056

89

2928

42

300000

250000

200000

150000

1813

2335

2683

33123630

35573525

100000

50000

75.0

5%

4132

9

5533

7 6718

1

1045

65 1044

52

8690

0

7976

0

73.6

6%

72.0

6%

65.7

1%

67.9

4%

71.5

7%

3361

86

3490

8988

773.2

6%

72.7

6%

Sold Stock (% of total stock) No of Projects Total StockInventory for Sale (no of units)

Total inventory is at an all time high, however number of projects at 3490 is still 5%

below peak of 3733 in June 17 – indicates increase in the average size of project.

The inventory for sale has also risen after falling since June ’17 indicating supply

outstripping demand.

The total number of units under development had reached a peak level of 327,670

units in Jun ’17. Since then, on account of a reduction in new project launches,

the total inventory contracted for next 2 years and finally rebounded by ~3% to

301,731 units in Jun ’19 from 292,842 in Dec ’18. In Dec ’19 it grew further by

8


~12% to 336,186 units surpassing the peak in Jun ’17. This suggests that the

market has accelerated in the last six months in terms of construction activity. From

a peak inventory available for sale at 107,402 apartments in Jun ’16 the inventory

available for sale currently stands at 89,887 apartments. Inventory available for

sale grew by ~12% as well over Jun ’19 (when it was 80,062 units). However,

inventory levels are down by 16% to 89,887 units in Dec ‘19 from the Jun ‘16 peak.

Since the implementation of RERA, number of live projects in Pune has reduced from

the peak of 3,733 projects in Jun ’17 to 3,490 in Dec ’19. As of Dec ’19, the total

number of projects on hold (where work has commenced and presently stopped)

has reached 249 (the figure of 3,490 live projects excludes these 249 projects).

These 249 projects consist of 40,023 apartments and based on our prior data,

23,466 apartments are sold. This means approximately ~24,000 families are stuck

with incomplete projects at present.

9


NEW LAUNCHESNew Launches at a 4-year high

At a city level, new launches have increased significantly by 37% (FIG 2). This

indicates optimism amongst the developer community. As highlighted above, there

is an overall increase of 37% in new launches (99,541 apartments launched in the

12 months ended Dec ’19 compared to the 72,503 launched in the 12 months

ended Dec ‘18). Due to this increase, new launches have hit a 48-month-high (it

was at 93,978 units in the 12 months ended 2016).

FIG. 2 - NEW UNITS LAUNCHED (Number of units)FIG. 2 - NEW UNITS LAUNCHED(Number of units)

124000

104000

84000

64000

44000

24000

119175

93978

59595

Jan ‘18 - Dec ’18 Jan ‘19 - Dec ’19Jan ‘17 - Dec ’17Jan ‘16 - Dec ’16Jan ‘15 - Dec ’15

72503

99541

On assessing the new launches of inventory by zone (for definition of zone see Page

34 of report), almost all zones with the exception of Zone 3 has seen an increase in

new supply. The maximum increase is seen in Zone 5 where new supply has dou-

bled in the 12 months ended Dec ’19 (3,258 apartments launched) compared to

12 months ended Dec ’18 (1,625 apartments launched) followed by Zone 6 where

new supply is up by 65% over the same period (30,772 units in 2019 compared to

18,608 units in 2018).

10


Looking at the data of new launches by segment, there is a significant increase

in new inventory launched in the Premium Category (For the definition of various

categories see TABLE 9 in Annexures). New inventory launched in the Premium

category grew by ~140% (from 8,767 units launched in 2018 to 21,011 units

launched in 2019). Launches in the Premium Plus and Luxury segment also witnessed

healthy growth rates of 44.5% and 31.9%. The other significant part is that launches

in the Budget segment declined by ~10%. While maximum inventory launched is

still in the Budget segment (31,324 units in 2019), clearly the demand has migrated

to more aspirational segments like the Value segment which also witnessed a good

growth rate of ~85%. As we shall see later, this finding is corroborated clearly in

demand data collected directly from potential customers who visited the CREDAI

PUNE exhibition in Dec ’19.

TABLE 1 - NEW STOCK ADDED IN ZONES (numbers in units)

Zone Jan ’16-Dec ’16 Jan ’17-Dec ’17 Jan ’18-Dec ’18 Jan ’19-Dec ’19 % change over Dec ‘18

1 12,693 7,581 9,979 11,843 19%

2 15,482 8,206 14,687 16,361 11%

3 16,294 10,965 13,303 12,742 -4%

4 16,615 11,802 14,301 24,565 72%

5 2,689 2,380 1,625 3,258 100%

6 30,205 18,661 18,608 30,772 65%

Overall 93,978 59,595 72,503 99,541 37%

11


FIG. 3 - NEW UNITS LAUNCHED (Number of units)FIG. 3 - NEW UNITS LAUNCHED(Number of units)

120000

100000

80000

60000

40000

20000

Jan ‘18 - Dec ’18 Jan ‘19 - Dec ’19Jan ‘17 - Dec ’17Jan ‘16 - Dec ’16Jan ‘15 - Dec ’15

119175

93978

59595

72503

99541

26970 22072

12379 14988

27638

59032

45889

3018034916

31324

7175 628410504 15177

5100 3328 4391

20898

8767

21011

16970 10597

BudgetValuePremiumPremium PlusLuxury Overall

27632598

3841

The share in new launches has dropped to 31.47% in the budget category (from

48% in 2018) while in the Value it has increased to 28% (from 21% in 2018) and in

the Premium segment it has increased to 21% (from 12% in 2018). In the Premium

plus and Luxury segment, shares remain relatively stable in the last 2 years.

