Pune Real Estate Market 2010 And Outlook for 2011

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2010 saw increased buoyancy on Pune’s residential market, which has been in steady recovery since 2H09. The confluence of price correction ( 10%-25% in 2009) along with rational mortgage rates offered by banks has increased affordability. Moreover, with the improving economic conditions as evident from the increased absorption of office space, there is improved employment security, creating fresh demand for housing in the year 2010. There has been spate of residential launches in the city, with a 10-12% increase in capital values witnessed across all the residential pockets of the city.

Buyers in the mid-income segment of housing (INR 3-5 million) have returned in force, as have those for premium category housing. In fact, the year 2010 saw a significant number of luxury home projects in Pune. Some of the notable ones are Marvel Aurum at Koregaon Park, Marvel Bounty and Azure on Magarpatta Road, Marvel Ganga Sangria at Undri, the recently launched Yoo Pune by Panchshil at Hadapsar and Windmere by Vascon developers at Koregaon Park.

Commercial Real Estate

The total absorption of office space in Pune, recorded at approximately 2.5 million sq ft during the first three quarters of 2010, clearly indicates the onset of a demand revival. Occupiers strongly believe that this is the right time to execute their expansion plans, since property prices were at their lowest valuations in 2010.

An important feature of the absorption in 2010 has been the revival of demand for SEZ spaces. The impact was clearly visible with a majority of Pune’s office space transactions (around 60%) recorded in SEZs in 2010. In 2011, demand is expected to strengthen across markets, along with an increase in SEZ absorption. The suburban micro-market, comprising primarily of the Hinjewadi region, is likely to benefit as it houses most of the upcoming SEZ supply. The secondary business district (SBD), on the other hand, currently has a significant share of the city’s ready-to-occupy as well as under-construction stock located in SEZs (EON Cluster D, Cluster B and Cluster A and Magarpatta’s Cybercity Towers VIII and IX) and various STPI units. This will also contribute significantly to the overall absorption levels in the city during the coming quarters.

Pune’s office market is expected to see a significant supply to the tune of aprroximately 14.53 million sq ft in the next two years, with most of the supply located in SBD and the suburbs. Some of the major developments in SBD amongst the IT completions would include Commerzone buildings 5, 7 and 8 at Yerwada and Weikfield IT Park’s Block B at Viman Nagar. Completions amongst SEZs would include EON clusters A and B and Magarpatta’s Cybercity buildings 8 and 9 at Hadapsar. The majority of the future supply in the suburbs would comprise of various IT SEZs by DLF, Paranjape (Blue Ridge), Embassy Group (Embassy Tech Zone) and Shapoorji Pallonji Group (SP Infocity).

Rentals are likely to remain stable across all precincts in the coming quarter, but will gradual increase towards mid-2011 and 2012.

Retail Real Estate

Pune’s organized retail landscape will undergo a significant transformation. Rentals and the commercials in retail has stabilized, and retailers are now occupying space more aggressively.

Some quality retail developments lined up for completion in 2011. The notable ones include Phoenix Market City , K Raheja’s Inorbit on Nagar Road, Amanora Market City at Hadapsar and Elbit’s PlazaCentre at Koregaon Park. Also, G Corp will become operational with approximately 0.4 million sq.ft of retail.

As a result, a number of international brands will set up shop in Pune for the first time. The notable ones will include Zara, Blue O and Spar, which will open their doors to a new line of fashion and entertainment.

Moreover, some well-known national brands will launch for the first time in Pune in 2011. Reliance Trendz, PVR, Reliance Footprint, Jack and Jones, etc. will cater to the young and the vibrant Punekar for the first time.

Future Group has added approximately 0.5 million sq.ft to their Pune portfolio. The group has recently launched their mega Pantaloon store at Senapati Bapat Road. Trent has also jumped onto the Pune retail bandwagon. The Tata Group already has one hypermarket under the name Star India Bazaar operational at Pune, and is going in for three more.

