Tag Archives: Pune real estate

Education a driving factor of Pune real estate

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Bottom Line: Though there are many economic drivers of Pune real estate, the education continues to have an edge in the Oxford of the East.

Pune, Pune property market, Pune real estate market, pune property prices, India real estate news, India property news, Track2Realty, NRI investmentThe phenomenal rise and growth of the real estate in Pune can be attributed to many factors, right from the proliferating Small & Medium Enterprises (SMEs) to the IT/ITeS and ever improving physical infrastructure to social infrastructure. However, many other cities with more or less the same DNA of development have been witness to a saturation point in a couple of year’s urbanisation.

That is not the case with Pune and, as a matter of fact, Pune property market seems to be ever evolving. What separates Pune from other emerging cities? More importantly, for how long can Pune sustain the era of real estate growth.

Analysts tracking the property market in this part of the world believe such apprehensions are actually a result of an outside view on the economy of Pune in general and its property market in particular.

As a matter of fact, many other cities across India that shaped up well as corporate destination were lacking a key element that made them only an attractive destination for the expat professionals. Pune did not lack that element called education, as historically the city has been referred as the Oxford of the East. So, the rise and growth of Pune as a sustainable corporate city has been holistic.

Everyone within the built environment of Pune real estate agrees that the city is shaping up well as a city for academic institutions even today. It may be a matter of debate as to what extent the education system in the city will be catalytic to the growth of Pune property market, but the potential of the education sector can be assessed by the fact that some of the Pune-based developers are today planning to foray into education sector in anticipation of huge opportunities.

It would be pertinent to point out here that education may have been a catalytic factor in many other cities for fuelling demand in the real estate market, but the growth of educational institutions in those cities were not sustainable as they followed only the corporate demand of the given business that thrives in that given city.

In Pune, on the contrary, IT/ITeS may be one of the high demand zones for education, yet it is not that only IT/ITeS driven educational institutions are flourishing. As a matter of fact, and industry players agree to it, education sector has grown in the city in all the segments, be it IT/ITeS or any other professional/vocational education.

Kruti Jain, Director, Kumar Urban Development agrees that in addition to IT, the city is home to a large number of educational and manufacturing, industries and training institutions which attract students and academicians. According to her, in some respect Pune is also well known as ‘The student city of India’ and this sector can compete with the IT sector.

“There are numerous reasons why Pune has emerged as one of the most aspired-for residential destinations in India. A growing IT hub and a well established educational locale augers well for the city’s real estate market. The fact that it is so well connected to Mumbai is only the tip of the iceberg. Pune is an economic powerhouse in its own right, being home to a wealth of multinational companies and industries. These organisations have ensured that Pune has emerged as one of the most important employment centres in the country. This influx has boosted infrastructure development including road connectivity, parking facilities, public transport and electricity and water supply,” says Kruti.

Rishav Vij, Associate Director – Office Services, Pune, with Colliers International adds that Pune has been a popular hub of education in western India since early 1970s. Over the last few years numerous colleges and universities have opened their campuses in the vicinity of the city, renowned examples being Symbiosis Intl University, FLAME, Bharti Vidya Peeth, Sinhgarh Group of Institutes, etc. In fact, Pune has historically been known as the ‘Oxford of the East’. According to him, the factors that influenced the above are proximity to a metro like Mumbai and affordable prices for acquiring land for campuses.

“These very reasons have led to a steep rise in prices of land that have gone up to levels where locking land for Educational Institutes cannot give a fair fight in terms of returns in comparison to other asset classes like residential and commercial. Education system will add to the demand for rental residential market in certain suburbs and micro markets in the city However, any significant demand for purchase is not expected immediately. Over the long term, education as an industry is expected to support real estate industry as an enabler,” says Vij.

Besides, due to the steady source of trained and skilled graduates and under graduates from educational institutions in Pune, the city will continue to attract specialised courses. And hence, the city is witness to an increased demand from IT/R&D and knowledge based industries/companies in addition to the traditional automotive industry in the city. Many corporates have already established a base in Pune, with some of them even head quartered here.

This also raises a fundamental question that if the education sector possesses huge opportunities why have Pune-based developers not forayed into this space till now. City-based developers defend this reluctance saying education being a specialised segment has not seen many developers venture in this field directly. However, they are supportive and are willing to work with education service providers, schools/colleges to house them in their upcoming townships/large projects.

Moreover, what has probably been a deterrent for the developers to foray into education has been the lack of any policy incentive. They maintain the returns on investment from an educational institute are very limited in comparison with residential or commercial real estate which have been witnessing high velocity and steady growth both in terms of volumes as well as capital values. Having said this, the slowdown in the last few years have taught the developers a valuable lesson that education is a recession proof business that has the potential to generate recurring cash flow for them.

The developers demand certain policy incentive that will encourage them to be more aggressive into education sector. Among the wish list is land at lower cost and/or other incentives such as increase in FSI, TDR to be loaded at lower rates, etc. that will enable the education industry to establish new campuses with increased pace in upcoming projects.

Real Estate Investment Trusts (REITs) too, specifically for an educational portfolio will enable incentivise investors and developers causing a further impact resulting in growth herein. Furthermore, tax incentives for educational purposes will create more interest and will attract investment in this asset class. If only the government comes out with some incentives, the developers won’t mind even getting into the construction of hostels for the expats studying in the city.