12


FIG. 4 - % SHARE OF NEW UNITS LAUNCHED BY SEGMENT

Jan '15 – Dec '15

Budget Value Premium Premium Plus Luxury

49.53%

22.63%

17.54%

6.02%

4.28%2.94% 4.36% 4.59% 4.41%

6.69% 6.45%

14.49%

15.25%18.06% 17.78%

12.09%

21.11%

23.49% 20.77% 20.67% 27.77%

48.83% 50.64%48.16%

31.47%

60%

50%

40%

30%

20%

10%

Jan '16 – Dec '16 Jan '17 – Dec '17 Jan '18 – Dec '18 Jan '19 – Dec '19

FIG. 4 - % SHARE OF NEW UNITS LAUNCHED BY SEGMENT

FIG. 5 - NEW UNIT LAUNCHES JUL ‘19 - DEC ‘19

(Top 20 Micromarkets with the Fresh Supply Launched)

8000

6000

7000

5000

4000

3000

2000

1000

Deh

u &

Env

irons

Ala

ndi &

Env

irons

Man

jari

Bhos

ari &

Env

irons

Bale

wad

i/M

ahal

unge

Hin

jew

adi

Bhug

aon

& E

nviro

ns

Khar

adi

Sinh

agad

Roa

d &

Env

irons

Am

bega

on

Nar

he

Kanh

e &

Env

irons

Kond

hwa

& E

nviro

ns

Und

ri/M

oham

mad

wad

i

Dha

yari

Wag

holi

Bavd

han

Wak

ad

Dha

nori/

Lohe

gaon

Pim

ple

Saud

agar

& E

nviro

ns

4645

7316

3146

2746

2389

2327

2264

2105

1884

1774

1716

1657

1635

1607

1519

1287

1265

1215

1006

887

FIG. 5 - NEW UNIT LAUNCHES JUL '19- DEC '19(Top 20 Micromarkets with the Fresh Supply Launched)

Please refer to Annexures for the detailed geographical classification.

13


DEMAND AND SUPPLY GAPS2BHK+ segment most undersupplied

As mentioned earlier, we have seen that there has been a significant increase in

new supply in the Premium segment. This is possibly due to migration of demand to

higher bedroom types.

Data comparing demand and supply gap across the last 2 years clearly indicates

where the supply is migrating in response to shifts in demand. In 2018, there was

clearly an oversupply in the 1BHK product segment and a clear undersupply in the

2 BHK segment. The market recognizing this mismatch launched 2 BHK inventory

leading to an oversupply in 2 BHK. The 2 BHK+ segment is now seeing undersupply

where demand is ~27% and supply is ~15%. Demand Data is collected annually

from the CREDAI PUNE exhibition.

14


FIG. 6 - DEMAND SUPPLY GAP (2018) (nos represent % of inventory)

1 BHK 1.5 BHK 2 BHK 2.5 BHK 3 BHK 3.5 BHK 4 BHK


OVERSUPPLY 54.1

6%

48.4

7%

3.72

%

0.98

%6.13

%

1.20

% 7.22

%8.

51%

0.22

%0.

58%

0.55

%1.

04%

Demand Supply

UNDERSUPPLY

50%

60%

40%

30%

20%

10%

28.0

1%

38.2

2%


1 BHK 1.5 BHK 2 BHK 2.5 BHK 3 BHK 3.5 BHK 4 BHK+

60%


50%

40%

30%

20%

10%

20.8

0%

33.2

8%

OVERSUPPLY

46.8

8% 50.7

4%

4.00

%

2.33

%

5.44

%1.

08%

8.48

%

9.62

%

9.76

%0.

60% 4.64

%2.

35%

Demand Supply

OVERSUPPLY

UNDERSUPPLY in the 2BHK+ segment

15


CYCLE ANALYSISAvailability ratio just above Dec ’13 low.

One way to look at the real estate cycle is through the lens of “replacement ratio”.

The replacement ratio is the new supply added divided by the number of apartments

sold. A replacement ratio of 1 indicates that demand and supply are in consonance

i.e. inventory being sold is being replaced by new inventory. When the ratio is more

than 1 – supply is being added faster than sales and when replacement ratio is less

than 1 – sales are faster than inventory addition. The current replacement ratio is 1.17

whereas the replacement ratio hit its peak at 1.455 in Jun ’15. This indicates that

supply is greater than demand i.e more units are being added than being taken out.

FIG. 7 - RELATIONSHIP BETWEEN PRICE & AVAILABILITY RATIO

5200

5100

5400

5300

5500

5000

4900

4800

4700

4600

4500

35%

40%

30%

25%

20%

15%

10%

Dec '13 Jun '14 Dec '14 Jun '15 Dec '15 Jun '16 Dec '16 Jun '17 Dec '17 Jun '18 Dec '18 Jun '19 Dec '19

26.3

4 %

27.0

1 %

4806

4909 5061

5075 5096

4984

4900

47864740

4685

45824555 4530

27.9

4 % 32

.32

%

34.2

9 %

33.2

1 %

32.0

6 %

30.5

2%

28.4

3 %

26.2

9%

27.2

4%

26.5

3%

26.7

4%

Avg Price psf Availability Ratio

FIG. 7 - RELATIONSHIP BETWEEN PRICE & AVAILABILITY RATIO

Availability Ratio rising after bottoming out

Pricecurve flattens

16


FIG. 8 - REPLACEMENT RATIO V/S PRICE

Dec ‘13 Jun ‘14 Dec ‘14 Jun ‘15 Dec ‘15 Jun ‘16 Dec ‘16 Jun ‘17 Dec ‘17 Jun ‘18 Dec ‘18 Jun ‘19 Dec ‘19