Mohammed Aslam, Head – Pune, Jones Lang LaSalle India

Used with permission from India Real Estate Compass by Jones Lang LaSalle India

Brace For Hefty Hike In Pune Property Taxes

(TNN, Dec 26, 2010)

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PUNE: Tax reforms planned by the civic administration for 2011-12 is likely to burden the citizens.The civic administration has proposed an increase in the property tax revenue by withdrawing the 40 per cent concession given to owner-occupied residential properties. There are 5,46,122 residential properties under the Pune Municipal Corporation’s purview.

In another proposal, a hike in octroi for essential commodities, including food grain and fuel, has been suggested.

In separate proposals on property tax and octroi hike which will be tabled next week to the standing committee, municipal commissioner Mahesh Zagade has said, “The PMC limits have expanded in the last few years and the population is on the rise. The PMC needs funds for development and improving the basic infrastructure like water supply, roads, sewage etc. Under the memorandum of understanding with the central government, the PMC has promised to carry out reforms and elimination of exemptions to citizens. If the exemptions in tax continue, the PMC may not get funds from the central government under Jawaharlal Nehru National Urban Renewal Mission.”

A similar proposal on a hike in civic taxes and imposition of austerity measures to tackle the weakening financial condition of the civic body is pending with elected members.

The civic chief has admitted that the annual civic budget of Rs 3,196.12 crore for 2010-2011 is in deficit and has suggested that the civic body opt for clause 104 of the Bombay Provincial Municipal Corporation (BPMC) Act.

This clause enables the municipal body to cut the expenses approved for the financial year, increase civic taxes or implement supplementary taxes.

The PMC had imposed an 11 per cent service tax hike last year, which was implemented from April 1, 2010. Also a steep hike on property tax for the IT sector is already in place since last year.

“But this is not sufficient. As per the JNNURM norms the PMC has to charge citizens for using basic services. As of now the PMC is charging little for these services. The property tax, octroi, development charges, service tax and water charges collected are insufficient. The civic administration will propose more tax reforms and it is up to political parties to decide,” said a top civic official.

He added that the central government has given strict instructions that user charges should be collected by the municipal corporations and if they failed to do so the flow of funds from central government will go dry.

Union finance minister Pranab Mukherjee, speaking at a function organised recently to mark the fifth anniversary of the launch of Jawaharlal Nehru National Urban Renewal Mission (JNNURM), had asked urban local bodies seeking central funds under the JNNURM “to bring about a change in the mindset of those who are running the institutions of urban governance and the users of urban services”.

He had said that there has to be an understanding that the goverment is not a source of endless funds. “We have to be ready to pay for the services we wish to avail for ourselves,” the minister said.

There has to be an appreciation that expenditure has to be prioritised and paced, as there can never be enough resources to meet all aspirations and an understanding that the amounts invested into urban infrastructure services are to improve our own and our children’s health, he added.

The minister said that true proof of change in the mindset will come when citizens willingly pay for services, and treat public assets as their own. It will also be visible when local governments are able to implement decisions based on a vision for sustained improvement in the quality of life and the need to support and sustain growth in economic activity, rather than on narrow short-terms gains.

However, in Pune, political parties will approach any tax hike with caution since it is an election year. Ruling party leaders have neither been open about support or opposition to the proposed tax reform moves.

Leader of the house Nilesh Nikam said that the ruling party will decide on the proposal only after detailed discussions while Congress leaders have remained silent.

Opposition parties are readying for agitation against any hike. BJP leader Mukta Tilak said that the PMC has completely failed to provide any basic service and in the given conditions the ruling party and the administration have not right to impose any tax hike.

Move To Rake In Revenue

The PMC is short of funds and has mulled a hike in development charges. According to the PMC, the construction industry has witnessed a boom in the last few years. But the development charges the builders pay the PMC have remained static. The rates are as per the Maharashtra Regional and Town Planning Act, 1966. The PMC has to seek the state government’s permission to hike these rates. In 1997-98, the civic body has submitted such a proposal which is pending. The PMC wants to hike development charges in the range of Rs 200 to Rs 250 per sq ft.

