Indian Millennial Homebuyers: The Times Are Changing

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Anil Pharande, Chairman – Pharande Spaces

Everything that your parents may have communicated to you about owning a home may be incorrect if you are a millennial under the age of 35. However, don’t blame yourself for this – your parents operated by a rigid set of values that they have simply passed on to you. It was a simple enough formula – get a good education, get married, have kids and buy a big flat in the city. This is – or was – the quintessential Indian middle-class dream.

This dream – and the formula – may continue to have relevance to quite a few younger people in India, but the way life works for today’s millennials in India is no longer so cut and dried as it was for their parents. In the first place, we have a rapidly evolving and increasingly competitive job market in India.

The career charts of Indian millennials are no longer as predictable as those of their parents were – nor does a sound college education mean that one can actually get the best jobs anymore. Also, millennials are the ‘job hopping’ generation which wants to sample different lines of work and also different companies with varied work cultures before they ‘settle down.’ This is one reason why many Indian millennials initially prefer to rent rather than buy their homes.

Secondly, because their careers are no longer cast in the concrete of limited options like engineer, doctor, lawyer, banker or ‘Government job, young Indians today are marrying later and are not necessarily in a hurry to have children once they do, either. When they do decide on having children, having one child is, more often than not, enough. The typical millennial family of today is essentially nuclear and does not subscribe to the values that drove the much larger and much more complex joint family package.

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They are more flexible and value their freedom, so they are not overly invested in making heavy financial commitments as soon as they are able to (making such commitments was a defining factor of the previous generations of Indians).

What does this mean in terms of their home purchase decisions? For one thing, it means that a smaller flat – even for a dual-income household – is perfectly adequate to begin with. What increasingly matters for the young, smart socially conscious Indian nuclear family of today is not necessarily size, but:

  • Value for money (banks and developers should understand by now that dual income does not equal dual gullibility)
  • Being able to get to and from work conveniently (not because getting to work fast matters most, but because getting home faster leads to better work-life balance)
  • Good public transport connectivity (because using public transport is good for the family budget as well as the environment)
  • Two car parking spaces (because two earning members may need to be as mobile as possible)
  • Fast broadband + Wi-Fi connectivity and other smart home features (because many Indian millennials can and do work from home, or from home as well as an office)
  • Environmental sustainability of the project (because most Indian millennials do believe that the world can become a better place)

Upgrading to larger homes should be an option, but it is by no means the only acceptable path for the Indian millennial to follow. For the previous generations, the ‘upgradation’ route was more or less socially enforced – but that trend is now history.

Strangely, many residential developers in cities like Pune have not caught on to the reasons why their projects are not selling as fast as they used to. They choose to believe that it is because ‘market conditions’ are currently ‘slow’. That may be true, but the larger fact is that housing projects that appealed to their parents may not have the same attractiveness for today’s millennials.

Projects that do not meet the requirements of today’s younger generation of working professionals are not going to work for this buyer segment, regardless of the market conditions.

One truth about the real estate market has not changed, even for millennials – while it is not all about ‘location, location, location’ for them, location is still certainly very important. It’s just that ‘central location’ is no longer the Golden Rule – Indian millennials are far more inclined to purchase their first homes in the suburbs, not in the city centre.

They are also far more likely to buy homes in organized townships with stand-alone infrastructure and their own schools, healthcare and shopping / entertainment facilities. Townships with their own office complexes offering potential walk-to-work or cycle-to-work possibilities and those close to major employment hubs such as IT parks and manufacturing belts are the most preferred.

About The Author:

Anil PharandeAnil Pharande is Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in West Pune. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer in the PCMC area offering a diverse range of real estate products catering especially to the 42 sectors of Pradhikaran. The luxury township Puneville at Punavale in West Pune is among the company’s latest premium offerings. Woodsville in Moshi is another highly successful PCMC-based township by Pharande Spaces which is now in its 3rd phase.

Infrastructure And its Correlation to Home Buying

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Anil Pharande, Chairman – Pharande Spaces

In India, as in other countries, it is a simple fact that localities which are as close as possible to important workplace areas will be most consistently sought out by people looking to buy homes. Therefore, projects with great connectivity by railway and road, see the highest demand for residential properties.

Property investment is always driven by the infrastructure in and around a locality. From sufficient roads to reliable water supply and drainage, infrastructure includes all the physical characteristics which contribute towards creating sustainable communities. Unsurprisingly, property costs close to infrastructure including airports, railway stations and roads are higher than in other regions.

If a location does not offer reliable electricity and water supply, connectivity, public transportation stops and sanitation by ways of good sewerage and waste disposal, it will not work as a residential destination regardless of what else it offers. All these are services that nobody living in a modern Indian city is prepared to live without.

From a property marketplace outlook, sufficient infrastructure in an area includes everything that leads to an easier, convenient lifestyle which does not have to contend with any kind of shortages, service outages and breakdown of public facilities.

Well-planned roads and public transport

Roads are required to make transport quicker and simpler. They are important right from the time when basic infrastructure and initial real estate development are being put in place, as raw materials and labour has to be able to reach the location. Once the area is established, roads let people travel to and from work, for kids to get to and from school and for access to shopping and entertainment.