5200

5100

5000

4900

4800

4700

4600

4500

1.500

1.400

1.300

1.200

1.100

1.000

0.900

0.800

0.700

0.600

4806

1.0311.101

1.054

1.455

1.230

0.982 1.018

0.869

0.6870.784

0.984 0.952

1.1674909

5061

5075

5096

4984

4900

47864740

4685

45824555 4530

Replacement RatioAvg Price psf

FIG. 8 - REPLACEMENT RATIO V/S PRICE

Market in Consolidation mode – 17 Projects account for 10,000 units sold

The Market is clearly consolidating. In 2019, 17 projects were needed to sell 10,000

units from the total yearly offtake of 94,383 units. In 2017, 40 projects were needed

to sell 10,000 units (2017 yearly offtake was 76,149 units).

TABLE 2 - PROJECTS NEEDED TO SELL

Year 10,000 Units 20,000 Units 30,000 Units

2017 40 142 317

2018 27 107 256

2019 17 59 150

We looked at 20 of the top developers in Pune in terms of brand name and repute.

To ensure consistency and uniform comparison we maintained the same list of

developers over the past 5 years. We then calculated what was their share in the

yearly offtake of Pune. The data clearly indicates that over the past their share in sales

has gotten stronger especially post RERA. These developers have very successfully

managed to take away sales from other developers. Clearly, the reason why most

developers are in bad shape is because they are unable to compete effectively with

these top players. The Pune market consists of 3490 projects of which 2386 (68%)

projects are less than 100 units.

17


FIG. 9 - SHARE IN YEARLY OFFTAKE OF THE TOP 20 DEVELOPERS

Jun '15

13%14%

15%16%

22%

Jun '16 Jun '17 Jun '18 Jun '19

4%

8%

12%

16%

20%

24%

FIG 9. SHARE IN YEARLY OFFTAKE OF THE TOP 20 DEVELOPERS

This trend of large projects being launched is evident if we look at the number of

projects with a size >500 units. This number has doubled since 2014.

FIG. 10 - NUMBER OF PROJECTS ( SIZE >500 UNITS)

20152014

73

91

103

112

123

148

2016 2017 2018 201920

40

60

80

100

120

140

160

FIG 10. NUMBER OF PROJECTS ( SIZE >500 UNITS)

18


PRICESPrices rise in core market (>= 100 units of inventory)

Overall market prices have broadly remained flat over the last 6 months after witnessing

an erosion of ~11% from peak levels seen in Dec ‘15. In Jun ’19 average market price

was ₹4,555 psf which has gone down to ₹4,530 psf (a reduction of 0.54%).

The average Pune market price is at a 6-year low. The average price in Dec ’13 was

₹4,806 psf. However, the overall market was also much smaller in Dec ’13 at 2,335

ongoing projects while in Dec ’19 there are 3,490 ongoing projects.

Looking at the price trend over the last 8 years, the Top 15 markets with the maximum

CAGR in price have been set forth in Table 3. The market that has seen the highest

CAGR is Akurdi & neighborhood at 8.40% followed closely by Erandwane.

FIG. 11 - SIX MONTHLY PRICE MOVEMENTSFIG. 10 - SIX MONTHLY PRICE MOVEMENTS

4500

4000

3500

3300

5000

5500

6%

8%

10%

4%

5.50

%6.46

%

8.29

%

6.07

%

6.01

%

7.66

%

2.16

%

0.28

%

0.41

%

-2.2

0% -1.6

9%

-2.3

3%

-0.9

7%

-1.1

7%

-2.2

1%

-0.5

8%

-0.5

4%

3.08

%

2%

0%

-2%

-4%

Jan

'11

- Ju

n '1

1

Jul '

11 -

Dec

'11

Jan

'12

- Ju

n '1

2

'Jan

'13

- Ju

n '1

3

'Jul '

12 -

Dec

'12

'Jul '

13 -

Dec

'13

'Jan

'14

- Ju

n '1

4

'Jul '

14 -

Dec

'14

'Jan

'15

- Ju

n '1

5

'Jul '

15 -

Dec

'15

'Jan

'16

- Ju

n '1

6

'Jul '

16 -

Dec

'16

'Jan

'17

- Ju

n '1

7

'Jul '

17 -

Dec

'17

'Jan

'18

- Ju

n '1

8

'Jul '

18 -

Dec

'18

Jul '

19 -

Dec

'19

'Jan

'19

- Ju

n '1

9

3475

3666

3970

4211

4464

4806 49

10

5061

5075

5096

4984

4900

4786

4740

4685

4582

4555

4530

6 month % change Average Price

19


While the above chart constitutes all live projects ongoing in Pune (3,490 at last

count), 68% (2,386) of the projects in Pune are small with less than 100 units of

inventory being built.

We looked at the price history of only those projects which are >=100 units and

where the most sales are happening. The chart below maps out the trend in the

prices of this subsection of the market. In line with the overall market this subsection

peaked in Dec ’15 and proceeded to trend down. However, over the last 18 months

(Dec ’18 onwards), this subsection is seeing a good recovery in prices with a growth

in prices of ~2.6%. This is line with what we had predicted earlier i.e. the cycle has

bottomed out.