It is to be seen how far the government grants these wishes but what can be vouchsafed is the fact that for the next few years the education will continue to be the driving force for the real estate market in Pune. And this education will be broad based across the sectors/business; something that promises to help the corporate sector in the city as well to tap the talent. Education and affordable education than the neighbouring Mumbai and many other cities promises to keep the momentum up in the Pune property market.

By: Ravi Sinha

Property market potential of top 5 cities

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Bottom Line: The realty markets of Mumbai, Pune, Chennai, Bengaluru and Hyderabad are proving to be magnets that attract potential home buyers from all over due to their massive infrastructure development, affordable rates and good job catchment opportunities.

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news“Form is temporary but class is permanent,” goes an old adage in cricket. But class being permanent is equally true with the best asset class called property. Since the very nature of the business is cyclic, that goes up and down in its critical linkage to the overall economy; it often leads to lending credence to the prophets of doomsday that the market is down and out.

However, a closer look at some of the leading property markets of the country, like Mumbai, Pune, Chennai, Hyderabad and Bangalore, clearly suggest that the market is poised for an upswing in the next few years. More importantly, it is not just the analysts but also the home-buyers who are today; ready to bet high on the long term growth story of the property market in these leading cities.

City realities

Home-buyers are bullish over the medium-to-long-term growth story of the property market

Cities that are mostly being preferred are Mumbai, Pune, Bangalore, Chennai and Hyderabad

Infrastructure developments and job catchment are the investment magnets in these cities

Mumbai

“I don’t really subscribe to the view that Mumbai is saturated and hence, is facing a slowdown. The same was opined before the emergence of BKC (Bandra Kurla Complex) as well but the new destinations for both, residential and commercial spaces changed this outlook,” says Jessy Kutty, an NRI, who is soon planning to invest in the city’s property market.

After all, the kind of infrastructure upgrading, like the Eastern Freeway and Western Expressway, the metro rail, Jogeshwari – Vikhroli Link Road (JVLR), Andheri Kurla Link Road, etc, have had, they have changed the outlook of the city.

Add to it, the upcoming infrastructure projects like the Mumbai Trans Harbour Link and an international airport in Navi Mumbai, has suddenly given birth to a twin city that is ready for investment. Needless to add, these developments are on the stretches of high business corridors and hence, are all set to fuel the housing demand in the city.

Advantage Mumbai

Mumbai 7th most promising city in the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

Impressive investment along the new growth corridors of upcoming MTHL and Navi Mumbai International Airport

New corridors of development emerging as the government pushes for Rs 46,000-crore expressway to connect Mumbai-Nagpur with Samruddhi Expressway

Pune

The story is no different in the neighbouring city of Pune as well where the Pune Municipal Corporation (PMC) has set up five special funds for urban projects. The PMC has set a target of raising:

INR 55 crore for the Pune Infrastructure Fund;

INR 23 crore for Critical Infrastructure Funds for Information Technology and Enabled Services (ITES);

INR 2 crore for Heritage Conservation Funds;

INR 20 crore for Urban Transport Land Development Charges and;

INR 40 crore for Urban Transport Building Development Charges.

“Pune is no more just a hot destination but the best market for investment today. Even in the wake of a slowdown, the performance of the IT industry in the city has been phenomenal. Even Cushman & Wakefield has placed Pune among the top 10 markets across the Asia Pacific region. For me, this is the market to bet on for a long-term growth story,” says Gaurav Gupta, an IT professional.

Advantage Pune

Pune 8th most promising city in the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

Pune sells India’s first municipal bond since 2007 worth $31 million for 10 years for smart city project and aims to modernize the city

A detailed project report (DPR) for the ring road proposed by the PMRDA will be ready by September and civil work will start by October-November. This eight-lane 128km ring road will connect places on the periphery of Pune and Pimpri Chinchwad

Bengaluru

Bengaluru has always been an aspirational city for the average home-buyers. Now, with the boost of infrastructure projects, like the metro rail and Periheral Ring Road, this job magnet destination appears to be even more desirable.

The influx of global corporate occupiers, infrastructure deployment in the peripheral areas, rapidly improving connectivity and unleashing of large land parcels by the government for commercial and industrial growth, promises the emergence of newer nodes in the peripheral districts of Bengaluru.

Since land in these areas comes at a lower cost; the expat workforce that is employed in the numerous automotive, engineering and other industries located on the outskirts of Bengaluru, would continue to drive the property market.

Ashish Puravankara, managing director of Puravankara Ltd, finds reasons to suggest why Bengaluru is a huge investment magnet. The companies are also realising the cost of doing business here; the average rental cost of office space per sq feet in Bengaluru is about INR 45 and that works well for companies. Then look at the customers’ point of view. The average cost of housing in Bangalore is INR 5,500 and that works well for their workforce too.

“So, it is all supporting each other and it is not that only one factor alone is driving the market. If the prices have become unaffordable due to the high demand in the city, people would have started looking at other cities but Bengaluru continues to drive the major share of investment in the property market,” says Puravankara.