Proper planning of road, rail and public transport nodes is very important. The key factor to be kept in mind during this planning is that people do not want to too close to bus depots, railway stations, shopping areas and industries businesses – but neither will they wish to be too far away from them.

Reliable supply of essential utilities

In a developing country like India, there are still many towns and suburbs of cities that do not enjoy reliable water and electricity supply, garbage management and public security features. With the income of typical Indian families constantly growing, today’s urban homeowners are willing to spend more to get access to seamless water and electricity, and adequate security.

Naturally, residential complexes that provide 24×7 water and electricity supply and round-the-clock security are far now highly favored. This is what has led to the growing momentum of township development in Pune and even more so in PCMC. Housing projects in places that don’t have reliable utilities and where security is a concern do find takers – but these are usually exceptionally budget-strung buyers who resign themselves to having to wait for everything to fall in place at some stage.

Sanitation infrastructure

In India, there has been rising awareness of the minimum levels of sanitation that a household should have access to. A new location will only start attracting real demand from homebuyers if it offers appropriate measures of sanitation such as municipal road cleaning, trash removal, sewage and waste water disposal, and other related services. Without these services, life becomes unhealthy and intolerable. A location’s score on the sanitation front is a very important criterion for homebuyers who are shortlisting housing projects in which to buy a property.

Social infrastructure: Schools, hospitals, shopping and recreation

Indian families put great onus on the availability of schools in a residential neighbourhood. This is why areas with good schools in the vicinity fetch higher property rates than most others. This is not only a question of convenience for Indian parents, but also of the safety for their children. Because of life’s uncertainties and the rise in road and domestic accidents, hospitals are another component in an area’s social infrastructure that is of critical concern for homebuyers. They expect quick access to medical facilities –  this is non-negotiable.

Recreational open spaces such as parks are also consistently in favour from city dwellers that wish to experience nature to some extent, and thereby be able to find some refuge from the urban madness that rules most of their days. A locality that offers water bodies, gardens, parks and playgrounds in the vicinity are considered premium.

Developers of large integrated townships are aware of how important the availability of good social infrastructure has become, which is why they include gardens and artificial lakes as well as schools, shopping and entertainment inside the project premises for their residents.

Infrastructure in all its facets is therefore hugely important in today’s residential property scenario, and it directly influences the buying behavior of Indians scouting around for homes. The degree to which social and civic infrastructure is available in a neighbourhood dictates how successful a residential destination is today.

This is why integrated townships have become the most important trend on the Indian property market today. Townships are not dependent on how proactive the municipality and private sector players in deploying social and physical infrastructure. They deploy it themselves in perfectly-contained microcosms that not only include residential projects but also office and retail complexes as well as educational and healthcare facilities.

Integrated townships ensure that their residents have everything they need for a modern comfortable and secure lifestyle accessible within easy reach, for instant use. The high demand for township properties in rapidly urbanizing cities like Pune and PCMC vouchsafes the fact that homebuyers are no longer willing to compromise on the advantages of sufficient infrastructure in their neighbourhoods.

About The Author:

Anil PharandeAnil Pharande is Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in West Pune. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer in the PCMC area offering a diverse range of real estate products catering especially to the 42 sectors of Pradhikaran. The luxury township Puneville at Punavale in West Pune is among the company’s latest premium offerings. Woodsville in Moshi is another highly successful PCMC-based township by Pharande Spaces which is now in its 3rd phase.

Rainwater Harvesting: Not Just an Option but A Necessity

Anil Pharande, Chairman – Pharande Spaces

In a land-locked city like Pune, the value of water is inescapable. Factors such as climactic changes happening at a national and global level are causing water levels to fall. Overpopulation has resulted in more and more acquisition and development of land – and, even worse, for landfills, cutting back on water bodies that were once available and accessible.

Deforestation has further compounded the deficiency of water, as this causes regional rain to eventually become unpredictable. Several areas are critically affected by a dearth of usable water – a city like Pune is, actually, a prime example of the happening throughout India.

More and more of the world’s burgeoning populations will be moving to urban areas in the years to come. As a result of accelerated property development in our cities, the greatest requirement for critical resources such as water is focused in urban areas. As a consequence, multistory residential complexes are being constructed at an extremely rapid speed.

The earth’s surface is 70% water; yet, very little of this is actually usable or drinkable by humans. It is very likely that we will shortly reach a stage when the quantity of useable water present on the earth’s surface isn’t sufficient to satisfy all of the requirements of the development occurring to accommodate the growing population.

Rainwater harvesting is the solitary realistic option to counter the growing menace of rapid water depletion – and this real and present option is definitely catching on in our cities. Rainwater harvesting involves accumulating, filtering and storing rainwater to be utilized for assorted industrial and residential purposes.

Rainwater is a clean, free source of potable water. Rainwater harvesting used in residential properties, which involves trapping rainwater from roofs and directing it into underground storage tanks or cisterns, can satisfy 50% of a regular family’s water needs.

The truth is, rainwater harvesting isn’t just a strategy to make maximum use of the natural resource – it also has minimal environmental impact. Naturally, it leads to substantial price savings on recurring water charges in residential buildings. In a city like Pune, a huge number of residential societies are dependent on expensive water tankers which extract ‘hard’ water from borewells – a process which further depletes ground water levels and causes all kinds of associated problems to the environment.