FIG. 12 - SIX MONTHLY PRICE MOVEMENTS (Prj Size >=100 units)FIG 13. SIX MONTHLY PRICE MOVEMENTS(Prj Size >=100 units)

4400

5600

4800

4200

4000

3800

3600

3400

3200

3000

5000

6%

8%

10%

4%

4.99

% 5.86

%

6.63

%

4.96

%

4.48

%

1.60

%

0.56

%

-0.2

5%

0.68

%

-0.7

1%

-0.9

7%

-0.9

7% -0.2

3%

-0.1

9%

0.04

% 1.66

%

0.93

%

2%

0%

-2%

-4%

Jan

'11

- Ju

n '1

1

Jul '

11 -

Dec

'11

Jan

'12

- Ju

n '1

2

'Jan

'13

- Ju

n '1

3

'Jul '

12 -

Dec

'12

'Jul '

13 -

Dec

'13

'Jan

'14

- Ju

n '1

4

'Jul '

14 -

Dec

'14

'Jan

'15

- Ju

n '1

5

'Jul '

15 -

Dec

'15

'Jan

'16

- Ju

n '1

6

'Jul '

16 -

Dec

'16

'Jan

'17

- Ju

n '1

7

'Jul '

17 -

Dec

'17

'Jan

'18

- Ju

n '1

8

'Jul '

18 -

Dec

'18

Jul '

19 -

Dec

'19

'Jan

'19

- Ju

n '1

9

3598

3777

3999

4264

4475

4676 47

51

4777

4765

4798

4764

4718

4672

4661

4652

4653 47

30

4774

% increase last 6 Months Price Per Sq.Ft ( SA)(Prj Size >=100 units)

20


AFFORDABILITYAffordability Index shows highest affordability compared to the past 8 years

We looked at the trends in affordability over time and data indicates that affordability

is at an all-time high as on Dec ’19 at 3.71x Annual Income (Monthly income is

assumed to be 2x EMI) making this the best time to buy a home. Over time interest

rates and prices (from Jun’15 onwards) have trended down, while incomes have

risen thereby increasing the affordability significantly.

FIG. 13 - AFFORDABILITY INDEX V/S PRICE

6000 5.50

5.00

4.50

4.00

3.50

3.00

5500

5000

4500

3500

4000

3000

FIG 14 - AFFORDABILITY INDEX V/S PRICE

4.8

3

4.8

9 5.0

2

5.0

6

5.0

9 5.3

0

5.2

6

5.2

7

5.1

3

5.0

0

4.7

5

4.7

0

4.5

1

3.7

1

3475 3666

3970 4

211 4

464

4806

4910

5061

5075

5096

4984

4900

4786

Jun'11

Dec'11

Jun'12

Dec'12

Jun'13

Dec'13

Jun'14

Dec'14

Jun'15

Dec'15

Jun'16

Dec'16

Jun'17

Dec'17

Jun'18

Dec'18

Jun'19

Dec'19

Affordability IndexPrice (in ₹ psf)

3.9

14.0

2

4.2

54.3

7

4530

4555

4582

4685

4740

We evaluated the salary needed to buy a home based on the then prices psf in

Jun ’11 considering interest rates at that time. We then increased this salary based

on the consumer price index and compared the new cost of the home with the

increased salary. In Jun ’11, the salary needed to buy a 1,000 sq. ft. home was 4.83

times. This peaked in Dec ’14 where the salary needed to buy the same 1,000 sq.ft.

21


house at the increased salary and increased rates was 5.27 times. Since Dec ’14,

the consistent reduction in rates and the salary increments (linked to CPI) have led

to a situation where the house cost is 3.71 times the salary. This makes affordability

at an all time high. We are already seeing a price rise in the core (>= 100 units)

market and expect the affordability index to get worse in the future.

TABLE 3 - PRICE APPRECIATION IN MICROMARKETS OVER 8 YEARS

ClusterPrice in ₹

psf (Dec ‘19)Price in ₹

psf (Dec ‘11)8 Yr Price

CAGRAkurdi/Nigdi/Nigdi Pradhikaran 7,000 3,673 8.40%

Erandwane/Karve Road/Karvenagar/Kothrud

11,765 7,178 6.37%

Bopodi/Khadki/Dapodi/Kasarwadi/Phugewadi

6,171 3,775 6.34%

Purandar/Saswad/Wadki/Bhivari/Bopgaon

3,179 1,958 6.24%

Hadapsar 6,458 4,148 5.69%

City (Centre) 11,042 7,125 5.63%

Vishrantwadi/Kalas 5,599 3,621 5.60%

Pimpri/Kalewadi 5,567 3,622 5.52%

Wakad 5,752 3,814 5.27%

Baner 7,340 4,892 5.20%

Dehu/Gahunje/Kiwale/Ravet/Talawade/Tathawade/Punawale/Marunji/Sangawade/Mamurdi/Urse

