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.

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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.

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.

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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.

Affordable Housing In India – Where Is The Supply?

Affordable housing is a term we use for residential units in India’s urban areas which are affordably priced with respect to households that fall within a specific limited income range. There is no single set of parameters to define what an affordable housing unit should cost in India. This is because the pricing and feasibility to developers of affordable housing is a function of the city, location within the city, type of project being built and also the construction technology employed.

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In India, it is appropriate to judge the affordability of a home on three broad parameters – the monthly income of prospective buyers from the target segment, the size of the home and, of course, its price. There is another element that should be mentioned, namely the target clientele itself. We tend to look at the word ‘affordable’ solely in terms of the LIG (lower income group) segment. For this segment, affordable housing would mean 200-300 square foot dwellings priced at between 7-12 lakh.

But what about people who earn more than the average factory labourer but still cannot afford to buy a decent 1 BHK flat of 300-450 square feet within ten to fifteen kilometers of their workplaces? They too need affordable housing – housing appropriately priced for the middle class. The home buyers in this segment can afford to buy flats in the price range of Rs. 30-35 lakh via home loans.

Obviously, they expect a certain standard of living, comforts and facilities for this expense. However, but even such flats are hard to come by in our larger cities. This is the case even in Pune.

Today, around 30% of India’s population lives and works in urban areas. This means that they occupy less than 2% of the land available in the country. If we zoom in on Maharashtra, it emerges that close to 60% of the overall population lives in urban locations. Distressingly, a closer look at a city like Mumbai reveals that over 50% of its citizens live in slums. Mumbai’s slums occupy less than 4% of the land available in the city. Obviously, the affordable housing quotient has gone badly wrong in Pune’s prosperous neighbouring city. However, the problem is larger than just one city, which continues to get negative press only because of its exorbitantly high property rates and enormous annual inward migration.

Despite everything being said on the matter, the shortage of affordable housing in India is getting worse instead of better. The country’s urban population of 285 million has multiplied itself by five over the last half century. It is projected that it will continue to increase at this fast pace, and that 50% of all Indians will be living in urban areas by the end of the next three decades. So, if the shortage for housing for the lower income segment stands at 25 million today and there is no increase in the pace of supply of affordable housing launches, what will this figure look like in 30 years?

Let us look at the situation from a real estate market point of view. There is, in fact, a gigantic market for affordable housing in India. Currently, it is valued at anything between Rs. 5-10 trillion. What is really being done to address this huge market – especially the one constituted by the ever-growing middle class? There are next to no Government incentives for projects with flats in the Rs. 30-35 lakh bracket.

While the only answers to this question in Mumbai seem to lie in small projects on the far outskirts of the city, Pune presents a far more encouraging picture. Developers of township properties in Pune have now begun addressing this market with an internationally inspired property development model called integrated townships. This model is based on maximum value for money to buyers, based on high-grade common infrastructure and shared facilities in more cost-effective, yet progressive areas like the Pimpri Chinchwad Municipal Corporation.

With fully integrated township projects like Woodsville and Celestial City, we at Pharande Spaces have been successful in delivering affordable housing for the mid-income segment of home buyers in Pune and the PCMC area.  There are various reasons for this success.

For one, land for these integrated townships was acquired early on in upcoming locations such as Ravet and Moshi. This meant that the price of the finished products could be kept within the means of Pune property buyers. Secondly, townships like Woodsville and Celestial City are conceived and constructed on a model that allows luxurious facilities and amenities on an economy of scale. In other words, it is possible to provide luxurious features for all units in these projects on the basis of a large-scale master plan.

Anil-Pharande

 

 

Anil Pharande is Vice President – 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.

PCNTDA Turned PCMC Into The Hottest Real Estate Destination In Maharashtra

Anil-Pharande

 

 

Anil Pharande, CMD – Pharande Spaces

There is little doubt in anyone’s mind that Pimpri Chinchwad is now Pune’s new hotbed for affordable residential property. In fact, the Pimpri Chinchwad Municipal Corporation is one’s of India’s most resounding real estate success stories. PCMC is a planned city, and its development profile has nothing in common with what is happening in the Pune Municipal Corporation limits.