Urban water supply calls for pumping stations in addition to putting up treatment plants and supply conduits. With the rate of increase in urban population, city planning authorities cannot match utilities in the majority of Indian cities. Engineers and geologists are constantly fighting to discover new sources of water.

With borewell shafts going deeper as the hunt for more water continues in cities like Pune, water supply can actually be significantly supplemented by rainwater and decrease the pressure on the usual water supply.

When rainwater is harnessed in a housing complex, it can be utilized for assorted non-drinking functions that call for substantial volumes of water. Because rainwater can complement the traditional water supply system, this means considerably reduced utility bills.

Rainwater harvesting is equally appropriate for large manufacturing units that use up substantial amounts of water. Such industries can reduce the pressure on groundwater by making use of rainwater for all their requirements.

A perfect fallback position

Climate change has caused significant disruptions in the weather patterns in lots of Indian cities, resulting is decreased rainfall. Rainwater can be collected, stored and used during drought seasons to complement the ordinary water supply. In cities like Mumbai and Pune, the dreaded bane of rationing and water shortage is mitigated with rainwater harvesting, which also reduces the dependence on dams and water reservoirs.

When rainwater harvesting systems are used by a sufficient saturation of residential buildings in a city, there is a substantial drop in pressure on drainage systems, thereby reducing the possibility of floods, soil erosion, and surface run-offs. Rainwater harvesting is a perfect solution especially in low-lying regions, which are usually prone to floods due to over-taxed drainage systems.

The use of rainwater harvesting systems allows groundwater levels to recharge, which in turn aids in enhancing urban greenery; in fact, this is actually the sole dependable means of having green places without leeching away from the direly needed water supplies within urban areas.

Simple to set up and use

Rainwater harvesting systems are simple to put up and operate. There is absolutely no requirement for the complicated purifying systems which need to be applied to cleanse groundwater, since rainwater is pure. Rainwater collection systems use modern yet extremely simple technology, and their care simply involves occasional cleaning of pipes and the storage tanks to ensure the rainwater gathered is not contaminated.

Actually, rainwater harvesting can be used by anyone. Installation of gutters is step one for buildings that lack them, together with a filtration system to make certain that any other sort of debris or leaves will not find their way into the storage tanks. Safety precautions include having locking bars or lids to stop the breeding of mosquitoes or other forms of pollution of the stored water. Catchment areas in a city may comprise paved regions for example roads and car parks, where water may be picked for several non-drinking purposes.

Need for more government support

Most of the municipality areas of cities like Pune have a huge number of housing projects which don’t have the required rainwater pits. In quite a few cases, the lack of space and the overall design of the project may not make rainwater harvesting pits feasible at all – but where it is possible, no effort should be spared to create them and put rainwater harvesting systems in place. New apartment projects must, of course, be engineered from the world ‘go’ to incorporate rainwater harvesting systems.

While all such measures have been implemented in the more progressive PCMC (Pimpri-Chinchwad Municipal Corporation) of Pune, the speed at which the Pune Municipal Corporation is moving on this front leaves a lot to be desired. Rainwater harvesting is a standard feature in PCMC’s large integrated townships.

As rain is becoming noticeably scantier, the government has already begun undertaking measures to encourage residential societies, educational institutions, and similar buildings to optimize water use and exercise better principles of water economy.

The rapid, yet necessary proliferation of paved areas and roads in our cities is preventing the proper percolation of rainwater into the ground, and causing water bottlenecks on the outskirts. Establishing regularly spaced rainwater harvesting pits in urban localities is definitely the way to go, and must be implemented in cities like Pune without further delay. Additionally, the city authorities must put in greater efforts to educate citizens about the benefits and implementation of rainwater harvesting.

About The Author:

Anil Pharande is Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in West Pune. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer in the PCMC area offering a diverse range of real estate products catering especially to the 42 sectors of Pradhikaran. The luxury township Puneville at Punavale in West Pune is among the company’s latest premium offerings. Woodsville in Moshi is another highly successful PCMC-based township by Pharande Spaces which is now in its 3rd phase.

PCMC’s Townships Save the Day for Pune’s Home Buyers

Anil Pharande, Chairman – Pharande Spaces

Townships are a new property mantra in India, and for the bigger cities they’re without any doubt the sole remaining hope for good quality living standards. Slowly but surely, residential quality of life in cities like Pune are on the decrease, and township properties are rightfully getting increasing importance as the most logical response to the increasing need for quality-based living.

In cities such as the Pimpri-Chinchwad Municipal Corporation, the ‘Infrastructure First’ strategy being employed by the governing authorities since several decades has served to provide highly adequate living conditions for PCMC residents. On the other hand, the Pune Municipal Corporation (PMC) has not been able to keep up to speed on its own infrastructure scenario. The heedless way with which real estate development has been taking place in Pune has not only resulted in a veritable concrete jungle but also made problems like traffic congestion, air and noise pollution and also water depletion much worse over the past several years.

PCMC – The New Townships Capital

In this depressing scenario, the massive integrated townships being developed in the booming city of PCMC has offered Pune’s citizens a new and invigorating lifestyle standard. In the PCMC, the integrated township revolution started in areas like Ravet and Moshi, and today the city’s leading developers have also established high-end townships in Punavale and on Spine Road.