4,495 3,011 5.14%

Market Yard/Lullanagar/Salisbury Park/Mukund Nagar/Gultekdi

11,948 8,033 5.09%

Navi Sangvi/Old Sangvi/Pimple Gurav/Pimple Nilakh/Pimple Saudagar/Rahatani

6,131 4,154 4.99%

Kharadi 6,055 4,131 4.90%

Anand Nagar/Dattawadi/Hingne/Sinhagad Road/Vadgaon Bk

6,341 4,327 4.89%

22


10 SUB MARKETS WITH MAXIMUM PRICE CORRECTION (Over 24 months)

FIG. 14 - BOTTOM 10 MICROMARKETS WITH THE LOWEST PRICE

GAINS IN THE LAST 2 YEARSFIG. 15 - BOTTOM 10 MICROMARKETS WITH THE LOWEST PRICEGAINS IN THE LAST 2 YEARS

-8.00%

-6.00%

-4.00%

-2.00%

0.00%

All

Mar

kets

-4.4

3%

Dha

yari

-7.1

0%

Ara

nyes

hwar

& E

nviro

ns-6

.66%

Vim

an N

agar

/Yer

awad

a-6

.21%

Aun

dh-5

.41%

War

je-5

.17%

City

(Cen

tre)

-5.1

1%

Eran

dwan

e &

Env

irons

-4.8

9%

Man

jari

-4.2

7%

Nar

he-3

.86%

Furs

ungi

/Uru

li D

evac

hi-3

.27%

Aranyeshwar & EnvironsAranyeshwar/BalajiNagar/Bibvewadi/Dhankawadi/Padmavati/Sahakar Nagar/Parvati/Satara Road/Swargate

Erandwane & EnvironsErandwane/Karve Road/Karvenagar/Kothrud

23


HOME SIZESFIG. 15 - AVERAGE SIZE OF UNITS LAUNCHED IN NEW PROJECTS

1200

400

600

200

800

1000

FIG. 16 - AVERAGE SIZE OF UNITS LAUNCHED IN NEW PROJECTS

H2 2014 H2 2015 H2 2016 H2 2017 H2 2018 H2 2019

981

837

756 735

859 863

Home sizes launched have increased to 863 sq. ft. after a period of decline.

24


SALES OVERVIEWOfftake at a 4-year high. Increase of 15% over the last 12 months.

TABLE 4 - SALES OFFTAKE – 12 MONTHLY

Size Jan ‘17-Dec ‘17 Market Share Jan ‘18-Dec ‘18 Market Share Jan ‘19-Dec ‘19 Market Share

Overall 76,149 100% 81,907 100% 94,383 100%

< 600 19,670 26% 24,145 29% 25,690 27%

600-800 17,934 24% 17,527 21% 18,782 20%

801-1000 18,218 24% 19,981 24% 24,658 26%

1001-1200 11,570 15% 12,070 15% 14,431 15%

1201-1400 3,490 5% 2,968 4% 3,992 4%

1401-1600 2,331 3% 2,570 3% 3,454 4%

1601-1800 1,079 1% 1,029 1% 1,275 1%

1801-2000 529 1% 361 0% 496 1%

2000+ 1,328 2% 1,256 2% 1,605 2%

Assessment of sales offtake based on size of apartment shows that the overall

offtake has increased by ~15%, the share of the <600 sq. ft. segment in the offtake

has decreased from 29% in 2018 to 27% in 2019. Similarly, the share in offtake of

the 600-800 sq. ft. segment has also gone down from 24% in 2017 to now 20%.

This segment (<600 Sq. ft.) along with the 600 - 800 sq. ft. segment is primarily

targeted by the Pradhan Mantri Awaas Yojana. The share of the 801-1000 segment

has also increased to 26% in the last 12 months.

Overtime, the share of offtake in the <800 sq. ft. basket has remained consistent

has gone down from 50% (2017 & 2018) to now 47% in 2019.

25


FIG. 16 - SALES BY SEGMENT (in number of units - yearly)FIG. 17 - SALES BY SEGMENT(Number of units)

44459 44142 45505

36421 36555 39320

23260

20122 20917

15545 16810 20920

17835

15009 16825 13654 12526

16801

9413 5917 7715 7724 12602

13248 4001

36253033

2805

3414 4094

98968

88815 93995

76149 81907

94383

20000

40000

60000

80000

100000

120000

Jan '14 to Dec '14 Jan '15 to Dec '15 Jan '16 to Dec '16 Jan '17 to Dec '17 Jan '18 to Dec'18 Jan '19 to Dec '19

BudgetValuePremiumPremium PlusLuxury Overall

As mentioned earlier, overall offtake has increased by 15% in the last 12 months.

The segment leading the growth in offtake is the Premium segment (For definition

of segments see TABLE 9 In Annexures) with an overall volume growth of 34% in the

last 12 months. The Budget + Value segment has displayed a growth of 32% in the

same period. There certainly appears a trend towards premiumization in the Pune

residential market. The Budget+Value segment occupy ~ 64% of the overall pie

in sales volume. However, this percentage has been gradually reducing over time.

In the 12 months ended Dec ’15, 72% of all units sold were in the Budget+Value

segment while in Dec’19 this share has come down to 64%

26


INVENTORY OVERHANGOverall Inventory overhang increases to ~12 months

TABLE 5 - INVENTORY OVERHANG (in months)

6 Months Ended Dec ’15 Jun ’16 Dec ’16 Jun ’17 Dec ’17 Jun ’18 Dec ’18 Jun ’19 Dec ’19

Total 14.13 13.93 13.34 13.90 13.69 12.49 11.69 9.75 11.96

Budget 11.80 11.96 10.96 11.43 11.38 9.67 10.37 7.77 9.21

Value 14.33 13.46 13.59 14.73 14.31 14.73 13.00 11.63 13.42

Premium 18.40 17.49 17.22 14.97 15.43 12.50 12.41 10.59 13.01

Premium Plus 20.28 16.86 15.52 20.05 17.23 16.26 11.47 10.46 14.64

Luxury 13.64 19.65 20.09 24.28 22.15 20.59 17.48 16.43 15.33

The inventory overhang (based on the offtake rate for 6 months) has increased from

9.75 months in Jun ’19 to 11.96 months in Dec ’19. This is on account of the rapid

introduction of new inventory.