Water charges

Based on the condition that the cost of services and its recovery should be equal under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), the Union government has set the 24-hour water supply norm and also installing meters for all consumers in Pune. In his fresh proposal before the standing committee municipal commissioner Mahesh Zagade has said that water meters should be made compulsory as per the JNNURM reforms. The proposal states that 150 litres of water will be provided per head and a five-member family will be considered as a unit. If a family uses 150 litres water per head (750 litres in total) no extra charges will be imposed and the existing water rates will be charged.For every additional 1,000 litres, Rs 33 will be charged.

2.5 Extra FSI On PMPML Land In PCMC Areas

(TOI, Dec 21, 2010)

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PUNE: The Pimpri-Chinchwad municipal corporation has granted an additional floor space index (FSI) of 2.5 to the land reserved for the PMPML in the township. This FSI can be used either by the municipal corporation or a private developer for extra construction.

To allow additional FSI, the municipal corporation will have to bring changes in its development control (DC) rules. As per the provisions of the Maharashtra Regional Town Planning Act, the municipal corporation has invited suggestions and objections from citizens for making changes in the DC rules. Citizens can send in their suggestions to the deputy director of town planning, PCMC, within next thirty days, a public notice issued by the PCMC has stated. The PCMC general body had in September approved a proposal to invite suggestions and objections from citizens regarding the proposal.

The PCMC proposal states: “while developing the site reserved for bus stand, bus terminus, depot for PMPML on a public-private partnership basis or by the PMPML or by the PCMC itself, the maximum allowable FSI shall be 2.5. The bus-stand, terminus, depot may be allowed to be developed on a public-private partnership basis. The ground floor shall be used for bus-stand, terminus while the immediate upper three to four floors shall be developed for parking and the commercial use shall be allowed on the above floors”.

Significantly, the proposal states that if the land is located in the BRTS zone, the premium and other rules which are especially applicable for BRT zone shall not be applicable to the bus-stand, terminus and depot reserved for the PMPML. The municipal corporation has proposed to levy premium for allowing additional FSI on private lands in BRTS zones.

Earlier, the PMPML had requested the Pune and Pimpri Chinchwad municipal corporations to allow additional FSI on its sites so that it serves as a source of extra income for the beleaguered transport company. “The PMPML has stated that the sites for bus depots and terminals are at prime locations. This benefit can be exploited for commercial gains which would help the PMPML overcome its losses and make it financially independent,” the resolution approved by the PCMC has stated. The sites will be developed on a build-operate-transfer basis. A similar proposal is likely to be mooted by the Pune Municipal Corporation.

The proposed parking facility will help people park their vehicles and travel by PMPML buses.

PCMC Will Decide On 234 Acres On Saturday

(TOI, Dec 16, 2010)

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PUNE: Over 234 acres of land in the green zone, meant for agriculture, in the fringe areas of Pimpri-Chinchwad near Moshi is all set to become residential, if the general body and the state government approve a proposal mooted by the Pimpri-Chinchwad Municipal Corporation.

The proposal was recently approved by the PCMC’s law committee. It says that the use of 95 hectares of land at Chikhli Borhadewadi in Moshi should be modified from green zone to residential zone. It will be discussed at the general body meeting on Saturday.

The land was earlier in the 1995 development plan of the Pimpri-Chinchwad New Township Development Authority (PCNTDA). Some areas of the development plan were later brought under the development control regulations of the municipal corporation. The 234 acres of land is also under the development control regulations.

Avinash Patil, deputy director of town planning, PCMC said that the land use was being changed to prevent encroachments on it. “The change in zoning will happen only after the general body approves the proposal. The state government’s approval will also be needed,” he said.

The civic body will first undertake a land-use survey, and prepare a map considering the reservations. It will then plan new roads in the area.

Suggestions and objections from citizens as per the Maharashtra Regional Town Planning Act for changing the zone of the land will be invited.

2.5 FSI For MHADA Redevelopment Projects In Pune & PCMC?

MHADA-150x150NAGPUR: The state government will decide in a month’s time the issue of granting 2.5 floor space index (FSI) for Mhada colonies under redevelopment in Pune and Pimpri-Chinchwad Municipal Corporation (PMC and PCMC) areas, minister of state for urban development Bhaskar Jadhav assured the state assembly on Tuesday.