Though negligence and greed are definitely operative factors in the illogical way the Pune Municipal Corporation has been developing, it also has certain limitations. In the first place, integrated township projects require substantial acreage, and large plots have essentially been completely used up in the central regions of the PMC. As consequence, the focus has now shifted to the Pimpri-Chinchwad Municipal Corporation, where superlative support infrastructure, affordable property rates and a scientific approach to real estate development still make townships a very workable proposal.

In integrated townships, the issues are infrastructure shortfall and deteriorating living conditions are totally negated. These projects provide an extremely high grade of living standards, set to the backdrop of tasteful natural surroundings and adequate open spaces.

Providing township-level facilities in smaller residential projects would entail prohibitive prices for the developers – and the cost escalations would have to be passed on to the property buyers. Such facilities would immediately boost a smaller residential project into the luxury category, with consummate price implications to buyers. However, as a result of the economies of scale, township developers in the PCMC are giving the township lifestyle option to buyers at prices that reasonable and attractive. 

High-quality infrastructure, open spaces and instant accessibility to every requirement of day-to-day living in these townships result in a first-class lifestyle equation since all residents in a township gain from one big integrated and centrally managed system.

Township Properties – Higher Price but Ultimate Value

As already mentioned, when a builder offers township-level facilities in smaller housing projects, the prices to consumers are comparable to those of high-end luxury residences. In townships, the vast variety of facilities, fully-integrated infrastructure as well as the availability of schools, hospitals and shopping complexes within the premises obviously means that township properties come at a price that is somewhat higher than standard multi-storey flats.

On the other hand, the added expense is vindicated by the reality that people who buy into township properties are guaranteed a greatly superior living standard – not to mention vastly higher yields on investment.

For property buyers who just don’t desire to compromise on their lifestyle choices, the township properties of PCMC are the most logical and intelligent options. The direct benefits include a healthier life thanks to open spaces and greenery, complete security, the guarantee of high-grade infrastructure and facilities within the premises, and instant accessibility to recreational facilities and retail outlets. This results in a very high measure of convenience and comfort within an entirely cosmopolitan ethos.

About The Author:
 
Anil Pharande is Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in West Pune. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer in the PCMC area offering a diverse range of real estate products catering especially to the 42 sectors of Pradhikaran. The luxury township Puneville at Punavale in West Pune is among the company’s latest premium offerings. Woodsville in Moshi is another highly successful PCMC-based township by Pharande Spaces which is now in its 3rd phase.

Demonetization: Advantage India’s Youth

– Anil Pharande, Chairman – Pharande Spaces

Digitization is the future – but until now, it had been the Indian government itself that stood against the future by encouraging cash payments and levying heavy charges on digital marketplaces. Invariably, the merchant discounts rate (the fee that is supposed to be paid to the banks) was passed onto the end customer. However, under the current Modi establishment, things have begun looking brighter.

The announcement of demonetization of high-value currency notes certainly came as a shock to the masses, but it seems that people have not only understood the reason behind the move but are also offering full support to this change. This is especially true for the younger earners and spenders in our economy. There are several favorable aspects to the younger generation that makes demonetization a welcome move at this point in time for our economy.

Firstly, the current generation is by and large rejecting many of the concepts that the previous generations believed in. Things like hoarding of assets, black money and tax evasion wherever possible are by and large unacceptable to the young contributor to the economy today. In fact, just the opposite.
 
The younger generation is more in favor of spending and putting their income back into the flow, rather than keeping it aside for emergencies. They believe in using credit cards and similar financial tools that don’t involve hoarding. The principled younger earners of India today prefer to be transparent taxpayers rather than find ways to evade tax and hide their income. They know and appreciate that that their tax contributes towards the betterment of the nation and assisting the lesser-privileged. This is a highly responsible generation.
 
Secondly, this highly tech-savvy generation knows all about digital payments. A twenty-five-year-old of today is more predisposed and equipped to making digital payments than people from the previous generation. They are more comfortable with mobile wallets than with carrying cash. The rapid penetration of smartphone technology and online payment gateways has also helped build trust, while offering convenience.
 
Thirdly – and most importantly – this is a generation stands firmly against any form of corruption. It’s not just about making your own lifestyle comfortable anymore but growing with the nation. They fully support the recent demonetization move’s primary intention to weed out and expose corruption in India.
 
They believe that:

  • Demonetization will equip authorities with the tools to track down individuals and organization who hold unaccounted cash and evade tax. With the high-value currency note ban, all cash hoarders now are forced to put their cash back in the economy and make it accounted for. The younger generation is a staunch supporter of such a level playing field, and vehemently opposes all forms of inequality
  • Black money has always been the prime funding for all kinds of illegal activities like gambling, drug use and trafficking, terrorism and inflated market pricing. This generation’s stand against such activities is very much on record
  • Demonetization will curb tax evasion and now everyone, howsoever rich or resourceful, will have to pay their taxes in full. It will not be just the middle class that will be contributing to tax-funded projects like infrastructure development, education, hospitals, schools and other such moves towards making a better and equal society. A big thumbs up from the younger generation.

As India moves more and more towards digital currency because of demonetization, the ensuing boost to online commerce will also encourage all kinds of startups that the young Indian are working or investing in. Moreover, people with lawful and accounted-for money will have nothing to fear – and the younger generation is all about living their lives free of fear – and free to explore life’s endless possibilities.