Advantage Bangalore

Bangalore 6th most promising city in the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

A Colliers report suggests Bangalore market maintained its top position across nine cities despite low vacancy and recorded an overwhelming share of 37% of total absorption

Bangalore is the only Indian city that has now scaled up to global level of consumption of office space per household, an impressive 65 sq feet as against the national average of 25 sq feet 

Chennai

Chennai seems to have moved ahead from its flood disaster of 2015. Today, it is the biggest manufacturing hub in India. The city has more industries coming up and it is termed as the Detroit of Asia. Almost every manufacturer has a facility there. It has attracted more investments and has more industrial corridors in almost every nook and corner of the city.

The IT sector here is also booming and growing at a rapid pace. Top Indian IT majors have a considerable chunk of employees operating out of Chennai.

“The best part about Chennai is the price point that hovers in the range of Rs 2500-5500. Premium projects are located in Nungambakkam, Egmore, Anna Nagar, Nandanam, Mandaveli, RA Puram and locations in ECR such as Muttukadu, Uthandi and Injambakkam. Low and mid-segment projects are coming up at Perumbakkam, Ottiyambakkam, Thalambur, Mevalurkuppam, Avadi, Padappai, Mogappair, Thirumazhisai, Navalur, Manapakkam, Padur, Kelambakkam, Thaiyur and Velappanchavadi,” explains Ravikiran Donthamsetty, a local broker.

Advantage Chennai

Chennai 9th most promising city in the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

Vision 2023 of State Government aims to boost infrastructure and industrial growth in the city

Expansion of Chennai airport, laying of Chennai peripheral ring road, widening of East Coast Road, and setting up of Chennai-Bangalore Industrial Corridor promises to alter the investment climate of the city

Hyderabad

Parth Mehta, managing director, Paradigm Realty agrees that markets like Hyderabad have been outperforming their peers in larger metro cities. The city is improving currently with respect to the infrastructure and government policies for doing business.

“Also, due to the IT and e-commerce boom, there would be a lot of start-ups that would prefer to operate from low cost office spaces at these locations,” says Mehta.

Probably, no other city looks as promising as Hyderabad from a medium-to-long-term perspective. The continuous growth of the IT sector in the city has had a cascading effect on the housing market in corresponding hubs as well. The residential activity in north Hyderabad is now driven by the presence of industries such as pharmaceutical, bio-tech, electronics, etc.

“In 2016, Hyderabad witnessed strong office leasing, registering a 109 per cent y-o-y growth during the year. In the January to March 2017 quarter, the city witnessed an uptake of more than 1.3 mn sq ft of office space. This growth in office leasing activity, coupled with robust infrastructure development and competitive pricing, positions Hyderabad as one of the most affordable residential markets for buyers in the region,” says Rami Shetty, a local property agent.

Most of the homebuyers in the city also agree that the metro connectivity and transit hubs will fuel further demand in the housing segment in the near future. Due to the lowest office rentals across top markets in southern India, corporates are increasingly looking at Hyderabad while planning their expansion strategies in the region. With the demand going up for office space, the city is experiencing a demand-supply gap at present and its organic effect on the housing market is a logical conclusion.

Advantage Hyderabad

Hyderabad tops the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

With political stability the city is high on the wish list of corporates due to low cost of doing business

The upcoming metro connectivity & transit hubs fuelling investment climate in the city

In Conclusion

In a slow moving housing market at present, these cities are displaying exemplary resilience to suggest that the medium-to-long-term outlook is pretty bright. The best part is that the home-buyers and other investors are ready to believe the long term growth stories of these cities.

Pune realty blessed with local talent

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Bottom Line: At a time when the real estate developers across the country are cribbing against the labour shortage and absence of migrant work force to justify the cost over heads and delays in meeting the project timelines, Pune real estate is apparently showing the way forward.

Pune, Pune property market, Pune real estate market, pune property prices, India real estate news, India property news, Track2Realty, NRI investmentPune property market is meeting the two challenges with the use of local talent. Interestingly, there is no dearth of man power in this market, either skilled or unskilled and the reason is pretty simple; instead of looking to tap the work force from other regions developers in the city are banking on the local talent to meet the project requirements.

Moreover, this market is actually blessed with the availability of local talent; and the developers are giving preference to make use of it. Most of the developers in this part of the world are engaging the local work force (both skilled and unskilled) to make sure that labour shortage or absence of talent pool does not affect their timelines of delivery of the project. After all, talent shortage is a major issue confronting the real estate sector across the country and the Pune market definitely stands better positioned due to the focus on the local workmanship.

Analysts also point out that the realty business is quite different from other manufacturing businesses and this is one of the main reasons why it is a difficult business in terms of attracting, managing and retaining the work force. It has always been suggested that the sector needs real estate specific courses and the real estate community and government bodies need to work together in order to ensure that this demand supply gap is met. However, in Pune the developers are showing the way forward to other markets afflicted with the talent shortage.

This also raises a fundamental question as to whether this is a wilful strategy to use the local work force or is borne out of need to comply with certain mandate of the government authorities. In certain other markets, for example Noida, the government authorities have issued advisory to the developers to make use of more local talent. However, in Pune the developers insist it is a strategy that has evolved more by design than default.

Abhay Kumar, CMD of Grih Pravesh Buildteck maintains that realty business is such where requirement of local talent is always preferable and since it is available in Pune it always works in favour of the developers. He adds that the local manpower is also helpful for the developers as far as their understanding the market is concerned. Therefore, it is always a wilful exercise on the part of developers to hire local talent.