Pune Property

Thanks to the unflagging efforts of the Pimpri Chinchwad New Township Development Authority (PCNTDA), PCMC is now a showcase of outstanding residential areas. The PCNTDA has been vigilant in defending this showcase sister city of Pune from the central city’s unregulated real estate development pattern. One of the hallmarks of this careful town planning is the availability of affordable township properties, which are the best examples of the masterfully planned social, economic and real estate development in Maharashtra.

Those who have never seen PCMC before are amazed at the futuristic look of this progressive city. When it comes to urban planning, the PCNTDA has gone several steps further than CIDCO of Navi Mumbai. Navi Mumbai was Maharashtra’s first planned city, and it certainly began on a good note. However, lack of vigilance by the town planning authorities there soon caused it to fall prey to commercialization. Charles Courier’s initial blueprint was son abandoned, and today Navi Mumbai has become just another extended suburb of unregulated Mumbai.

In Pimpri Chinchwad, however, the PCNTDA was determined to avoid the mistakes which caused the real estate market in Navi Mumbai to degenerate. The blueprint which was adopted was one of uncompromisingly regulated real estate growth, and organized urban planning was the constant watchword. Keeping its focus firmly on the long-term objectives of rational real estate development, the PCNTDA has managed to turn PCMC into a genuine city of the future.

Residents of township properties in PCMC have the unique advantage of owning homes which are near to their workplaces, yet affordable and blessed with green natural surroundings. They live high quality lifestyles and do not have to sacrifice their family’s health to the pollution which defines the inner city. On an average, township property owners is the PCMC spend upto 35% more time with their families than Pune residents, and have up to 40% more living space at the same cost.

The Pimpri Chinchwad Municipal Corporation is truly a prime example of social-minded real estate development. Only here will one find spacious properties at affordable prices, coupled with a modern and efficient transportation system. Only here can one find a multitude of employment opportunities, superior infrastructure and modern, yet very affordable homes close to one’s place of work. And only in the PCMC can one enjoy the benefits of carefully preserved natural splendour.

Thanks to the approach taken by the PCNTDA, the PCMC property market is today seen as the smartest option for residential property buyers from Pune and beyond. Yearly inward migration figures clearly indicate that this city is indeed growing rapidly. The year-on-year appreciation rates of residential property in the PCMC range between 15-20%, and this has also attracted property investors from all over Maharashtra.

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 Real Estate Needs Special Residential Zones

It has been a while since anything concrete has been done about creating more affordable housing in India. Considering the great need for budget homes, it is remarkable that there is so little interest being shown in providing them. Of course, Indian developers have their own constraints – the cost of bank borrowing, the lack of realistic incentives from the authorities, the ever-increasing cost of land are just a few of them.

Meanwhile, the Government is busy battling inflation and simultaneously trying to keep India’s economic growth from sinking even further. It is very evident that, despite its obvious linkages to the economy, the real estate sector is not on its priority list at the moment.

In cities like Pune, even middle income home buyers are struggling to find homes within their budgets. Pune property rates have gone through the roof, with many blaming investors from Mumbai for this fact. The employment situation is far from brilliant in Pune these days. People are unable to increase their financial situations by shifting to better jobs because the job market has shrunk considerably over the last one year. Interest rates are also astronomical. Many aspiring home buyers are looking at buying small 1 BHK flats in dilapidated housing societies – projects so old that most banks to grant home loans for them.

What is the solution? Is there another model of affordable housing that would help both the EWS and middle class to realize their dream of home ownership? While this is a difficult challenge in land-strapped cities like Mumbai, Pune still has enough land to spare to offer one possible solution. This solution, which requires the involvement of both the Government and the developer community, is Special Residential Zones (SRZs).

The concept of Special Residential Zones or SRZs is not a new one. It has been discussed in the past and is, in fact, nothing but a natural extensions of the existing SEZ model tailored to the Indian residential property market context.

A Special Residential Zone is a model of affordable housing development that creates a separate economic microcosm or entity. The model can be tailored to attract developers by means of various incentives and tax breaks. A important feature of a SRZ would be subsidized rates for land and construction materials, which would be a further incentive for developers to get involved. In this model, the Government would provide the necessary infrastructure to make the SRZ approachable and inhabitable. In other circumstances, developers would have to see to this themselves.

The SRZ model calls for a change in certain fiscal policies, and also for simplified parameters for development approvals and sanctions. The primary objectives would be one of social responsibility, though part of the incentives for developers would be a commercial component.