About The Author:
 
Anil Pharande is Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in West Pune. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer in the PCMC area offering a diverse range of real estate products catering especially to the 42 sectors of Pradhikaran. The luxury township Puneville at Punavale in West Pune is among the company’s latest premium offerings. Woodsville in Moshi is another highly successful PCMC-based township by Pharande Spaces which is now in its 3rd phase.

A Review of The PCMC Property Market in 2016

– Anil Pharande, Chairman – Pharande Spaces
 
As the new year dawns, India’s real estate market has begun navigating the potentially choppy seas of 2017 with a lot of uncertainty. When it comes to the past year, it is safe to say that nothing went as anticipated for the property market. The hoped- for recovery in the residential sector did not happen, and the Government’s unexpected demonetisation move in early November put paid to any chances for a last-minute turnaround.
 
Robust economy: Through the entire gamut of churn and setbacks in 2016, only one city’s real estate market managed to hold its own and even achieve some modest growth. West Pune, with its dominant market PCMC (Pimpri-Chinchwad Municipal Corporation), has always been a unique as it rides on an unbeatable trinity of residential demand drivers – manufacturing, Information Technology and the services sector. This equation has perennially acted like a healthily diversified investment portfolio, with the inherent strength of one or two of these sectors compensating for the occasional de-growth in the others. As always, this factor came to the rescue of the PCMC residential market.
 
Employment still drives housing demand: While the manufacturing sector in PCMC has always been robust thanks to the MIDC belt, continued growth in IT and the various services streams additionally ensured that the employment graph remained strong. With job creation continuing to drive the demand for homes, Pimpri-Chinchwad Municipal Corporation crossed the finish line of 2016 ahead of the other major cities – with room to spare. Though the demand for prime and luxury housing has remained somewhat subdued, budget and mid-income housing saved the day. If anything, 2016 amply illustrated that the middle class in Pune and PCMC has become extremely choosy about its home purchases.
 
Unsold inventory: Many of Pune’s peripheral areas – the hot investment favourites of 2014-15 – saw a depressing build-up of unsold supply even in completed projects. The lack of support infrastructure and known deficiencies such as inadequate or non-existent water supply put paid to many a developer’s hopes of selling his stock solely on the basis of enticingly low rates and freebies.

Of course, every large city in the country has its share of unsold inventory today, either because of muted market sentiment, the fact that a lot of supply is still in the early stages of construction, supply in the wrong locations, or unrealistic pricing of certain projects by developers. In the case of West Pune, most of the non-selling oversupply has been in locations lacking infrastructure. In PCMC, the supply overhang is largely from smaller developers without a good track record and credibility on the market.
 
Evolving buyer preferences: Diwali, the traditional period for increased home purchases in Pune, saw very few takers for inferior projects in inferior locations. Even the prospect of acquiring larger homes than their current ones did not draw mid-income buyers to lagging locations. On the other hand, there was a distinct uptick for smaller but ‘high-performance’ homes in properly connected areas. The accent was on a high degree of facilitation within such projects.
 
Price corrections: With 2016 bringing a slow but steady erosion of property pricing in most of its markets, some of the previously unaffordable locations in West Pune / PCMC have once again become attainable to homebuyers. If Budget 2017-18 brings the hoped-for benefits for first-time property buyers and the RBI rolls out lower interest rates, there is every reason to expect a major revival in home buying sentiment – and it is the superior locations which will see the highest demand.
 
Outlook for 2017
 
The trend of the real estate market in Pune and PCMC performing against the larger odds will definitely continue. Not only do the twin cities have all the right economic and demand drivers firmly in place, but their inclusion in the 100 Smart Cities program will only increase the interest from multinational companies to set up and expand operations here. This will, in turn, increase inward migration and fuel greater demand from investors, even as local end-user demand continues unabated.
 
While the bulk of demand today comes from end-users, investors are still very much a force on Pune’s property market. The city offers several budget bandwidths and property typologies into which one can invest. Well-timed and properly researched real estate purchases can reap very satisfactory returns.
 
However, it should be borne in mind that not every kind of investment pays off equally in Pune – one needs to know precisely how each sub-market works, what it responds to and where the demand is headed. A poorly-judged property investment can be a disappointing proposition. Particularly, investors need to be wary of the cheap, potentially illegal ‘gray market’ residential constructions happening on the outskirts.
 
About The Author:
 
Anil Pharande is Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in West Pune. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer in the PCMC area offering a diverse range of real estate products catering especially to the 42 sectors of Pradhikaran. The luxury township Puneville at Punavale in West Pune is among the company’s latest premium offerings. Woodsville in Moshi is another highly successful PCMC-based township by Pharande Spaces which is now in its 3rd phase.

GST Implications On Real Estate

– Anil Pharande, Chairman – Pharande Spaces

The Goods and Services Tax (GST), is a kind of a comprehensive indirect tax on sale, manufacture and consumption of different kinds of goods and services throughout India, with all other Central and State taxes intended to be subsumed under it. If this happens, it has far-reaching implications, including on real estate.