A favourable decision would mean creation of additional housing facilities by Mhada in Pune and Pimpri-Chinchwad. The issue has been in discussion for quite some time now.

Jadhav was replying to a motion moved by MLA Bapu Pathare and others. Pathare pointed out that most cities in the state other than Pune and Pimpri-Chinchwad already have 2.5 FSI for the Mhada colonies. Pathare was joined by MLAs Girish Bapat, Madhuri Misal, Vinayak Nimhan, Ramesh Bagwe, Bala Bhegde and others in the 30-odd minute debate over the issue.

They pointed out that the then chief minister Ashok Chavan had promised a decision on 2.5 FSI for Mhada colonies under redevelopment in Pune and Pimpri-Chinchwad. However, things have not progressed much.

Responding to this, Jadhav said that the legal process like inviting suggestions and objections etc, towards granting 2.5 FSI to Mhada colonies has already been over and a report is pending clearance before the state government. He conceded that the decision got delayed due to political developments, in between. “We will settle the issue in a month’s time,” he assured.

The members also demanded, among other things, a relaxation in the minimum 35-year construction norm for redevelopment of Mhada colonies, which, if granted, will benefit older colonies in areas such as Yerawada, Lokmanya Nagar and Wadgaon Sheri.

They further sought additional FSI benefits for police colonies, other government colonies as well as residential settlements for the flood-affected people.

To this, Jadhav said that extending the benefit to these colonies would involve an exercise like structural audit of buildings etc. “The government will take steps in this direction,” he said.

Hawkers Policy In Pimpri-Chinchwad Soon

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PUNE: Around 7,500 hawkers from the Pimpri-Chinchwad township can now hope to get an authorised place to sell their wares and proper rules to govern them. The common citizens too can hope to get relief from the encroachments by hawkers as there will be designated hawker zones, as well as no-hawker zones, particularly on some of the busy main roads.

The Pimpri-Chinchwad Municipal Corporation(PCMC) has prepared a comprehensive policy on hawkers. According to civic officials, the policy, after its approval, will be implemented from April. The draft of the policy will be discussed at the municipal corporation’s monthly general body meeting later this month.

A city level hawkers committee has been proposed to implement the policy. In addition, there will be zonal committees as well as some technical committees which will look into all the issues concerning the policy at a micro level. The mayor will be the chairperson of the city hawkers committee, while other members will include elected office-bearers, civic officials as well as representatives of various hawkers organisations. The zonal committees will comprise zonal chairpersons, civic officials, and police officials.

The hawkers policy has been prepared according to the state government’s directives. As per the directives, the PCMC had invited suggestions and objections from citizens but did not receive any response.

Speaking to TOI on Monday, Subhash Machare, social welfare officer, PCMC said, “The PCMC had started preparing the hawkers zone policy two years back. But it had to be revised after the state government issued directives to have a common hawkers policy in the state.”

According to a survey conducted by the PCMC two years ago, there were 7,500 hawkers within the municipal limits. Machare said that a fresh survey will be undertaken to finalise the list of hawkers. As per the proposed policy, the hawker should have a proof that he has been a resident of Pimpri-Chinchwad for ten years. The PCMC will issue identity cards to the hawkers.

The civic body will announce a list of hawker zones and no-hawker zones. Only authorised hawkers will be allowed to operate in the hawker zones. Once the policy is implemented, the corporation will take action against unauthorised hawkers and those operating in no-hawker zones, Machare said.

Speaking to TOI, independent corporator Maruti Bhapkar said, “The PCMC should finalise its hawkers policy at the earliest. The hawkers have to face eviction from the township as there are no designated hawker zones in the municipal limits. Hawker zones should be formed to give relief to the hawkers. The PCMC should take action against the unauthorised hawkers and ensure that new hawkers do not encroach on public land.”