In the SRZ model, the Government would incentivize the development of affordable residential units. The long-term objectives would include the lowering of housing prices in certain areas, since the SRZ model will eventually alter local property market dynamics.

As in the SEZ model, the land on which the units are developed would be long-term leasehold. In other words, the property buyer would own the property, but not the land it stands on. As everywhere else, ownership dynamics would conceivably change once the property has been occupied for over 12 years.

True, the concept of SRZs still needs to be developed. However, the point here is that it can be implemented very well around Pune, since there are considerable land parcels available on the periphery that would make the SRZ model possible.
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.

PCMC Real Estate By 2020 – A Fast Forward Into The Future

The Pimpri Chinchwad Municipal Corporation follows a real estate model that has proven to be the most progressive and sustainable all over the world. The essence of this model is ‘planned development’ or ‘controlled urbanization’. PCMC is a twin city to Pune, but in that respect is uniquely different. Annual inward migration into the PCMC has been calculated at a staggering 70%, while in the Pune Municipal Corporation, it is only around 30%.

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Moreover, PCMC is attracting the crème de la crème of the Indian business world. This upper crust of professionals is the senior managerial cadre that administers to Pimpri Chinchwad’s booming IT and manufacturing sectors. The housing demand from this segment has revolutionized the residential property sector in the PCMC, with New Age residential configurations such as integrated townships increasingly taking centre stage.

While Pune continues to benefit from its own property market drivers, real estate development there has not followed any sort of plan. In fact, it is not hard to see it becoming a smaller version of chaotic Mumbai over the next decade.

A HOMOGENEOUS, MULTI-FACETED MOSAIC

In the same time span, PCMC will have attained its fullest potential as a model city of the future. Obviously, it will look very different from what we see today. It will have grown exponentially, into a harmonious montage of large industrial units, IT Parks, hotels, shopping and entertainment plazas, educational institutes and healthcare facilities – towering above public parks and gardens and crisscrossed with multi-lane roads and flyovers.

Further, the additional 25,000 acres of land that have come within the PCMC jurisdiction by virtue of the last Development Plan will eventually result in the addition of at least 2 million new homes. These homes will cater to every social stratum of property buyers, from the lower to the high income segments.

HORIZONTAL AND VERTICAL EXPANSION – CREATING A SPECTACULAR SKYLINE

In other words, there will be tremendous – yet controlled – horizontal real estate growth in Pimpri Chinchwad over the next decade. Most spaces allocated for residential use will have been utilized for that purpose. But this will not result in an urban jungle, since the PCMC planning blueprint will enforce the maintenance of vast green spaces at all stages of development.

Moreover, the Pimpri Chinchwad Municipal Corporation will at all times endorse self-sufficient real estate developments such as townships and other integrated residential projects. The PCNTDA (Pimpri Chinchwad New Town Development Authority) has charted a regulated, progressive and environment-friendly course for real estate development in the Pimpri-Chinchwad region. The town planning authorities have adopted the most sustainable and progressive models for optimum residential real estate. This means that residential projects in prime areas of the PCMC such as Ravet and Moshi will conform to the master-plan of scientific uniformity in real estate development and growth.

In fact, the addition of 25,000 acres will not suffice for this region’s real estate development over the next decade. This is because the PCMC will have to accommodate a massive demand for housing. The population growth in PCMC over the last 25 years has been almost ten-fold (from 200,000 to 2 million). There is reason to believe that population growth is likely to cross 50 lakhs (5 million) by 2035.

This growth will be fueled by several factors. On the one hand, there will be a huge requirement for homes from the rapidly growing manufacturing sectors of Pimpri-Chinchwad and the Chakan-Talegaon belt. Chakan itself, though a burgeoning industrial hub, has little to offer by ways of residential facilities. The onus naturally falls on PCMC, which will necessarily be the residential location of choice for the entrepreneurs and employees of these units.

Simultaneously, there will be the spill-over effect from Pune City (which will have reached complete saturation point in the next 20 years or so). We further have to factor in the ever-increasing migrant population from all over the country, attracted as much by the excellent education institutions as by the varied career opportunities.

The obvious solution lies in growing vertically as well as horizontally. More land will have to come within the purview of planned development, and building heights will need to increase from the currently permitted 70 metres – approximately 22 floors plus parking – to 100 metres or more. FSI, which still currently stagnates at 1, will need to be raised to at least 2, or even 2.5.