Taxation and real estate industry

If we take a look at the real estate industry in India today, we find that there have been major tax changes in the last few years. However, these taxes are not uniform all over the country – different practices and regulations are followed in different states in India. It was the 46th Amendment to the Constitution that brought massive changes towards taxation in the real estate sector. Later in the following years, special powers were given to the State Government for implementing Value-Added Tax (VAT) on some specific kinds of transactions.

gst

For land, property and other kinds of work contracts, different kinds of taxes are levied by the State Government and the Central Government. The transactions are mainly categorized in three parts – value of services, value of goods and materials and value of land. VAT is applied by the State Government on the goods portion, while value of services is taxed by the Central Government. However, other than stamp duty, there is no clear tax on the transactions regarding value of land. This situation leads to confusion and can result in dual taxation. Compliance and implementation of such taxes also get difficult.

The real estate industry has justifiably been feeling jittery with such confusing tax implantations and calculations. For one real estate transaction, multiple taxes need to be paid and this has a negative effect on the industry. The industry’s demand to bring GST on board is primarily to get a clear and transparent taxation rule for the real estate sector in India.

Expected GST effects on the real estate industry in India

The implementation of GST can prove to be a significant step in reforming indirect taxation in India. Chances of double taxation would be diminished, as some of the Central and State Government taxes will be amalgamated into one tax. This will ease the process of taxation considerably, making its enforcement and administration easier and simpler.

Talking about the real estate industry in this context, there are many things which have to be known and understood. In the current situation, a builder or a real estate developer incurs various kinds of expenses during the construction phase of a project. Different kinds of taxes are involved with these expenses, such as VAT/CST, customs duties, service tax, excise duty and so on. Majority of these taxes are expenses that are included in the system. This is because they are not creditable to the developer or to the end-customer. These non-creditable expenses lead to tax inefficiency, which is not desirable.

One positive impact that might result from GST is doing away of restrictions on credit utilization. This will definitely help in strengthening the credit chain in the entire system. If property developers and builders can properly manage this aspect, they will see some profit.

It is expected that the proposed GST structure will have a progressive and streamlined approach. The tax compliance rules should not have any serious impact on real estate builders and developers. In present conditions, builders running projects in different states have to comply with State-specific VAT laws, as well as other kinds of service taxes. Bringing in GST will therefore not bring any additional compliance burden on real estate builders in the country.

Issues regarding GST which affect real estate builders

There are a few clarifications that might be sought for GST taxation by real estate developers. For instance, the definition of a real estate developer varies from one state to another in India. The composition scheme varies according to State, in which the VAT rates come between 1-5%. In some States, there are differences between the terms real estate contractors and real estate developers. It has to be understood what will the GST implications are if the terms have different meanings.

There might be some confusion regarding GST implementations on residential property, as well. In the present scenario, there is no service tax applicable on renting immovable property, particularly for residential purposes. But service tax and VAT is implemented on the construction work. The question that arises is if the proposed GST will offer differential tax for residential properties.

As of now, it does not look like completed residential projects will be affected by GST, as buyers into completed projects have already paid statutory charges such as stamp duty and registration charges on the transaction. The segments to watch on the GST front are under-construction flats and rental flats, which are expected to come under the ambit of GST. GST will apply to the materials that a developer procures for building a residential project, so there is a direct correlation to the overall cost of construction.

Much depends on what rate of GST will finally be confirmed. If it is more than the existing cumulative taxes currently in force, it means that the overall cost to consumers of buying an under-construction flat will increase along with the added cost of stamp duty and registration. At the same time, developers have to keep an eye on costing, as price competitiveness is very important in the current real estate market scenario.

About The Author:

Anil PharandeAnil Pharande is Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in Western Pune. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer in the PCMC area offering a diverse range of real estate products catering especially to the 42 sectors of Pradhikaran. The luxury township Puneville at Punavale in West Pune is among the company’s latest premium offerings. Woodsville in Moshi is another highly successful PCMC-based township by Pharande Spaces which is now in its 3rd phase.

How Infrastructure Drives Real Estate Demand

– Anil Pharande, Chairman – Pharande Spaces

All property investors are familiar with the phrase ‘market drivers’, which has become one of the most utilized terms in real estate investment. What exactly are market drivers? They can be explained as advancements within a region which boost the overall worth of the location, and the desirability associated with residing there. It is a well-established fact that the infrastructure of an area is a key criterion for home buyers, and therefore property investors.

Infrastructure has numerous types. For instance, roads are considered key infrastructure, as they enhance the connectivity of the area. There is also civic infrastructure, which involves the availability of public services in the region. In India, the primary aspects covered under civic infrastructure are reliable water and electricity supply, without which an area falls flat as a residential location and therefore as a real estate investment destination.

infrastructure3

Then there is the factor of social infrastructure, which accounts for the liveability of the area. At the most basic level, civic infrastructure will include public transport and shopping outlets, but educational institutions and hospitals are also important. People expect to have colleges, schools and healthcare facilities close to where they live. Therefore, the level of saturation of social infrastructure will play a big role in the overall value of the location as a residential and investment destination.

The global standard for urbanization which is evident in most developed countries is that all or most of infrastructure required to make an area livable and desirable as a real estate destination are set up prior to or opening it up for large-scale real estate development. This is because efforts to put the necessary infrastructure in place retrospectively results in inconvenience to the existing population because of decreased public mobility during construction of such projects.

Retrospective construction of infrastructure projects also pollutes the environment during the actual construction process, and this is nothing but bad news in an area which is already inhabited.

