What Pune Real Estate Needs From Budget 2012-13

The 2011-12 budget did not offer much to the Pune real estate sector, and neither home buyers nor developers has any reason to feel enthusiastic. At the time when the Budget for 2012-13 is about to be announced, the city continues to face problems because of such industry hurdes as high lending rates and construction costs, insufficient infrastructure and lack of affordable housing.
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The provisions that Pune real estate needs from Budget 2012 are:
  • A higher allocation of infrastructure funds, which should nevertheless be disbursed only if clear guidelines on timely commencement and completion for projects are agreed upon and adhered to
  • Removal of the 10% service tax on residential real estate construction, which increases the cost of new homes by as much as 3%. For a cost-sensitive market like Pune, which has a sizeable lower mid-income segment, this additional cost makes a big difference.
  • More incentives for development of affordable housing, so that more developers are encouraged to become active in this important sector and can increase the supply of budget homes in Pune.
  • Reduction of tax burden on rental income. Since buying a home is still an unattainable dream for many Puneites, renting remains the only viable option. In such a scenario, the Government needs to make rental housing a more attractive option for landlords. More fiscal incentives for landlords would also put downward pressure on rents.
  • Broaden the scope of interest rate subsidy for budget homes. Currently, the 1% home loan interest subsidy is only available for properties costing upto Rs. 20 lakh. This is extremely narrow-sighted, since it limits the choice of budget-constrained home buyers to the smallest formats and the furthest outskirts of the city. Increasing the ceiling to Rs. 30 lakh would help homebuyers to live closer to their workplaces, and to buy decent-sized homes.
  • Increase developers’ access to project funding at reasonable costs. The RBI’s step-motherly treatment being extended to real estate developers in this regard is reducing the supply of affordable housing and increasing the cost of these properties to home buyers
  • Reduce taxes such as excise, VAT and stamp duty on real estate so that home purchase becomes more attractive
India Budget 2012 is a great opportunity for the Finance Ministry to prove that the Government is concerned about the lack of affordable housing for the common man. We sincerely hope that this opportunity will be used with wisdom and compassion.

 

Anil-Pharande

 

Anil Pharande is Vice President of CREDAI Pune Metro and Chairman of Pharande  Spaces, a leading construction and development firm that develops township properties in the PCMC area of Pune, India.

 

 

Pune Infrastructure Deficit – Causes And Cure

In the rush to develop projects during Pune’s real estate boom time, the very important factor of support infrastructure was neglected. This was especially true for projects within the city and the adjoining areas. Due to the high demand for properties, people kept on buying and developers kept on building even though infrastructure was declining rapidly.

Pune Property

However, Pune property buyers soon discovered that both their standard of living went down and the investment value of their properties stagnated because of the inferior infrastructure. Eventually, the new breed of Pune real estate buyers became more aware of the importance of basic infrastructure, and of their right to expect it. The highest demand is now for Pune flats that are affordable and also offer basic civil infrastructure such as adequate sewage, access roads, connectivity to important places, water and electricity supply, etc.

The problem of Pune’s infrastructure deficit is actually very surprising. The problem should logically be lower for projects developed within the city limits. After all, the municipal corporation has the advantages of sufficient funding and opportunity for forward planning. However, it is areas such as PCMC which have taken the infrastructure message more seriously. As a result, infrastructure in the Pimpri Chinchwad Municipal Corporation is visibly superior to what Pune City has to offer. People who have bought homes in township properties in Pimpri Chinchwad are even better off, because these projects offer high-class internal infrastructure, as well.

The PCNTDA (Pimpri Chinchwad New Township Development Authority) has ensured that all residential areas in the PCMC have sufficient infrastructure. As a result, the quality of life and appreciation potential of residential properties in PCMC are at a very high level. Meanwhile, Pune continues to face problems of traffic congestion, lack of adequate open spaces and green areas, pollution, etc. The Maharashtra Government has been proactive in assisting with infrastructural enablement for its cities. However, it is not possible for the Government to rush in with support infrastructure whenever developers decide to build.

As such, developers should assume a larger share of responsibility for the establishment of infrastructure for their projects if they aspire for success for their projects. However, there is one more thing the Maharashtra Government can do to ensure that Pune’s newer areas get sufficient infrastructure. It can revise its policies on development and follow the model adopted by forward looking bodies such as the Pimpri Chinchwad Municipal Corporation and the Ahmedabad Urban Development Authority (AUDA), which has implemented large-scale infrastructure reforms that do not necessarily involve huge budgets.

The model involves acquiring a larger tract of land, putting in all necessary civic infrastructures, and returning that component to the owners as developed land that has immediate market value. In return, they retain the remaining part for further development of their own projects.

Anil-Pharande

 

 

Anil Pharande – Vice President, CREDAI Pune Metro & Chairman, Pharande Spaces

The Pune Township Mania

The demand trend of Pune residential property is slowly but surely changing to township properties. A growing segment of Pune property buyers now says that nothing less than the autonomy, independence and convenience of a township property will do.

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Who are these people? Mostly employees from Pune’s booming IT and manufacturing sectors. The highest demand is from home buyers employed in Hinjewadi, Kalyani Nagar, Viman Nagar, Hadapsar and the PCMC MIDC belt. These home buyers are fed up with the congestion or the inner city and are seeking homes in the new and established township projects that are taking Pune real estate by storm.

