- New residential launches and sales in Pune declined significantly in the second half of 2016 compared to the previous year, with launches down 38% and sales down 19%. The decline was attributed partly to demonetization in late 2016, which brought the residential market to a standstill. - In the office market, transactions in Pune fell to a three-year low in the second half of 2016 due to limited new supply, while rentals increased owing to a steady decline in vacancy rates. IT/ITeS sectors accounted for the majority of office transactions during this period. - Overall, the Pune real estate market suffered setbacks in the second half of 2016 from falling residential sales and lower office transactions compared to

1. H1 2016, a recap
- A recovery predicted
INDIA
REAL ESTATE
JULY – DECEMBER 2016
PUNE

2. PUNE
REAL ESTATE

3. H1 residential recap
LAUNCHES DROP BY 32%, SALES
REMAIN STEADY WITH 1% YOY
GROWTH IN H1 2016

4. We predicted 12% growth in
launches and 4% growth in sales for
H2 2016, but Pune suffers a setback
as launches & sales tumble
in H2 2016

5. New launches plunge by 38%;
Sales decline by 19%
Half yearly trend in launches and sales (units)
22,694
24,513
24,652
16,700
18,135
11,300
-
5,000
10,000
15,000
20,000
25,000
30,000
H2 2011H2 2012H2 2013H2 2014H2 2015H2 2016
Launches
-38%
20,804
24,895
17,858
20,150
20,740
16,800
-
5,000
10,000
15,000
20,000
25,000
30,000
H2 2011 H2 2012 H2 2013 H2 2014 H2 2015 H2 2016
Sales
20
% -19%

6. Drastic fall in H2 2016 has
pulled the annual numbers
to below 2015 performance

7. New launches dip by 35%;
Sales at a relatively restrained decline of 10%
Yearly trend in launches and sales (in units)
39,881
45,725
48,017
38,795
34,869
36,264
32,488
-
10,000
20,000
30,000
40,000
50,000
60,000
2010 2011 2012 2013 2014 2015 2016
43,675
54,147
55,971
45,372
33,583
30,897
20,013
-
10,000
20,000
30,000
40,000
50,000
60,000
2010 2011 2012 2013 2014 2015 2016
-35%
-10%

8. Overall, the city witnessed a fall in
new launches –
East and West Pune experience
maximum dip in their share

9. South accounts for almost one-third of the
launches and North also sees growth
Micro-market wise half yearly share of launches
1%
30% 32%
15%
22%
6%
21%
28%
16%
28%
0%
5%
10%
15%
20%
25%
30%
35%
Central East West North South
H2 2015 H2 2016

10. While demand slackens in the city,
North leads the share in sales

11. Affordable supply and proximity to the major
employment hubs drive the demand in North
Zone-wise split of sales during H2 2016
1%
26%
30%
18%
24%
2%
28%
23%
27%
21%
0%
5%
10%
15%
20%
25%
30%
35%
Central East West North South
H2 2015 H2 2016

12. QTS on a continuous downfall since
December 2014 –
1.4 years to offload the unsold inventory
Pune market health – Quarters to sell and unsold inventory
Unsold inventory
at 49,720 units in
20167.0
7.3
7.4
7.1
6.8
6.4
6.5
6.3
6.2
5.8 5.8
5
6
7
8
No.ofQuarters

13. Impact of
Demonetization

14. Pune hit hard - New launches plunge by 64%
in Q4 2016 YoY; Sales decline by 35%
Quarterly trend of new launches and sales
8,583 8,300
8,900
7,800
6,670
6,092
8,705 9,430
4,531
4,182
7,900
3,400
7,219 7,500
9,500
10,650
8,543
6,980
10,992
9,748
7,687 8,001
10,500
6,300
2,000
4,000
6,000
8,000
10,000
12,000
Noofunits
Launches Sales

15. Q4 revenue loss for both
State exchequer and industry
Average # units sold in
Q4 2014 & Q4 2015 10,200
# Units sold in Q4 2016 6,300
38% fall
in sales
Notional REVENUE LOSS
to real estate industry
INR 2,000 cr
State government notional
LOSS ON STAMP DUTY
INR 100 cr

16. Key takeaways
Launches go downhill, sales weaken YoY in H2 2016
Affordable prices attracting buyers in its peripheral markets such as
Chakan, Chikhali and Talegaon
Demonetization brings residential market to a standstill
Uncertainty likely to continue for the next quarter
Reduction in home loan interest rates, RERA, GST and ‘possible’ tax
benefits in the upcoming budget likely to bring in a ‘feel good factor’
among buyers

17. Office market
PUNE OFFICE MARKET SEES
SIGNIFICANT FALL IN
TRANSACTIONS IN H2 2016

18. Transactions fall in 2016 in the face
of supply crunch
Yearly transactions & new completion
4.2
3.6
2.2
3.6
2.5 2.7 2.5
3.7
3.2 3.0
4.0
4.5
5.5
3.8
-
1
2
3
4
5
6
mnsqft
New completion Transactions

19. H2 2016 witnesses transactions at three-year low;
new completions see a marginal rise
Half yearly transactions & new completion
1.3 1.2
0.5
1.1 1.2
1.6
1.2
2.4
3.3
1.8
-
1
2
3
4
H2 2012 H2 2013 H2 2014 H2 2015 H2 2016
mnsqft
NEW COMPLETION TRANSACTIONS

20. Vacancy on a steady decline and currently at 8%;
Transactions consistent, new completions restrained
Half yearly vacancy rate
21%
16%
11%
8%
5%
10%
15%
20%
25%
H2 2013 H2 2014 H2 2015 H2 2016

21. Rentals gain momentum owing to
space crunch
Half yearly weighted average rental trend
41
47
56
60
30
40
50
60
70
H2 2013 H2 2014 H2 2015 H2 2016
Rs/sqft/month

22. IT/ITeS sector continues to hold
the fort in h2 2016

23. IT/ITeS leads with big ticket transactions
Sector wise transactions
47%
23%
18%
12%
44%
33%
14%
10%
0%
10%
20%
30%
40%
50%
IT/ITeS BFSI* Manufacturing Other Services
H2 2015 H2 2016
* Includes support services

24. SBD East witnessed a sharp jump in its share
of the total transaction volume, as most of
the big deals took place in this micro-market
Micromarket-wise transactions
8%
47%
20%
8%
17%
7%
69%
12%
5% 7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
CBD & Off-CBD SBD East SBD West PBD East PBD West
H2 2015 H2 2016

25. Key takeaways
H2 2016 witnesses transactions at three-year low
on the back of supply constraints
new completions dip, leading to rise in rentals in key markets
IT/ITeS leads with big ticket transactions

26. Download the complete report from the link below:
bit.ly/IREH216-SS