Static real estate market in Pune, economic slowdown and caution about RERA penalty

Data from the website of Maharashtra Real Estate Regulatory Authority (MahaRera) has revealed that the real estate market of Pune is suffering from a sharp slowdown.

In 2016, Maharashtra became one of the first states to notify and adopt the Real Estate Regulation and Development Act (RERA). The authority in charge of implementing this law, MahaRera was notified in the state in May, 2017. Moreover, it has also become a preferred destination for the redressal of the grievances of home buyers.

The data obtained from MahaRera reflected a steady dip in the launch of new realty projects in Pune district. The district witnessed registration of 3,550 projects in October, 3,717 in November and 3,843 in December last year (2017).

However, this year, reports show that the district had 3,945 registrations in January and 4,033 registrations in February. The number of new launches in Pune is increasing each month, yet the quantum of growth has been steady.

In 2017, between October and November, total 167 new projects were launched. But, only 88 such projects were launched between January and February, this year.

Carried out by the real estate analyst Niranjan Kelshikar, the further analysis of the data shows that major growth is in Haveli Taluka, which spans across Pune and Pimpri Chinchwad, and includes the newly-merged villages of Kirtikwadi, Ambegaon Burduk and others.

The report showed that in January almost 53 per cent of the projects registered were from this area, followed by 14.02 per cent in Mulshi, where the Hinjewadi IT Park is located, and 11.95 per cent in Pune city.

Sources said that after the introduction of MahaRera only a few real estate projects replicate the impact of the economic slowdown, as well as a cautious approach in the market.

Niranjan Kelshikar said, “The regulatory Act, especially its stringent Section 18 that allows slapping fines on builders over delayed possession, has acted as a deterrent for many.”

“Before MahaRera, builders used to underwrite the proposed tenements, and collect the money from the buyer. That money used to be diverted towards completion of the project, which often got delayed,” he added.

Kelshikar said that this arrangement worked in favour of the real estate industry as most buyers were cautious of approaching the legal system.

He said, “Now, as per Section 18, an interest has to be paid in case of delayed possession. This will hit builders, most of whom have started concentrating their capital to ensure completion of their projects.”

Only few builders have been able to venture into newer projects, as their capital is locked in ongoing projects, and their efforts focussed on meeting the deadlines.