Creating the infrastructure which is required to make a location liveable and also supportive to various economic functions can be compared to creating vast green cover in an area . In both instances, there is a primary requirement of adequate space. Another vital factor for successful infrastructure creation is time. In the case of trees, the root systems must be given adequate time to penetrate deep enough to provide anchorage as well as access to deep-lying groundwater. Similarly, infrastructure must be given enough time to be deployed, become functional and start servicing the area properly. Without space and time, both forestation and infrastructure creation become futile exercises.

infrastructure

If we take the cases of Pune and the adjoining Pimpri-Chinchwad Municipal Corporation (PCMC), we see a vast difference in successful infrastructure deployment. In Pune, the PMC has been unsuccessfully trying to provide retrospective infrastructure support to its massively congested and largely dysfunctional city areas.

Almost every new infrastructure project in Pune is hotly contested by local political parties and becomes road blocked by bureaucratic red tape. One of the reasons is that these projects affect already populated areas, which represent vote banks. The result is that most of these projects take ages to be built, and many are eventually shelved altogether.

The advantage that the PCMC has enjoyed is that it follows a proactive rather than reactive approach to infrastructure creation. In other words, massive Greenfield areas are taken up by the town planning authorities for infrastructure creation, and only then  opened up for further development by private builders. This has resulted in extremely viable, plug-and-play residential neighbourhoods and commercial districts which start delivering the goods from day one.

This proactive approach to infrastructure has earned PCMC the distinction of being one of India’s most sought-after destinations to live and work in. PCMC’s superior infrastructure has attracted the highest number of multinational companies and industries to the region, and this has also led to the highest rate of employment creation in PCMC. As a result, the Pimpri-Chinchwad Municipal Corporation has emerged as the most preferred city for home buyers who are looking to live close to where they work – and simultaneously enjoy a superior quality of life.

About The Author:

Anil PharandeAnil Pharande is Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in Western Pune. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer in the PCMC area offering a diverse range of real estate products catering especially to the 42 sectors of Pradhikaran. The luxury township Puneville at Punavale in West Pune is among the company’s latest premium offerings. Woodsville in Moshi is another highly successful PCMC-based township by Pharande Spaces which is now in its 3rd phase.

The Challenges And Opportunities Of Urbanization In India

– Anil Pharande, Chairman – Pharande Spaces

Most of the populations across the globe either live in cities or are headed there. It is estimated that by the year 2050, more than two-third of the world’s population will be settled in urban areas. The trend is already in place, with more than a million people shifting to cities every year. For countries like India, migration to developed and developing cities is driven by job opportunities and a better quality of life. However, rapid urbanization also brings its own challenges.

The Challenges In India

The relationship between population migration, urbanization and economic growth is complex. For developed countries like the USA or the European nations, there is a positive correlation between urbanization and per capita income. However, the equation is not as simple when we are talking of less developed countries like India. There is a thin margin between urbanization and overpopulation, and in many large Indian cities, the ‘carrying capacity’ has always been reached. Some relevant examples are Delhi, Mumbai, Pune and Bangalore, where new migrants face a scarcity of affordable accommodation.

Congested city - small

It is important to understand the changes that migration to urban centres brings along. Urban growth or urbanization invariably feeds increasing industrialization and commercialization, which impacts the environment as well as infrastructural capabilities of a city. Increasing population also leads to continually expanding urban development and in the case of India, local Governments are continually challenged to deliver the necessary institutional, economic and managerial capabilities that such expansion requires. With lack of proper housing, most of the migrating population – especially those coming from the rural areas – settle for slums and other unregulated/unorganized living options.

Urban Congestion

The rapid inward migration in cities like Mumbai, Pune and Delhi has given rise to clogging and other problems like faulty water management and unnatural changes to the environment. The rapid creation of settlements in the peripheries of these saturated cities makes it impossible for the concerned city planning authorities to gauge and counter the changes to the natural environment and implement necessary sanitation and other necessary infrastructure.

Hijacked Environment

Major environmental issues encountered around clogging settlements include land degradation, resource depletion, decreased public health, loss of resilience in the ecosystem and unsafe residential standards. Health hazards are rampant as clogged settlements encourage flooding, degradation of natural resources like water table and air quality, faulty or non-existent drainage systems, inefficient or non-existent sewage treatment facilities and transport systems.

urban landscape

As a matter of fact, India faces a major threat from water pollution. Untreated sewage water being discharged into our existing water systems has been deemed the single-largest cause of surface and ground water pollution. The problems include lack of sufficient water treatment facilities and faulty maintenance where they do exist. Migration contributes to this problem, and the untreated waste water leads to serious hygiene issues. As per the reports by the World Health Organization, only 209 out of 3,119 cities have sewage treatment facilities, and just 8 of them have a full-fledged wastewater treatment facility.

Success Story – PCMC, Pune

There are ways to handle the mounting problems associated with heavy urbanization. The first and foremost is the development of low-cost and affordable housing projects around developing cities. The second is a proactive town-planning approach wherein urbanization is anticipated rather than reacted to, and necessary infrastructure to accommodate inward migration is put in place before it actually arrives.

green urbanization

Cities like the Pimpri-Chinchwad Municipal Corporation (PCMC) of Pune have demonstrated that this forward-looking approach works brilliantly in India. In PCMC, the town planning authorities identify areas of future urbanization, equip them with proper drainage systems, water supply, waste management and transport infrastructure and only then open them up to the migrating population.