This means that over the next decade and a half, PCMC will be a skyscraper city on the lines of Gurgaon.

WORLD-CLASS INFRASTRUCTURE

In most cities, such growth would mean serious infrastructure challenges. We have already seen what happens in a city like Mumbai, where skyscrapers are being built without sufficient parking, connectivity and municipal amenities to support them. However, thanks to the master plan that PCMC will always adhere to, the necessary infrastructure will precede the building of high-rises. I firmly believe that in the next 20 years, the Pimpri Chinchwad Municipal Corporation will serve as a national and even international benchmark for planned, scientific vertical real estate growth.

An essential prerequisite to support this massive growth is an advanced public transport system. With an eye on this future requirement, PCMC has adopted a model similar to Ahmedabad’s Janmarg – a scientifically designed BRT-based public transport system spanning 130 km across 14 routes in PCMC. This system involves 4-lane wide, exclusive roads with grade separators that will reduce the dependence on private transport in favour of more efficient public transport.

This, in turn, will result in smooth traffic flow, less road blocks, radically lower pollution levels and a healthier, energy-conserving environment. To ensure that there are no hitches in the development of this lifeline, the PCMC has established an Urban Transport Fund for its funding.

Another requirement for efficient transport is more connecting roadways. A ring road is on the drawing boards, but that will become truly effective only with the implementation of a hub-and-spoke road network. To illustrate this point, there are currently only two arterial roads connecting Pune with Pimpri-Chinchwad, and only two connecting Pimpri-Chinchwad with Chakan. These cannot sustain the enormous increase in vehicular traffic that industrial and residential growth will generate.

Again, it is my opinion that this alone may not suffice to cater to the public transport needs that will emerge over the next two decades. I personally feel that an elevated skybus or monorail network or even an underground rail network will be called for.

THE ULTIMATE GAME-CHANGERS

I cannot end these musings without mentioning the new International Convention Centre at Moshi, which will cover a sprawling 200 acres. The Convention Centre alone will spawn a huge tourism, hospitality and retail boom which will convert PCMC into a major urban destination both within and outside Maharashtra, perhaps second only to Mumbai. Global hotel chains will have redefined the hospitality sector, and the shopping centres will be populated by marquee retail brands.

In fact, the next two decades are surely going to see PCMC being catapulted into the international Big League, giving it a distinct global identity in its own right.

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.

Township Property Mania Hits Pune

In Pune, something very new and exciting is happening on the residential real estate market. Where ordinary flats were once the most sought-after type of residential property, the trend is slowly but surely changing to a demand for township properties. The more discerning Punekars of today says that nothing less than the convenience and ambience of a township property will do.

Pune property

Who are these people? Mostly representatives of the IT and manufacturing sectors. These, along with some other discerning professionals, have apparently become fed up with the congestion of the inner city, and the lack of amenities in the projects there. They are setting their sights on the spacious, green environment of areas beyond Aundh. Pimpri Chinchwad, with a special focus on the booming market in Pradhikaran properties, is especially in demand.

What is it about these township properties in the PCMC area that makes them so different from other available ones on the Pune property market? Well, one reason is that nothing within the suburbs of Pune can match the bliss of living in a township property. The mantra in these avant-garde resindetial projects in Pimpri Chinchwad is still ‘respect and enjoy Nature’. In the township properties in areas like Moshi and Ravet, green environment is carefully maintained and traffic congestion is unheard-of, despite the proximity of the Express Highway.

The environment is absolutely perfect for families to live in. There is so much demand for these properties that many prominent developers have snapped up prime land exclusively for the building of township properties. Other factors also add to the popularity of these townships – the Expressway, of course, is a vital one. The Expressway is the umbilical cord between Pune other major cities, beginning with Mumbai. In many ways, the Expressway is the lifeblood of Pune’s commercial progress. In addition, the nearby Mumbai-Bangalore Highway brings in further commercial growth and intercity connectivity.

With the kind of investment value that localities along these two major highways get, their popularity comes as no surprise. However, the Expressway has also brought about the existence of the Hinjewadi Infotech Park. The professionals that work there need homes close to their offices, and also privacy and peace in their time away from work. This has been another driving factor behind the township properties mania in the Pimpri-Chinchwad Municipal Corporation area. Obviously, another contributing factor is the Pimpri-Chinchwad industrial belt.