Hawkers policy

  • The draft policy will be discussed a the GB meeting later this month
  • After approval, the policy will come into effect from April
  • Various committees will be formed at the city and zonal levels to implement the policy
  • Hawker zones and no-hawker areas will be notified
  • Penal action will be taken against unauthorised hawkers and those operating in no-hawker zones

Residential Property Appreciation At PCMC To Increase Manifold

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The Pimpri Chinchwad Municipal Corporation to the North-West of Pune City, has seen tremendous real estate development of residential properties. After all, the PCMC belt constitutes Asia’s biggest industrial center, which is home to several blue chip companies.

To illustrate this point – giants such as Bajaj Auto, BEL Optronic Devices Ltd, TATA Motors, Kinetic Engineering, Force Motors and Daimler-Chrysler. Hindustan Antibiotics Limited, India’s premier antibiotics research institute, also has its plant there, as do a number of heavy industries like Forbes-Marshall, Thyssen-Krupp, Alfa Laval and Sandvik Asia. Moreover, the Rajiv Gandhi Infotech Park at Hinjewadi, where many IT companies such as IBM India, KPIT Cummins, Tata Technologies, Infosys, Wipro and Geometric have large units in operation, is within close commuting distance from Pimpri Chinchwad.

This has created a huge demand for residential properties among the large working class population attached to these industries. In fact, there is a now a constant demand for rental and purchase properties, specifically in the 1,2 and 3BHK range. However, we are only speaking of the end-user demand here – in other words, the requirements of those who need homes primarily for their own use. What is even more significant is the promise that the Pimpri Chinchwad Municipal Corporation holds for those who also seek growth in residential property investment.

The huge inherent and ever-growing end-user demand alone has caused the investment potential of residential property in PCMC to grow tremendously with every passing year. However, a new dimension has now opened up with the announcement that the International Convention Centre (ICC) at Moshi in PCMC has now been cleared for take-off. This major infrastructure project was conceived to cater to the business needs of the industrial segment of the Pimpri Chinchwad Municipal Corporation, Pune City and the rest of Maharashtra’s major business-centric cities.

This Rs. 600 crore project, which will take up 240 acres of prime space, is going to transform the residential real estate market in the Pimpri

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Chinchwad Municipal Corporation area. In fact, those who have already bought residential units at Woodsville, the integrated residential complex by Pharande Spaces, are going to see their investments grow manifold with every passing month. Woodsville, a deluxe residential project is situated just across the now imminent International Convention Centre, will benefit the most from this prominent business nexus.

Real estate experts are unanimous about the growth prospects for real estate projects in the vicinity of large infrastructure projects such as the ICC.

Saugata Maitra, National Head of Infrastructure Advisory practice at Jones Lang LaSalle India, states – “An upcoming infrastructure generally increases the prices of property in the nearby areas, as it becomes a part of USP for the developers and property owners in that location. Instances can be cited where property prices have increased 50-70% from the announcement of an infrastructure initiative till the operational phase. For example, residential sale rates in Essel Towers, Gurgaon increased from around INR 5000/- per sq. ft in 2006 to INR 9,000/- per sq. ft range (operational phase in 2010), vis-à-vis a more reticent increase of 40-50% in other areas. Investing in such zones is a good idea.”

Basically, real estate prices around such infrastructure projects rise because they generate a lot of employment opportunities. The resultant employees, right from the lower rungs of the workforce up to the managerial echelon, need to reside in close proximity to the project for ease of transportation. This creates a lot of residential demand.

Posted by: K. D. Nagarkar

K. D. Nagarkar is a blogger and freelance journalist who specializes in real estate and environmental issues. He keenly follows the development of innovative residential property solutions and real estate market trends in and around Maharashtra.

Pimpri Chinchwad Municipal Corporation To Adopt ‘Zero Garbage’ System

(DNA, Dec 11, 2010)

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Facing the daunting task of managing garbage disposal, the Pimpri Chinchwad Municipal Corporation (PCMC) has planned to work on a ‘zero garbage’ system, implementing it in one housing society on an experimental basis.

The system requires two small machines for composting wet garbage and to generate fertiliser. If the experiment is found successful, the PCMC will replicate the model in big housing complexes, hotels and hospitals before making it mandatory for the twin towns to follow the system.