“Pune can be compared with any other metro as far as availability of talent is concerned. Both skilled and non-skilled professionals are found in abundance in the city and one of the main reasons is that Pune has got wonderful mix of urban and semi-urban population. On one side, Pune being closer to Mumbai adds to the supply of skilled talent, and on the other side the rural area supplies adequate non-skilled labourers,” says Abhay.

Kishor Pate, CMD, Amit Enterprises Housing agrees that for Pune-based developers, local talent is used in every project. According to him, in a regular housing project in Pune more than 80 per cent of the manpower used is local. There can be a higher percentage of outside talent in a luxury project; especially when it involves national or international level architecture firms, interior designers or other specialist consultants as these tend to have their own teams. Also, externally appointed firms who tackle facilities management post completion may have teams with a mix of local and outside manpower.

“For a Pune-based developer, using local talent is a matter of choice and makes sense in almost all respects. Project construction is a time-bound process and all teams involved need to be readily available on a constant basis. Even for developers who come into Pune market from outside, this is the reason why they use local manpower which is an essential factor in timely completion. One of Pune’s many USPs is its extremely rich and diverse manpower pool. In fact, Pune is not only a reliable talent market for the city but for the national and international markets as well. Skilled and unskilled talent is readily available, and local developers are usually able to build and scale their teams very efficiently,” says Pate.

Arvin Jain, Managing Director, Pride Group adds that to a maximum extent Pune developers use locally sourced talent as there is no dearth of qualified professionals. Construction labour teams are also maintained locally, but this aspect also depends to quite a degree on inward migration from nearby villages. Sometimes, it is necessary to bring in people from other cities and there can be various reasons for this, ranging from occasional and unanticipated dearth of construction labour to the precise requirements of more specialized projects.

“Developers in Pune will always seek to build their manpower from locally acquired talent, as this is not only good from a point of view of the generated employment benefiting the city but also in terms of managing attrition. While there is no compulsion as such, it goes without saying that it also helps with maintaining market goodwill. Pune has no shortage of skilled talent but ironically, developers sometimes have to attract highly qualified professionals who passed out from one of Pune’s many excellent colleges back into the city,” says Jain.

In a nutshell, Pune real estate market is blessed with local talent pool which helps them both ways—meeting project timelines as well as keeping manpower cost in check. Of course, in exceptional cases only there are sometimes shortages in construction labour, which makes it necessary to bring in manpower from other cities. The developers in the city are also candid to admit that since the pay scales are relatively lower in Pune than in Mumbai, the city loses quite a bit of qualified talent for that reason each year. But unskilled talent is usually not a problem.

 

Godrej Properties adds a new project in Pune

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News Point: The Mumbai-based Godrej Properties will develop a residential project in Hinjawadi IT Park, Pune. 

Godrej Press Launch, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtyGodrej Properties has signed a new deal to develop a residential group housing project in the heart of Hinjawadi IT Park, Phase I, Pune.

Spread over 15 acres, the project will offer approximately 155,000 square metres (1.7 mn. sq. ft.) of saleable area and will be developed as a modern residential development comprising of apartments of various configurations.

Pirojsha Godrej, Managing Director & CEO, Godrej Properties said, “We are happy to add our 12th project in Pune in an important established micro market.  This project addition fits well with our strategy of strengthening our presence in the country’s leading real estate markets.”

This project is located behind Wipro in Phase I, the most prime location within Hinjawadi IT Park, and has excellent connectivity to the Mumbai-Pune Expressway.

This project will be developed in partnership with Godrej Residential Investment Program II (GRIP II). This is the third project under GRIP II, the US$ 275 million fund which was announced in March 2016.

Affordable homebuyers must know their wants & needs

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Bottom Line: Affordable homebuyers must understand their wants and needs to not get duped by the fancy marketing jargon of builders.

- india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news,Track2Media, Track2Realty, ravi sinha“Let’s face it! We all have unrealistic expectations when buying a house. We often forget about our budget and end up stretching it to fall into debt trap. It happens because we want the best of everything even though we are in the property market to buy a budget home or affordable home. I am not sure to what extent it is human tendency or to what extent we fall into the fancy trap of developers. But today when I look back I think I should have been more realistic when buying my house. There is no point paying almost all the salary in the EMI now,” says a repentant homebuyer in Mumbai.

Well, not many would like to admit it as openly as this homebuyer but the fact remains that the buyers of affordable homes often forget their wants and needs when they enter the property market. The temptation to have one’s home is palpable and many of the first time homebuyers make the mistake of stretching beyond the financial limits.

How many affordable homebuyers who leave to work early morning and come back late night actually need amenities like free Wi-Fi, amphitheatre, club, tennis court, swimming pool etc? Are many buyers in the average salaried class in a position to avail these facilities even though the developer has created e everything within the project? How long such fancy amenities are maintained once the project is over and the monthly maintenance charges are a huge issue?

The critics of this theory might question as to why not the buyers of affordable property be given these amenities. The reasons are many – ranging from the increase in loading percentage vis-à-vis the usable carpet area to cost of maintenance of these amenities every month. In a housing market like Mumbai where the majority of the homebuyers in the affordable segment are expat professionals having both time and budget constraints it simply defies logic to expect fancy amenities.