In the not-so-distant past, township properties were a residential genre reserved exclusively for the ultra rich. This has changed drastically with their rising popularity. The fact is, owning a township property in Pimpri Chinchwad has now become a feasible option for Mr. Everyman.

Anil-PharandeAnil 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.

 

 

Problems Ahead For Pune Real Estate

Anil Pharande

Like all other property developers in Pune and PCMC, I continue to be enthusiastic about the city’s real estate future and potential. However, I do have concerns about the impact of unregulated development. For instance – in the fever of the property market’s roller-coaster ride, we may have forgotten the fact that this city’s primary and most marketable attraction was its salubrious climate.

Pune Property

Today, the city authorities we indiscriminately razing hills and trees to make way for a proliferating concrete jungle. This has already had a very noticeable effect on the climate in the PMC limits. Fortunately, great care is being taken in the Pimpri Chinchwad Municipal Corporation – Pune’s booming sister city – to maintain as much green cover as possible.

The PCNTDA (Pimpri Chinchwad New Town Development Authority) is very serious about planned development; as a result, there is considerable emphasis on environmentally sustainable real estate development in the Pimpri-Chinchwad region. The increasing and highly successful trend of integrated township properties in the new boom localities of Moshi and Ravet are clear indications of this progressive focus.

However, the real estate development mania in the Pune Municipal Corporation region continues unchecked, without any apparent purpose other than to exploit all available space to maximum commercial advantage.

There are also considerable problems with real estate market transparency in Pune. The city’s rapidly increasing population is putting relentless pressure on the available land in the city. As a result, the city limits are constantly being pushed further into the adjacent villages. Ever since the merging of 38 villages into the PMC in 1997, there has been an upsurge in illegal structures in these areas. Not surprisingly, they also still lack basic infrastructure.

As Maharashtra’s second largest city, Pune is going to see increasing problems in the future. It does not take an expert to see that Pune’s urban planning and development do not consider the city as an integrated unit. The highest interest still seems to be in the pockets of highest commercial potential. With increased FSI in certain locations, there will soon be skyscrapers in certain areas, while there will continue to be unresolved slum issues in other areas.

Even today, we are not addressing the issues of badly maintained roads, inadequate drainage and the shortfall in water and sewerage networks. This leads to extremely lopsided real estate growth, with the demand focusing solely on favoured areas while little is done to raise the potential of those that lack the needed infrastructure. Pune still does not have a comprehensive parking space policy and has done nothing to curtail freight movement within the city. Many key intersections have exhausted their capacity to handle the increasing traffic.

Currently, the highest degree of Pune’s urban sprawl is along the national highway, with the density of land development declining with distance from the highway. In the interest of sustainable development, we need to correct Pune’s urban sprawl by providing the necessary infrastructure in currently non-preferred areas as well. If this does not happen, we will have serious problems in further development in the coming ten years.

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.

This article may be reprinted with proper attribution to the author and a link back to PunePropertyBlog.com

Pune Property – The Advent Of Transparent Real Estate Deals

Pune PropertyAnna Hazare and his fight against corruption were all over the news for the better part of the month. There was a lot of food for thought for everyone, including property market stakeholders. While there was no direct reference to the immense amounts of black money in real estate, Anna Hazare obviously addressed this aspect in his crusade, as well.

In this context, it is pertinent to note a recent testimonial by a senior representative of a leading international property consultancy here in Pune.  His statement was in response to a request for his views on the subject of corruption and black money in the Indian real estate sector.

He pointed out that the subject of corruption in real estate is bound to crop up again and again, especially in light of the scams that rocked the news bulletins just a few months ago. However, he also correctly pointed out that stricter scrutiny for and measures against the movement of black money in the sector are already being enforced. Nevertheless, he stated, we are still in the early days of our battle against corruption in various business segments, and that it will take time to completely subdue its effects.

Anna Hazare himself would not dispute this fact. The rot of corruption has set in over a number of years, and has therefore sunk rather deeply into it at various levels. To weed it out completely will take time, but the sanitation process can be accelerated with greater consumer awareness. After all, corruption in real estate is fed both at the supplier and consumer ends. Thankfully, this syndrome is already on the decline because of increasing awareness among Indian property buyers.