PCMC chief medical officer, Nagkumar Kunchagi said, “It is mandatory for municipal corporations to dispose of waste in a scientific and mechanised way under the Jawaharlal Nehru national urban renewal mission (JNNURM). As residents opposed the PCMC’s vermi-composting plant at Moshi garbage depot, the administration has proposed a garbage depot in Punawale. But this project also met with opposition from local farmers. It is now a serious issue for the civic body as to how to dispose of waste in future.”

“We decided to follow the new ‘zero garbage’ policy after finding that vermi-composting system adopted by housing societies was working 100%. As against the traditional method of garbage disposal that takes nearly 20 to 25 days, the new system takes just 8 to 10 days,” a civic official said.

To create public awareness about the new system, the civic body will implement it in a housing society on a trial basis and will extend it to one hotel also.

“The civic body will bear the expense of installing the two machines in the initial phase,” a health official said. The PCMC health department had invited bids for buying these machines through e-tendering.

“Two machines, a 30-kg capacity machine at a cost of Rs8.50 lakh for 30 families and 50-kg capacity machine priced at Rs12 lakh for 50 families, have been earmarked,” a civic official said.

The administration hopes that if the ‘zero garbage’ system turns out to be successful, it will reduce the cost of garbage collection and streamline the whole process of garbage disposal, besides saving manpower.

The PCMC has recently started house-to-house garbage collection on public-private-partnership (PPP) basis in Ward A and D. Nagkumar said, “Several housing societies that have adopted vermi-composting system face difficulty in disposing of water and non-vegetarian food waste. ‘Zero garbage’ system will try to solve this problem.”

Pune Municipal Corporation’s Property Tax Revenue Dwindles

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After remarkable success in recovery of property tax at the beginning of the financial year 2010-11, the Pune Municipal Corporation (PMC) has recorded a sudden dip in tax collection. The reason cited is shortage of staff in the property tax department.

According to sources, the department had collected Rs198 crore in April and May this fiscal, thanks to the 10% concession provided to early tax payers. However, in November the collection went down to Rs14.71 crore.

The figure was dismally low as compared to the collection during the same month in the financial year 2009-10 (Rs31.98 crore), 2008-09 (Rs27.94 crore) and 2007-08 (Rs25.9 crore). In 2006 -07, the department had collected just Rs14.11 crore.

The total collection till November this fiscal is about Rs350 crore.

Sources said that around 48% property holders paid their tax in the first two months of the current financial year. Those were the regular tax payers. However, the PMC is finding it difficult to collect taxes from the remaining property owners due to lack of manpower.

After the success of the 10% concession scheme, it was expected that the civic administration would intensify its drive to recover tax, but last month’s dismal figure has raised doubts about the PMC’s seriousness in achieving the set target of Rs606 crore.

The total property tax collected in 2008-09 was Rs355.41 crore while in 2009-10 it was Rs364.22 crore.

List Of Those Eligible For EWS Housing In PCMC Released

(TOI, Dec 9, 2010)

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PUNE: The Pimpri Chinchwad Municipal Corporation (PCMC) has released a list of 11,534 people who are eligible for its ambitious housing scheme for people from economically weaker sections (EWS).

As many as 4,352 applicants were found to be ineligible in the scrutiny conducted by the slum eradication and rehabilitation department of the PCMC.

Aziz Karche, assistant commissioner said, “Citizens have been given 15 days to submit their suggestions and objections about this list. A hearing on these suggestions and objections will be held, after which the final list of eligible applicants will be prepared.”

In 2007, the Union government gave primary approval to the PCMC’s proposal to implement the EWS housing scheme under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), estimated to cost Rs 449.70 crore. The PCMC is constructing 13,250 tenements as part of the EWS housing scheme. It had promised to give the flat to the beneficiary at a cost of Rs 1.5 lakh but later had to increase the cost to Rs 3.76 lakh owing to cost escalation.

The first phase of the project is being implemented on a plot of 75 acres in sectors 17 and 19 given by the Pimpri-Chinchwad New Township Development Authority ( PCNTDA), where the PCMC is constructing 6,700 flats in the first phase.

Three years ago the PCMC had invited applications from the public for the scheme and received 17,044 applications.