The budget segment continues to have the lowest inventory overhang of 9.2 months.

While inventory months has gone up for all segments, the major improvement is seen

in the Luxury segment where the inventory overhang has gone down to 15.33 months.

The table below sets forth a comparison between the Inventory Available for Sale

and the trailing 12 months offtake. The 12 months ended Dec’19 would be the first

time in the last 5 years where the offtake for last 12 months is significantly greater

than the entire inventory available for sale (it was almost at par in the 12 months

ended Dec ’18)

TABLE 6 - INVENTORY AVAILABLE FOR SALE V/S OFFTAKE

12 Months Ended Inventory Available for Sale 12 Months Offtake

Dec ‘15 104,565 88,815

Dec ‘16 104,452 93,995

Dec ‘17 86,900 76,149

Dec ‘18 79,760 81,907

Dec ‘19 89,887 94,383

27


INVENTORY VALUE AND SQUARE FEETMarket Size expands by ~16% to ₹43,818 Crores

FIG. 17 - VALUE OF INVENTORY FOR SALE (in ₹Cr) & AREA (in Cr sq. ft. )

50000

45000

55000

60000

50000

35000

30000

25000

20000

10

12

8

6

4

2

Dec '13 Dec '14 Dec '15 Dec '16 Dec '17 Dec '18 Dec '19

5.49

7.08

9.1010.25

9.46

7.40

8.43

27400

39085

48526

55329

49214

37898

43818

Value (in Cr)

Valu

e (in

Cr)

Unsold Area (in Cr Sq. ft.)

Uns

old

Are

a (in

Cr

Sq. f

t.)

FIG. 18 - VALUE OF INVENTORY FOR SALE (in ₹ Cr) & AREA (in Cr sq. ft.)

Inventory available for sale has increased by ~14% over Dec ’18 to 8.43 Cr sq. ft.

while value of that inventory has increased to INR 43,818 Cr. The weighted average

price has increased by 1.5% over Dec ’18 ( Dec ’18 – 7.4cr sq. ft. inventory worth

37,898 Cr, Dec ’19 – 8.43cr sq. ft. unsold worth 43,818 Cr)

28


End stage and Ready Inventory for sale at a 5 ½ year low at 10,769 units

FIG. 18 - INVENTORY FOR SALE BY STAGES

70000

60000

50000

40000

30000

20000

10000

24789

29718

53418

17633

5709

39217498

6746 7345 7543 8692 7967 8849 8760 9005 9439 8064 84185382

51,7

25 55,6

84

66,6

83 67,6

14

91,2

81 104,

565

107,

402

104,

452

100,

012

86,9

00

79,5

46

79,7

60

80,0

62

89,8

87

2857133657

34878

4789946296

5476552413

51261 49156 50363

59468

15431

22757 22349

4507844691

39120

32300

21107 15589 1782219166 19650

4826

7857

4862 5918 5648 61203947 4098 4620

3691 334323512469

Jun'13 Dec'13 Jun'14 Dec'14 Jun'15 Dec'15 Jun'16 Dec'16 Jun'17 Dec'17 Jun'18 Dec'18 Jun'19 Dec'19

Inve

ntor

y fo

r sa

le (U

nits

)

FIG. 19 - INVENTORY FOR SALE BY STAGES

Total Inventory for SaleREADYENDMIDEARLY

43140

We have classified projects into 4 stages based on construction status i.e., Early, Mid,

End and Ready. End & Ready segments form 2.62% & 9.37% (~12% combined)

of inventory available respectively in Dec ’19. In Dec ‘18 combined they formed

~16% of the inventory available. In Dec ’18 the total inventory in this basket was

12,782 units while in Dec ‘19 this has decreased to 10,769 units. The inventory in

this basket is also at a 5 ½ year low (In Dec ’13 End stage and Ready inventory was

10,769 units).

Early stage Inventory forms ~22% of the total available units in Dec ’19.

As seen in Table 6, Dehu area and neighborhood consist of 11% of the total inventory

available for sale. The top 5 markets contain 1/3rd of the total inventory available

for sale.

29


TABLE 7 - MICROMARKETS WITH THE HIGHEST INVENTORY FOR SALE (in no. of units)

Cluster Unsold Dec ‘19 % Share in Unsold Stock

Dehu/Gahunje/Kiwale/Ravet/Talawade/Tathawade/Punawale/Marunji/Sangawade/Mamurdi/Urse

10,230 11%

Bhosari Pradhikaran/Chikhali/Chikhali Pradhikaran/Moshi/Moshi Pradhikaran

6,361 7%

Alandi/Alandi Road/Bhosari/Bopkhel/Charholi/Dighi/Dudulgaon/Wadmukhwadi

5,412 6%

Kanhe/Somatne Phata/Talegaon/Wadgaon Maval/Kamshet

3,881 4%

Manjari 3,833 4%

Hinjewadi 3,734 4%

Wagholi 3,686 4%

Undri/Mohammadwadi 3,631 4%

Kondhwa/Pisoli/Yewalewadi 3,570 4%

Balewadi/Mahalunge 3,259 4%

Bhugaon/Bhugawade/Bhukum/Chande/Chandkhed/Ghotawade/Kasar Amboli/Kasarsai/Lavle/Maan/Nande/Paud/Pirangut/Rihe Road/Urawade