The traditional viewpoint of black money driving Indian real estate is obsolete in many ways by now. In Pune, property buyers should be aware of the fact that many of today’s larger, reputed developers are already offering completely transparent deals. The prevalence of such developers is, in fact, higher in Pune than in neighbouring Mumbai. Pune property buyers have the option of patronizing such developers.

The times when Pune property buyers were completely at the mercy of corrupt small-time developers are long over. Those looking for homes in Pune are no longer limited in their options. The more prominent developers in Pune have long since recognized the need for greater transparency in the system. After all, the largest component of Pune residential property buyers is made up by the salaried class, who do not have large cash reserves and often need 100% funding on home loans.

However, there are also larger reasons why Pune real estate is becoming more transparent. The Pune property market is a focal point for foreign investors who are attracted by the immense potential it presents. Residential developments around the Hinjewadi and Kharadi IT hubs as well as the integrated townships of Primpri-Chinchwad are drawing massive investments from from domestic and international investors. With the exposure to global funds, the sector has matured rapidly and transparency is becoming a norm.

In addressing the issue of corruption in Indian real estate, it is important to note that there will always be supply where there is demand. A corrupt system holds illegal advantages for both the buyer and the seller. If more and more sellers are willing to offer clean deals, it is to be hoped that more and more buyers will opt for such deals. only then will we be truly on the way to a corruption-free real estate market.

pharande spaces logoPharande  Spaces is a leading construction and development firm that develops township properties in the PCMC area of Pune, India.

This article may be reprinted with proper attribution to the author and a link back to PunePropertyBlog.com

Posted by: K. D. Nagarkar

The Advantages Of Township Properties At Ravet

Pune real estate is all about new growth. Unlike neighbouring island city ofMumbai, Pune is not hemmed in geographically, and such growth is indeed possible. Pune’s urban growth is steadily advancing into its peripheral areas. Meanwhile, Pune’s sister city ofPimpri Chinchwadhas been seeing its own real estate boom under the auspices of the PCNTDA (Pimpri Chinchwad New Township Development Authority).

One of the most exciting new Pune real estate destinations for homebuyers is Ravet, which is situated on the North-West side of Pimpri Chinchwad. Ravet is an area that aptly showcases how seriously the PCNTDA is taking planned urban development.

celestial-city-300x204

As a residential property purchase as well as property investment destination, Ravet has several advantages in terms of location and infrastructure. Also called the Gateway to Pune, Ravet is the first area to greet those who come in from the Mumbai-Pune Expressway. In fact, Ravet is also where the old NH4, the Katraj-Dehu Road bypass and the Mumbai-Pune Expressway meet. However, this incredible accessibility from the financial capital is not the only factor that makes Ravet so important from a real estate point of view.

Two of the primary demand drivers for residential real estate in Pimpri-Chinchwad are its industrial clusters and the Hinjewadi IT Park. Both of these generate a massive amount of employment at all levels. Ravet is located at an equal distance from both these workforce hubs. Also, it has excellent educational institutions in the immediate vicinity – including the prestigious Mercedes Benz School, the Indira Institute of Business Management and the D.Y. Patil College.

Ravet is also where the most prestigious residential township properties in the Pune-PCMC belt are now taking place. Township properties are becoming increasingly popular because they have re-introduced the concept of community-based neighbourhoods. Healthcare, educational facilities and shopping are all readily available in these projects. In sharp contrast, homes in smaller projects have far less to offer.

Moreover, the investment value of integrated township properties increases much faster than that of smaller projects. The appreciation is higher because these follow premeditated development plans that encompass open spaces, communal amenities and common areas. This means the overall value of the location does not decrease because of uncontrolled developments and compromised infrastructure.

In fact, since integrated townships have their own infrastructure, they are not overly dependent the local municipal corporation. They have their own sewage management, water supply and overall maintenance facilities as well as their own security, which assures homeowners in integrated township projects of much higher levels of safety for themselves, their families and possessions.

In Ravet, integrated townships such as Celestial City by Pharande Spaces are conceived and executed on the basis of a thoroughly researched master plan. This means that construction parameters are completely standardized – unlike in unplanned residential localities, where divergent construction ideologies and standards often prevail. The standardization of construction parameters in integrated townships allows for uniform appreciation of property values.

Posted by: K. D. Nagarkar