With the reasonable expectation of a roof over the head not very long ago, the real estate boom in this part of the world has scaled up the liberty of choice for the average homebuyers. While the aspirations of even the middle and lower middle income with moderate budget have gone up, there are very many residential projects launched in recent times that seem to fill the gap with the promise of hi-tech amenities, luxurious lifestyle, lush green surroundings.

Analysts therefore recommend that the average homebuyers must know their budget and needs to avoid the additional financial load. What you may want does not necessarily fit into your budget segment and the quest to have something more is endless. The smart builders do understand this temptation of gullible homebuyers and in the absence of homebuyers’ education in this part of the world their temptation is what sells the fancy marketing offerings of the developers.

Developers, on their part are conscious of this homebuyers’ temptation. The point out that the developers are just catering to what the market is looking for. Harjith.D.Bubber, M.D & C.E.O, Rivali Park agrees that nowadays a homebuyer expects gated community as a part of affordable housing. “External amenities like club house, swimming pool, open areas for children to play, minimum one car parking is the basic expectation of the homebuyer today even in budget housing.”

Parth Mehta, Managing Director, Paradigm Realty, on the other hand, suggests caution when he says that when a person is buying an affordable housing with budget constraints one should keep in mind some basic things. His suggested checklist is more about basic sanctions and clearances than amenities to ensure the timely delivery of the project.

“To invest in a property where developer has complete approval like IOD, CC is more important for someone who is spending his lifetime savings. The title of the property should be clear and marketable. One must also check the credentials and standing of the developer in the market,” says Mehta.

Some of the developers try to find a method in the expectations of affordable homebuyers. They feel it is more to do with how the developers define the demand of affordable housing. Affordable homebuyers too should be given liberty of choice as far as upgrading the lifestyle is concerned.

Nikhil Hawelia, Managing Director of Hawelia Group says there is nothing wrong for a low-ticket buyer to expect the quality experience. According to him, instead of compromising on the quality of amenities that the modern homebuyers want (and often also need) the budget segment should be determined by the distance from the main city and the work place. If one is ready to travel an hour or so for getting a luxurious feel at home, the market should be ready to respond to this set of buyers as well.

“I believe in today’s market place where most of the young buyers are aspirational, even when they have budget constraints, their budget should be a criterion only for location and the size of the apartment. They should not be devoid of modern amenities and that is how a new emerging segment of affordable luxury can meet the market expectations as well during the slowdown. This is how urbanization has evolved the across the world,” says Hawelia.

Analysts for quite sometime are pointing out to mismatch between homebuyers’ preference and the ground realities. While value addition is something that drives homebuyers across the segment of housing, in affordable housing this value addition has an altogether different connotation. More usable spaces, since most of the affordable housing units are smaller in size, is a better value addition than lowering the usable carpet area for the sake of badminton court or amphitheatre kind of fancy offerings. 

As a thumb rule, if the budget is just for the affordable home and the homebuyer is moving from a rented flat to his own, one should first of all look at the location and distance from the work place. Since most of such projects are on the periphery of the city, one must also look for the infrastructure within the project. Usable carpet area is next and the fancy offerings & amenities are definitely the last in the checklist of affordable housing. 

By: Ravi Sinha

What regulatory bill will do for homebuyers?

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News Point: Now that the Real Estate Regulatory Bill has been cleared for take-off and will be an enforceable law soon, the question that buyers are asking is how exactly they will benefit from it.

Kishor Pate, CMD, Amit Enterprises Housing, Pune real estate, India real estate news, Indian realty news, India property market, India investment, Track2Media Research, Track2RealtyThis is a fair question, considering that RERA was primarily formulated for their protection and in their interests. Let me answer it as clearly as possible, without sacrificing on the necessary details.

One of the most important things that RERA will do for homebuyers is to reduce their uncertainties when it comes to planning their finances around a home purchase.

If we assume that a buyer has booked a flat admeasuring 1,000 square feet, and that the developers has promised possession in three years. A flat of such dimensions (1000 square feet) in a location which is close to the city Centrex, or has good public transport connections to it, would potentially earn its owner anything between Rs. 1.5-2.5 lakh per annum.

If the developer keeps his promise and delivers the flat in the stipulated time, the buyer would be able to put the flat out on rent and draw an income from it to offset his home loan expense.

However, if the developer fails to deliver the property in three years and extends the delivery by a year or more without providing compensation for the delay, the buyer’s finances are thrown seriously out of whack. The Real Estate Regulatory Bill will safeguard property buyers from such eventualities.

In the latest amendment to RERA which was accepted in the final draft, real estate agents are also covered under its. Effectively, this means that property agents can no longer engage in deceptive promises, charge excessive brokerage or fail to perform their full duties in a property purchase. They will be held accountable for any deficient service or failure of omission or commission.

RERA will also ensure that home buyers will not be cheated on the promised layout, and that amenities and fittings will not change along the way. Notably, such unforeseen and unscheduled changes were a recurring nightmare and grievance for homebuyers in the past.

With RERA in force, the developer will not be able to make any changes in the layout, dimensions, amenities, facilities and fitting which were agreed upon at the time of signing the sale deed. If they still occur, affected buyers can appeal to a tribunal which has been specifically instated to address such incidences, and be assured that punitive or corrective action will be taken against the developer.