3,113 3%

Anand Nagar/Dattawadi/Hingne/Sinhagad Road/Vadgaon Bk

2,754 3%

Dhanori/Lohegaon 2,612 3%

Wakad 2,550 3%

Kharadi 2,457 3%

30


BREAKUP OF THE MARKET BY JURISDICTION (PMRDA, PMC, PCMC)

FIG. 19 - AVERAGE PRICES (in ₹ psf) (extended boundaries of PMC)

Jan '15 – Dec '15

7186

5075 4984 4786

4582 4530

7039 7075

5650 5434

3905 3853 3706 3455 3482

4769 4797 4763

4799 4820

8000

7000

6000

5000

4000

3000

2000

1000

Jan '16 – Dec '16 Jan '17 – Dec '17 Jan '18 – Dec '18 Jan '19 – Dec '19

PMC OverallPCMCPMRDA

FIG. 20 - AVERAGE PRICES (in ₹ Psf)(Extended boundaries of PMC)

TABLE 8 - GROSS INVENTORY (in no of units) – EXTENDED BOUNDARIES OF PMC

Dec ‘14 Dec ‘15 Dec ‘16 Dec ‘17 Dec ‘18 Dec ‘19

PMC 71,122 78,881 78,519 111,523 106,069 126,360

PMRDA 117,495 160,775 174,049 123,364 117,982 125,053

PCMC 50,784 63,557 70,745 68,313 62,644 78,795

Overall Inventory 240,433 304,905 325,843 305,689 292,842 336,186

31


FIG. 20 - SHARE IN INVENTORY (with extended boundaries of PMC)

20%

30%

40%

50%

60%

10%

53%

26% 24%36% 36%

38%

23%21%22%22%21%

53%

40% 40%

37%

PMRDA PMC PCMC

FIG. 22 - SHARE IN INVENTORY(with extended boundaries of PMC)

Jan '15 to Dec '15 Jan '16 to Dec '16 Jan '17 to Dec '17 Jan '18 to Dec '18 Jan '19 to Dec '19

32


CONCLUSION

In our view, we are seeing clear signs of greenshoots in terms of a price rise in

projects in the core market (projects sized greater than 100 units)

While the overall market (all projects put together) is flat in terms of prices it is doing

excellent sales while launching new inventory. In our view the cycle turned in the

recent 6-12 months.

The offtake of the last 12 months is considerably greater than the current inventory

available for sale. We are also seeing a migration of demand from lower bedroom

types to higher bedroom types which is currently an under-served market.

This is one impact of affordability i.e. when your overall budget increases due to

rising income & falling interest rates, customers seek a higher-grade apartment. We

are seeing this trend playing out. Higher grade apartments are also associated with

developers with a strong brand name and excellent track record who customers

trust to deliver.

33


ANNEXURESDehu & EnvironsDehu/Gahunje/Kiwale/Ravet/Talawade/

Tathawade/Punawale/Marunji/Sangawade/

Mamurdi/Urse

Alandi & EnvironsAlandi/AlandiRoad/Bhosari/Bopkhel/Charholi/

Dighi/Dudulgaon/Wadmukhwad

Bhosari & EnvironsBhosariPradhikaran/Chikhali/Chikhali

Pradhikaran/Moshi/Moshi Pradhikaran

Bhugaon & EnvironsBhugaon/Bhugawade/Bhukum/Chande/

Chandkhed/Ghotawade/KasarAmboli/Kasarsai/

Lavle/Maan/Nande/Paud/Pirangut/Rihe Road/

Urawade

Sinhagad Road & EnvironsAnandNagar/Dattawadi/Hingne/Sinhagad

Road/Vadgaon Bk

Kanhe & EnvironsKanhe/SomatnePhata/Talegaon/Wadgaon

Maval/Kamshet

Kondhwa & EnvironsKondhwa/Pisoli/Yewalewadi

Pimple Saudagar & EnvironsNavi Sangvi/Old Sangvi/Pimple Gurav/Pimple

Nilakh/Pimple Saudagar/Rahatani

TABLE 9 - PRICING CLASSIFICATION FOR EACH SEGMENT (in ₹ psf)

SEGMENT Jun ‘13 Dec ‘13 Jun ‘14 Dec ‘14 Jun ‘15 Dec ’15 Jun ‘16 Dec ‘16 Jun ‘17 Dec ‘17 Jun ‘18 Dec ‘18 Jun ‘19 Dec ‘19

Budget < 3,913 4,000 4,122 4,247 4,144 4,060 3,991 3,899 3,808 3,719 3,633 3,728 3,705 3,685

Value < 4,892 5,000 5,152 5,309 5,180 5,076 4,989 4,873 4,760 4,649 4,541 4,659 4,631 4,606

Premium < 5,870 6,000 6,182 6,370 6,216 6,091 5,987 5,848 5,712 5,579 5,449 5,591 5,558 5,527

Premium Plus <

7,338 7,500 7,728 7,963 7,770 7,613 7,484 7,310 7,140 6,974 6,811 6,989 6,947 6,908

Luxury > 7,338 7,500 7,728 7,963 7,770 7,613 7,484 7,310 7,140 6,974 6,811 6,989 6,947 6,908