What is it about these Pune townships that make them so different from other property options available on the market? Many of these township projects are located in the Pimpri Chinchwad Municipal Corporation in locations such as Ravet, Moshi and Punavale. Existing residents affirm that nothing within the main city can match the bliss of living in these magically located projects.

Nature is, indeed, still master of the situation in these areas. Real estate development in the PCMC area is tightly regulated. There is abundant green cover and almost all of these projects offer unobstructed view of distant hills, while traffic is just a dim, far-off echo from the Express Highway. The environment is absolutely perfect for residential family units. Naturally, prominent developers have snapped up prime land exclusively for the building of township projects in the PCMC.

Other factors have added to the popularity of these locations. The Express Highway, of course, is a vital one. It is the umbilical cord between Pune and other major metropolises, beginning with Mumbai, and is the very lifeblood of Pune’s commercial progress. In addition, the Mumbai-Bangalore Highway (in the close neighborhood) brings in further commercial growth and intercity connectivity.

With the kind of exposure that localities lying along these two major highways get, their popularity comes as no surprise. However, it should also be remembered that it was the Expressway which brought about the existence of the Hinjewadi Infotech and Biotech Park – which is the very important economic driver for Pune City today. Professionals from the city’s IT and manufacturing sectors need homes close to their offices, and also relative privacy in their time away from work. This has been a heavy driving factor behind the demand for township properties in the Pimpri Chinchwad Municipal Corporation.

In the not-so-distant past, township properties were a residential genre reserved exclusively for the rich. This has changes drastically with their rising popularity. The fact is, owning a township property in the PCMC has now become a feasible option for the city’s middle class. High competitiveness among housing finance institutions has ensured that loans for the purchase of homes in these township properties are easily available to the middle class.

All of the above reasons have combined to make township properties the No. 1 choice for Pune property buyers, and therefore a priority for many developers. Recognizing the wave of the future, prominent builders in the PCMC have appropriated land in these high-demand localities and are developing incredibly modern township projects there. These multi-acre township projects offer within their boundary walls every convenience of modern living to the property buyers. In fact, they can justifiably be seen as lifestyle resorts in which one can actually buy units.

The inherent commercial potential of this Pune township property boom cannot be ignored. Obviously, it presents a great opportunity to builders as well as real estate investors. In fact, a huge number of outstation investors – most notably from Mumbai – have already taken note of the Pune township trend. If Bangalore has earned the label of Silicon Valley of the East, Pune is well on the way of being called India’s Township City.

Anil-Pharande

 

 

Anil Pharande is Vice President of CREDAI Pune Metro and Chairman of Pharande  Spaces, a leading construction and development firm that develops township properties in the PCMC area of Pune, India.

Property Investment – How Real Estate Appreciation Happens In West Pune

Property investment only makes sense when the investor is fairly assured of a property’s appreciation and rental income potential. But these days, even normal home buyers are intent on getting the benefit of property appreciation and the possibility of good rental income when they are buying a home in Pune. Gone are the days when a home was simply a home – today, it is also a means for ensuring future financial security.

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The Pimpri Chinchwad Municipal Corporation has become one of the most promising areas for property appreciation in Pune today. There are many reasons for this:

  • PCMC is a developing area, which means that property rates are still lower than in fully developed areas
  • Because it is still developing, a lot of new infrastructure is being put in. Infrastructure is one of the prime influencers for property appreciation
  • The fact that PCMC residential real estate is being thoroughly planned by the PCNTDA (Pimpri Chinchwad New Town Development Authority) is ensuring that development is closely monitored. Since the PCNTDA follows a master plan for the development of residential property in PCMC, every location gains maximum investment value. There is no chance of oversupply, destruction of the environment or shortfall of necessary infrastructure
  • West Pune is a hotbed for growing residential real estate demand because of the huge presence of automobile and other manufacturing industries there. There is unlimited demand for homes right from the affordable housing category to the luxury homes segment

It is important for anyone interested in property investment to know how real estate appreciation actually takes place. We have often heard that real estate investment is all about ‘location, location, location’ and this is largely true. However, we also need to understand what it is that gives a location its investment value.

First of all, one needs to consider how much demand exists for homes in a particular area. Then one needs to look at how many projects are being constructed to meet this demand. If the demand is more than the supply, the location has great appreciation potential. If there is more supply than demand, there is an oversupply situation and property appreciation will be low.

Another factor to consider is the existing cost of residential property in the location, and the manner in which property prices have moved. For example, if property prices in a location five to seven years ago were half of what they are now, the appreciation potential is definitely high. This is usually the case in so-called ‘growth corridors’, where a lot is happening every year to develop the area further.

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If property prices have moved less than 10-12% over the last five years, it means that the area has very little appreciation potential. This invariably happens in city centres, which have been developed to such an extent that no further development is possible.

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What kind of new developments cause property prices to shoot up? These include:

  • New roads, widening of existing roads, bridges and flyovers, which improve connectivity of the area to other areas
  • The arrival of new office complexes or industries, which increase employment and create demand for homes in the area
  • Education and healthcare institutes and facilities, and also shopping and entertainment complexes. These increase the comfort levels and quality of life for residents

About The Author:

Anil-Pharande

 

 

Anil Pharande 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, an ISO 9001-2000 certified company, is a pioneer in the PCMC area offering a mixed bag of products catering especially to the 42 sectors of Pradhikaran.