Also, RERA will require developers to quote their asking rates on carpet area instead of super built-up area, which has so far been the norm. This aspect will take some time to be fully implemented, as it is a huge change which will require countless developers to recalibrate their rates.

There are many more facets to this Bill which will work in favour of property buyers, but the above clearly indicate that property buyers are soon going to stop being victims and will in fact be much more in full control of their property investments.

By: Kishor Pate, CMD, Amit Enterprises Housing 

How rental housing benefits our cities

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Bottom Line: If modern rental policy becomes a reality, we will see a significant increase in investor demand for housing in areas where there is a huge requirement for rental housing.

Kishor Pate, CMD, Amit Enterprises Housing, Pune real estate, India real estate news, Indian realty news, India property market, India investment, Track2Media Research, Track2RealtyRecently, the Indian Government announced its intention to deploy a modern tenancy law with the aim to promote rental housing in Indian cities, giving due heed to the requirements of contemporary tenants. The planned National Urban Rental Housing Policy intends to address the needs of people migrating from rural areas to cities.

It will benefit intending landlords who have so far shied away from renting out their properties, by means of fiscal incentives specifically designed to encourage rental housing. The result will be a far better availability of rental housing in cities where it is needed the most.

The rental housing conundrum

India’s cities are continuously growing in terms of population, and increasing population has consequently led to more pressure on their housing markets. The rental property market is the only option for most people who have newly migrated into a city for employment, or are just at the outset of their careers.

Given the huge inward migration that Pune sees each year, the city’s rental housing market is literally a lifeline for countless individuals and families. As a result, rental housing is also a prime focus for real estate investors.

This is a trend we see in cities the world over, where the rental market thrives even when end-user housing sales are constrained due to macroeconomic factors. If we look at the US market, even while home ownership was a common trend during the 1900’s, the share of the rental market was seen as increasing.

Between 2004 and 2012, the rental market grew from 31% of 35%. In 2013, the total number of renters in the US was more than 43 million.

This trend also reflects in countries like India, where rental housing is always in demand – regardless of how the home sales market is performing. There are several factors driving this phenomenon, but one of the most pertinent facts is that rental housing has positive impacts to the overall economy and development of a city, as well as the country as a whole.

Developing cities have always attracted greater migration of talents from neighboring cities. This naturally puts pressure on the existing residential stock. Rental housing is the only bulwark against the growing cost of home ownership; it offers a greater flexibility and puts significantly lower financial strain on people.

Further, rental opportunities attract a vast cross-section of households and individuals from diverse age groups, ranging from students to high-ranking executives. Almost every Indian family with the budget to buy their own home has inhabited rental properties at some point. 

A range of housing options

Rental properties come in a variety of configurations – the higher one’s budget is, the better the space will be in terms of location or size, and also the available amenities. They range from single family homes to high-end multi-bedroom apartments.

Rental homes meant for modest income groups are generally concentrated around the cheaper suburbs, while higher rentals occur in the classier areas of the city.

Thus, rental housing caters to the whole spectrum of incomes. As cities experience higher inflow of migrated population, the suburbs and surrounding spaces must develop their rental housing capacities to meet the demand. 

Rental housing decreases slums and other irregular developments

In the absence of adequate rental housing in a city, migrating populations – especially the lower income groups – are apt to occupy slums or other kinds of irregular housing which tend to blight the urban landscape of growing cities.

This adversely showcases the quality of growth of the city, and also creates a range of problems that range from increased crime rates to sanitation challenges. Affordable rental housing is therefore an important preventive of unorganized growth.

With more families able to depend on rental properties, the city’s housing market as a whole gets more standardized. Increased competition among property developers and agents ensures that real estate prices are managed within the ‘affordable’ range. This also goes on to boost the overall economy of the city. 

Rental housing encourages influx of valuable talent

One of the primary concerns among the migrating workforce is the availability of adequate housing. A city that offers limited or unaffordable rental housing options will also not be able to maintain its skilled manpower equity. The influx of qualified and skilled working population is necessary to encourage growing services sectors like healthcare, manufacturing, education, entertainment and retail.

In short, affordable rental housing must always be encouraged in a city which seeks to grow and prosper. A city’s town planning authorities and state governments alike must take heed of the fact that growth in the rental housing sector is a very essential quality and component of overall urban growth and development.

By: Kishor Pate, CMD, Amit Enterprises Housing 

The empowered Indian woman and home purchase

Posted on by Track2Realty

A decade ago, an Indian woman independent and capable enough to buy her own home was a rare case but things have changed today.

Kishor Pate, CMD, Amit Enterprises Housing, Pune real estate, India real estate news, Indian realty news, India property market, India investment, Track2Media Research, Track2RealtyThe contemporary Indian woman tends to be very well educated, has a good job with excellent career growth prospects, and even holds important government or corporate leadership posts.

In any case, today’s Indian women certainly have the ability and confidence to craft their own lives, and are very much able to fulfill their dream of owning a home regardless of whether they are married or not.

In fact, buying a home is fast beginning to figure as a bigger priority for many Indian women than marriage. This is not surprising, since a self-owned home is correctly seen as the #1 security anchor in India – and the best foundation from which to make long-term life decisions.