Along with environmental and health issues, inward migration also affects the inherent culture of the city – and at least in this case, the change is invariably a positive one. With people flooding in from across the country, the host city is exposed to a variety of cultures and eventually adopts new cultural norms. This is the essence of ‘cosmopolitanization’ – the process in which a city evolves from its traditional cultural boundaries and becomes more and more accommodating to new influences.

This is a very desirable process which ‘future proofs’ a city and ensures that urbanization is progressive and not regressive. A city’s cosmopolitan ethos is born out of constituent cultural elements from various other cities and parts of the world, resulting in an urban mindset which is able to embrace positive change in the form of new economic opportunities and better lifestyle standards.

The process of cosmopolitanization in PCMC has resulted in a rapid shedding of the previous regional/industrial image and the emergence of a truly evolved global ethos. The ‘Citizens First’ approach which has driven the rational and progressive urbanization of cities like PCMC and other global cities must always be the central focus if India is to tackle its mounting problems of inward migration.

About The Author:

Anil PharandeAnil Pharande is Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in Western Pune. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer in the PCMC area offering a diverse range of real estate products catering especially to the 42 sectors of Pradhikaran. The luxury township Puneville at Punavale in West Pune is among the company’s latest premium offerings. Woodsville in Moshi is another highly successful PCMC-based township by Pharande Spaces which is now in its 3rd phase.

PCMC’s Integrated Townships: Redefining Traditional Luxury

– Anil Pharande, Chairman – Pharande Spaces

Indian luxury real estate is in rapid evolutionary mode, and few of the previously accepted definitions of a luxury home have stood the test of time. For luxury home developers, the challenge has shifted from offering a number of attractive add-ons to providing a well-rounded residential experience that transcends luxurious exteriors, interiors and amenities.

Luxury townships are the obvious answer to the questions today’s buyers are asking. They are not looking for mere glamour – because of the mounting challenges of urban life in cities like Pune, they are also looking for superior infrastructure, cutting-edge security and project management and a walk-to-work option. These are obviously not an option in standalone luxury buildings – nothing less than a fully integrated luxury township can provide such advantages.

puneville2

A number of Indian developers who previously specialized in traditional luxury residential projects – one or two snazzy buildings in a tony part of town where ‘address value’ accounts for a massive price premium – have therefore shifted their focus to the township format. This is because luxury living in today’s context is a 360-degree lifestyle equation which cannot be limited to elegant superficialities.

The buyer profile for integrated luxury townshipspuneville is also different today. These are not HNIs hailing from families with protracted histories of wealth – they are young, self-made entrepreneurs, the corporate upper management cadre and high-placed Information Technology professionals.

This new breed of luxury home buyers is not swayed by impressive addresses and the other factors which dictated how luxury was interpreted in the past. They are looking for the aspects that spell genuine luxury today – convenience, safety, reliable water and electricity supply, modern recreational facilities, on-the-spot availability to essential services like hospitals, schools and shopping, and good internal and external connectivity.

punevilleThey will not spend their hard-earned money on an expensive location but invest in a superior living experience for themselves and their families. Moreover, the traditional CBDs of cities like Pune are no longer the areas which yield the most lucrative jobs – the IT and manufacturing hubs in modern satellite cities like the Pimpri-Chinchwad Municipal Corporation (PCMC) are the next employment hotbeds which are driving both the demand and trend for high-end homes.

This luxury home buyer demographic is highly tech-savvy and environmentally conscious, and attributes a lot of value to ‘smart’ and ‘green’ features – not only at a residence level but at a project level. Again, this is only possible in integrated townships, and this is what has spurred the growth of PCMC’s ultra-modern townships over the last decade.

These townships offer their residents:

  • Broad, well-lit internal roads
  • 24×7 water and electricity supply
  • Multiple user parking per unit
  • Multi-level security
  • Green open spaces
  • Conveniences  such as shopping malls, banks, schools and hospitals within the project
  • Easy connectivity to other parts of the city
  • Modern recreational facilities

The best integrated townships also include high-grade commercial spaces and give residents the ultimate luxury – the walk-to-work option. Obviously, this new definition of luxury living provides a stark contrast to the traditional concepts of luxury homes, which was usually tied to a vanity address in an exorbitantly pricey location. Though older luxury buildings in the core areas of cities like Pune are invariably redeveloped into luxury skyscrapers, there is nothing that can be done about the fact that the locations themselves are cramped, polluted, devoid of support infrastructure and often hemmed in by slums and tenements.

While the window view from a luxury home in such a setting is usually one of chaos and urban decay, the corresponding view from a home in an integrated township is one of greenery, orderliness and unpolluted air. No wonder, then, that the younger and smarter generation of luxury home buyers today prefers the benefits of contemporary luxury far away from such areas. Integrated townships are their obvious choice.

About The Author:

Anil PharandeAnil Pharande is Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in Western Pune. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer in the PCMC area offering a diverse range of real estate products catering especially to the 42 sectors of Pradhikaran. The luxury township Puneville at Punavale in West Pune is among the company’s latest premium offerings. Woodsville  in Moshi is another highly successful PCMC-based township by Pharande Spaces which is now in its 3rd phase.