34


APPENDIXZone 1Bokari | Bolhai | Dhanori | Ghorpadi | Kalas | Keshav Nagar | Kesnand | Kharadi | Koregaon Bhima |

Lohegaon | Lanikand | Mundhwa | Nagar Road | Ranjan Gaon | Sanaswadi | Shikrapur | Shirsatwadi |

Talegaon | Dhamdhere | Viman Nagar | Vishrantwadi | Wadgaonsheri | Wagholi | Yerwada

Zone 2Bibvewadi | Fursungi | Gultekdi | Hadapsar | Kondhwa | Loni Kalbhor | Lulla Nagar | Manjari

| Market Yard | Undri | Mohammad Wadi | NIBM Road | Pisoli | Salisbury Park | Saswad | Uruli

Devachi | Uruli Kanchan | Wadki | Yavat | Yewalawadi

Zone 3Ambegaon | Dhankawadi | Dhayari | Donje | Katraj | Khadakwasla | Khed Shivapur | Kirkitwadi |

Kolhewadi | Nanded | Kondhawe Dhawade | Narhe | Shivane | Uttam Nagar | Warje

Zone 4Ambadvet | Aundh | Balewadi | Baner | Baner Balewadi Road | Baner Pashan Link Road | Baner Sus

Road | Bavdhan | Bhugaon | Bhugawade | Bhukum | Chandkhed | Ghotawade | Hinjewadi | Kasar

Amboli | Mahalunge | Marunji | Nande | Pashan | Paud Road | Pimple Gurav | Pimple Nilakh | Pimple

Saudagar | Pirangut | Punawale | Sus | Sus Road | Tathawade | Urawade | Wakad

Zone 5Anand Nagar | Bhosale Nagar | Boat Club Road | Camp | City | Dattawadi | Erandwane | FC Road

| Fatima Nagar | Ganeshkhind Road | Gokhale Nagar | Gultekdi | Hingne | JM Road | Kalyani

Nagar | Karve Nagar | Khadaki | Parvati | Koregaon Park | Kothrud | Mitra Mandal | Model Colony

| Mukund Nagar | Padmavati | Peth | Prabhat Road | SB Road | Sahkar Nagar | Satara Road |

Shivaji Nagar | Sinhagad Road | Tilak Road | Vadgaon BK | Wakadewadi | Wanowrie

Zone 6Akurdi | Alandi | Alandi Road | Alandi-Dehuroad | Alandi-Moshi Road | Bhosari | Bhosari Pradhikaran

| Bhopkel | Chakan | Charholi | Chikhali | Chikhali Pradhikaran | Chimbali | Chinchwad | Dange

Chowk | Dapodi | Dehugaon | Dighi | Dedulgaon | Kalewadi | Kasarwadi | Kamshet | Kanhe |

Kiwale | Mamurdi | Moshi | Moshi Pradhikaran | Navi Sangvi | Nigdi Pradhikaran | Phugewadi |

Pimpri | Punewala | Rahatani | Ravet | Sanghavi | Somatne Phata | Talawade | Talegaon | Thergaon

| Wadgaon Maval | Wadmukhwadi

35


Areas in Extended boundaries of PMCAmbegaon | Anand Nagar | Aundh | Balewadi | Baner | Baner Pashan Link Road | Bavdhan |

Bibwewadi| Boat Club Road | City Centre | Dhankawadi | Dhanori | Dhayari | Erandwane | Fatima

Nagar | Ghorpadi | Gultekdi | Hadapsar | Hingne | Kalas | Kalyani Nagar | Karvenagar | Katraj |

Katraj | Kondhwa Road | Keshav Nagar | Kharadi | Kondhwa | Koregaon Park | Kothrud | Lohegaon

| Lullanagar | Market Yard | Mohammadwadi | Mundhwa | NIBM Road | Padmavati | Pashan |

Sahakar Nagar | Salisbury Park | Salunke Vihar | Satara Road | Shivaji Nagar and Neighborhoods

| Shivane | Sinhagad Road | Sus Road | Undri | Uttam Nagar | Vadgaon| Vadgaon Sheri | Viman

Nagar | Vishrantwadi| Wanowrie | Warje | Yerawada | Yewalewadi

Without Extended boundaries of PMCAnand Nagar | Aundh | Balewadi | Baner| Baner Pashan Link Road | Bavdhan | Bibwewadi |

Boat Club Road | City Centre | Dhankawadi | Dhanori | Erandwane | Fatima Nagar | Ghorpadi |

Gultekdi | Hadapsar | Hingne | Kalas | Kalyani Nagar | Karvenagar | Katraj | Katraj Kondhwa Road

| Kharadi | Kondhwa | Koregaon Park | Kothrud | Lullanagar | Market Yard | Mohammadwadi |

Mundhwa | NIBM Road | Padmavati | Pashan | Sahakar Nagar | Salisbury Park | Salunke Vihar |

Satara Road | Shivaji Nagar and Neighborhoods | Sinhagad Road | Sus Road | Vadgaon | Vadgaon

Sheri | Viman Nagar | Vishrantwadi | Wanowrie | Warje | Yerawada | Yewalewadi

Gera Developments Private Limited

200, Gera Plaza, Boat Club Road, Pune - 411001 | Call: +91 20 6680 7700

E-mail: [email protected] | www.gera.in

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THE GERA PUNE - Gera Developments - Real Estate Builders ... · ROHIT GERA MANAGING DIRECTOR GERA DEVELOPMENTS PRIVATE LIMITED The real estate industry prior to RERA used to be highly