In fact, even married Indian women today are more often than not active financial partners in their families. Apart from being earning members, they also have a complete grasp of the family’s current and future financial abilities.

Developers are very aware that the woman plays a leading role in a family’s home purchase decisions. Also, Homes are made by women, not men. Every man knows this, and will defer to the judgment of the woman in his life in matters of buying a home.

Women have a genetically encoded gift for homemaking, and much better perspective about what should be included or excluded. A man depends on the woman to make his home comfortable and suitable for family life.

Still, buying a home is not just a matter of instincts and good taste, but also one for adequate planning and foresight. For women who investigating the market for suitable properties, either for themselves or for their family, here are some points to consider:

Prepare for the initial costs:  First-time homebuyers tend to save a considerable while to get a sizable down payment together. However, keep in mind that property purchase involves several other initial expenses such as stamp duty and registration costs, utilities connection charges and insurance and taxes.

Apart from your down payment on a home (or your contribution towards a home loan) you need to have an additional fund of at least 6-7% of the base cost of the property available. If a broker’s services are used, even a negotatiated fee will amount to a significant sum.

Not having the required capital to cover all of the initial costs can prove to be a dampener on home purchase plans. It is not necessary to have the entire corpus in one’s savings account, since personal loans are always an option.

However, women who are just starting out in their careers should not allow themselves to fall too deep into a credit trap. If they avail of a personal loan to cover the initial costs of home purchase, it should be to the minimum possible extent so that repayment does not become an issue on top of servicing the home loan. It is always best to use free and clear capital as far as possible. 

Be confident about monthly outgoings:  Anyone eyeing a property purchase should first figure out the monthly mortgage and whether they will be able to afford it. Online mortgage calculators can be helpful, but they will only tell you the value of the principal and associated interests.

There are other monthly expenses involved in home ownership, and these include insurances, taxes, maintenance charges, utilities charges, etc.

For working single women, it is important that all these amounts put together do not exceed 35-40% of their net income. Do not neglect to figure out your overall cost of living before deciding on how big a home loan you can safely service, and keep in mind that property is not the only investment you should make towards your ongoing financial security. You should also put at least 10% of your monthly income into a retirement plan.

Often, the full implications of having over-committed on a home loan do not dawn on the borrower until the home loan has been serviced for a few months. By then, it is too late to modify the financial plan. When it comes to home purchase, every financial angle must be examined well in advance.

It is very advisable to use the services of an experienced financial planner, or rely on the informed advice of a family member, friend or colleague who is experienced in such matters. The process of buying a dream home should not turn into an unexpected nightmare at any point.

Be realistic and maintain forward focus:  Home ownership is a great step ahead in a woman’s life, and towards independence in your retirement age. But your first home is not necessarily the only home you will ever buy. Remember that you can always upgrade in the future if required or desired, so there is absolutely no need to buy the biggest-possible flat now. Never compromise your current financial viability by buying a needlessly expensive home.

The home you live in today does by no means have to be the one you will be living in when you retire. When it comes to real estate, it is always a good thing to upgrade as financial ability improves, but this process can and should be planned out over the entire course of one’s working life. For a woman who is at the outset of her career, nothing is more important than financial stability on every front.

To plan for upgrading to a bigger and better home further down the line, it is very advisable to invest (and stay invested) in good mutual funds which deliver more returns than savings accounts.

Direct stock market speculation into single company stocks and bonds as a potential source of real estate funding should be avoided, as such investments are not sufficiently diversified to offer a safety net in case a company experiences a downturn. 

Shop around extensively for home loans:  When it comes to choosing the right lender, do not go by the recommendations of friends or relatives alone. Do extensive research on the several different lending institutions available to you.

Ideally, you should get pre-approved for a home loan the interest rate should be the most competitive. Remember that as an Indian woman, you are entitled to ask for a lower rate of interest on a home loan – be sure to insist on this benefit.

The home loan market in India is currently very competitive, and banks are falling over themselves to attract customers. This is a fact that can and must be taken advantage of.

A woman who is shopping around for a home loan should make specific inquiries about special interest rates and other incentives that a bank is offering to women borrowers. Asking the right kinds of questions will also establish you as an informed borrower and encourage the bank to offer you the best possible structuring.

Never take the first thing that is offered to you – most banks have a considerable margin of flexibility to accommodate borrowers who know what they want and are determined to get it. If you are married, the ideal scenario is to take a joint loan with your spouse. This is also the arrangement that banks prefer most, since it reduces their risk.

Be sure of the developer’s credibility:  Every day brings new stories about buyers who have been hoodwinked by unreliable developers. Either the project has been unreasonably delayed, has never even taken off or the delivered property (or amenities and facilities) are grossly different from what was initially promised.

Do not fall into such a trap – no woman looking for the security of home ownership should have to deal with such a setback. Make sure the developer has a strong reputation on the market by doing multiple checks with reliable agents, the home loan company and also on the Internet.

It is highly advisable to patronize only established developers with a readily verifiable track record for timely completions and 100% adherence to the agreements they make with their customers.

By: Kishor Pate, CMD, Amit Enterprises Housing 

What has led to Pune’s affordable housing crunch?

Posted on by Track2Realty

No discussion about the hottest real estate markets in India today is complete without a generous reference to Pune.

Kishor Pate, CMD, Amit Enterprises Housing, Pune real estate, India real estate news, Indian realty news, India property market, India investment, Track2Media Research, Track2RealtyPune is one of the most-talked-about and desirable places in India to live and work in today. People are attracted to this city because of its vibrant job market, the much more clement climate and environment when compared to the neighboring financial capital Mumbai, and – very importantly – the superior quality and spread of options in housing.

However, there are some important factors that property buyers who are not familiar with Pune should be aware of so that they can make the right choice while buying their homes here. Pune is doubtlessly a marvelous place to live in, but this has over the recent years actually become a problem.

The areas closest to Pune’s business district and Information Technology hubs have gained attention for being the most desirable places to buy or rent a home in. However, as the popularity of these areas increased, so did the cost of living. Because these areas are seen as high profile and naturally attract people from the higher income brackets, most of the housing supply there is now in the premium segment. The property rates of such housing also drive those of non-premium housing upward.

It is not only real estate prices which are affected in these locations, but the overall cost of living. The high property prices in these areas mean that shopping outlets, entertainment centers, restaurants and healthcare facilities all have to pay much higher rents.

The higher costs are directly passed on to the customers in these catchments. Moreover, because of the overall premium ethos of these locations, they tend to attract retail, hospitals and F&B outlets which cater primarily to high-income customers.

True, Pune is one of the most vibrant cities because of its high lifestyle quotient, spunky neighborhoods and Information Technology hubs. Unfortunately, the very residents who made the city this upscale, happening place where everyone wants to live and work are now challenged by the increased property prices and cost of living. In Pune, affordable housing options are becoming fewer and far between.

As a result of the rapidly increasing capital values, housing rents in the most popular areas have also been rising inexorably, and this trend shows no signs of stopping anytime soon. Right-priced housing is decreasing because of the swanky new apartment buildings in the more happening locations. Pune’s inner locations and those closest to its IT hubs now have no affordable housing left for people to buy, even as the influx of new renters in these limited areas drives up demand and prices for a limited amount of units available for rent.

The only solutions would appear to lie in Pune’s far-flung outskirts, where land is still cheap and developers can keep their prices low. However, these areas are also very far from most of the city’s workplace hubs, and also lack the kind of support infrastructure that makes decent living possible. Fortunately, Pune still has a small handful of locations which are neither too remote not too costly for budget home buyers.

Among these, Undri in the Southeast of the city and Ambegaon in the Southwest are two of the best-connected areas which are still receiving a decent supply of affordable housing and also rapid infrastructure deployment. Keshavnagar and Manjri in the East are also still quite affordable, though relatively less enabled in terms of infrastructure.

These locations offer home buyers the benefits of rational housing prices as well as very good connectivity in terms of road network, public transport and proximity to good schools, shopping, entertainment and affordable healthcare.

By: Kishor Pate, CMD, Amit Enterprises Housing 

Real estate demands from the Union Budget

Posted on by Track2Realty

Real estate stakeholders in every Indian city are looking forward to the upcoming financial budget 2016 to see whether it will provide any relief to the sector.

Kishor Pate, CMD, Amit Enterprises Housing, Pune real estate, India real estate news, Indian realty news, India property market, India investment, Track2Media Research, Track2RealtyDevelopers have their own expectations, because positive announcements for real estate buyers made during the budget will help increase the market sentiment, and therefore sales. The general hope is that the budget will provide cheer to intending homebuyers who have been deterred for various reasons.

Make home loans more affordable

The Union Budget should make the rate of interest specific to home loans more reasonable. Currently, the banks are offering interest rates which are still too high. Paying so much interest has serious implications on the family budgets of most middle-class wage earners. It is not surprising that many of them currently shy away from home loans.

The budget should bring the interest rate on home loans down to between 7.5%-8.0%. The new government has clearly stated that it wants to make Housing For All Indians a reality by 2022. It is impossible to achieve this goal if home loans do not become affordable to all, as well.

Additionally, the home loan interest amount exemption under Income Tax benefit should be increased from the existing limit to Rs. 3 lakh. Further, this exemption should be made applicable for more than single property purchases.

This is not an unreasonable expectation. In the current times and in many cases, a single home is not enough to accommodate all family members. The finance ministry should take due note of this fact and accordingly provide relief for both first home and second home buyers.

Eliminate multiple taxation on property purchase

The budget should also do away with the multiple taxes involved in the purchase of residential property. As of now, home purchasers are required to pay service tax and value-added tax (VAT) on top of stamp duty and registration charges. Goods and Service Tax (GST) should be introduced in the place of these taxes. 

Bring in the real estate regulatory bill

The real estate industry expects the Budget to finally make the Real Estate Regulatory bill a reality this year, so that the industry has the benefit of an apex body via which all concerns can be addressed transparently and efficiently.

Reduce cost of property registration

Another expectation from the Union Budget is a reduction in the cost of property registration. Stamp duty and registration costs are as high as 6% in most cases, and this needs to be reduced by a few basis points to aid consumers. Alternatively, a slab-based approach should be introduced. Stamp duty falls under state government purview, but the Center can nevertheless issue a directive to reduce stamp duty costs.

By: Kishor Pate, CMD, Amit Enterprises Housing

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