The Value Proposition Of Large Vs. Small Flats In Pune

Anil-Pharande

 

 

Anil Pharande

Over the last couple of years, I have been observing with concern the decreasing size of flats on the Pune real estate market. Of course, it is the demand for smaller flats that is driving this kind of supply.

With housing prices in the Pune Municipal Corporation rising relentlessly, the ‘biggest’ opportunity that developers perceive is in smaller flats that get sold in the shortest possible time. This kind of supply is aimed at first-time home buyers who either have limited budgets or low financial confidence.

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Smaller Flats – Pricing Trap

Though these are supposed to be ‘affordable homes’, the pricing of these units is actually on the higher side. They sell because the prices are still lower than those of larger flats, but the buyers are actually paying an excessive unit cost.

The reason for this disparity is that the ‘pigeon holes’ housing model itself has some inherent flaws built into it. To begin with, the share of common area that needs to allocated in a project that consists of only of small-sized homes means that the project loses in terms of overall efficiency and sale-able area. This results in lower revenue potential, so developers bump up their prices to compensate.

Secondly, the cost of construction depends on the quantity of raw materials being used. When a developer is building a project which comprises exclusively of small units, his development costs actually go up because every unit needs to be provided with separate fittings, appliances and finishes.

As a result, he will increase his prices to make up for the loss in profitability.

Home buyers should be aware that the converse is equally true. In a project with larger units, developers save on costs because of more efficient common space utilization and lower consumption of fittings, appliances and finishes for individual units.

Better Common Amenities

This is why a 1 BHK is often only 30-35% less expensive than a 2 BHK. The bottom line is that by opting for larger flats, property buyers are getting more value for their money.

Also, projects comprising of larger flats tend to have better common amenities, which the developer can maximize the overall livability and therefore attractiveness of the project rather than needing to focus on making as many units as possible within the available space.

The obvious question that follows is – where can middle class home buyers from Pune find larger flats that fall within their budgets? The answer is – in the developing (rather than expensive over-developed) parts of the city.

For example, West Pune is a corridor where hundreds of property buyers are still able to find true value for their money.

Property rates in many of the the areas of PCMC are lower than the inner localitions of the Pune Municipal Corporation, which means that buyers can get the benefits of larger flats with better amenities there.

With the vastly improved road connectivity, the newer areas of West Pune close to Hinjewadi and the MIDC are now becoming the destinations most favoured by home buyers working in these employment catchments.

About The Author:

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. Puneville in West Pune’s Punawale is the latest integrated township project by Pharande Spaces

 

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.

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.
Pune Property
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 Real Estate: The Price Of Rapid Urbanization

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By the most recent reckoning, India’s population currently hovers around the 1.15 billion mark. It is estimated that by 2030, this figure will have grown to around 1.53 billion. India’s urban areas are just about ready to burst at the seams, on the heels of an accelerating population explosion.

The population growth in India’s rural areas in the present decade is around 18%, and over 30% in the urban areas. This pattern of urbanisation is seen as encouraging, since it seems to indicate that India will attain the global urbanization standard average in the course of the next decade.

However, it is also true that this upsurge in our cities’ population is putting available civic structures like public transport, water supply, drainage, sewerage and obviously the supply of housing under severe pressure.

This raises the question – how are India’s real estate developers addressing the problem of insufficient infrastructure in and around their projects in the main cities? The fact is, they can’t do much.

In cities like Pune, property buyers have no choice but to turn a blind eye to the absence of sufficient infrastructure. They are aware of the fact that they will face numerous inconveniences, but what can they do?

Many opt to buy into projects that boast of compensatory measures to overcome the infrastructure deficit. These would include independent water supply if a reliable municipal pipeline doesn’t exist, electricity backup to make up for unreliable power supply and sump pits if the area does not have adequate sewage.

However, such projects in Pune City are few and far between, and homes in them come at extremely high prices. Also, no matter in how many ways Pune developers compensate for lack of civic infrastructure, they cannot add more than a token patch of landscaped lawn by ways of natural ambience.

The high property rates are a real problem. Many of those who buy flats in Pune have saved all their lives for buying their Pune dream home. They have made a lot of sacrifices to make this happen; having finally managed to save enough, they buy their homes and immediately regret it.

The maintenance costs for their flats are far too high for them to bear – a lot of them can’t afford petrol for their cars anymore. They travel to and from work by bus.

We have all looked at the parking lots of highly-priced residential projects and seen dusty cars with handmade posters on the rear windows saying things like ‘Homemade Detergent Soap Available at Flat 12A’ and ‘Tuition For Stds. V to IX – Contact Mr. XYZ at Flat 26C.

It simply makes no sense to invest everything in a home and then live in financial stress afterward. The solution obviously lies in finding a home where the same investment buys you more.

The choice is between paying a certain amount on a small, under-equipped flat in the crowded central city or on a spacious home in a location blessed with natural beauty and and sound infrastructure.

The Pimpri Chinchwad Municipal Corporation, which planned its residential areas decades ago, offers such options. The integrated residential projects in Ravet and other sectors of Pradhikaran close to the upcoming International Convention Centre offer the kind of homes that Puneites have always dreamed of, but never been able to own.

The Pimpri Chinchwad Municipal Corporation also has an extremely vibrant economy, offering more and more job opportunities across all business sectors with every passing year.

Finally, because of the regulated nature of the PCMC real estate market and the high emphasis on civic facilities and amenities, there is no question of an eventual infrastructure deadlock. The real estate prices are way below those see in Pune, too. For that reason, these are the kind of homes that will be sources of joy for several generations.

Anil Pharande is Chaiman – Pharande Spaces, a leading construction and development firm operating in the PCMC area of Pune, India.

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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.

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.

 

 

Buying Investment Property In Hot Markets

Investing in real estate is a time-honoured method of achieving financial success. Throughout the ages, investment property has helped a lot of people make a great deal of money – sometimes quickly, sometimes over the long term. Those who invest for the short term are generally known as property speculators, and they play a dangerous game. Long term property investment is for forward thinkers who have an investment horizon of at least five years.

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The objective of a long-term property investor is to buy a property at a low price and sell it at a higher price. To be successful at this, one needs to know what is going to happen in a certain location over the next few years. You will need to invest in a growing location, not an established one. This is especially true if  you are a middle-class person living off a middle-class income. There are two reasons for this.

First of all, properties in established locations cost a lot of money. At the same time, their long-term investment value is lower. The reason for this lies in the nature of the real estate market. The costly (or ‘prime’) areas gained their value over a certain period of time, but what goes up will eventually go down. Real estate gains value because of new infrastructure projects, shopping centres, public transport facilities, etc.

If you look at central locations of Pune such as Bund Garden Road, KoregaonPark, Kothrud, Deccan Gymkhana and Laxmi Road, you will see that nothing more can happen there. These areas are saturated. In many of them, residents are facing a lot of problems because of overcrowding, lack of parking, open spaces, playgrounds for their kids, pollution and traffic clogging. Even with the best of intentions, the city planning authorities cannot do anything to make life better for them – there is simply no space left.

Though the property rates in these areas of Pune are high, they cannot rise further because the future has nothing to offer there. Long-term property investment in Pune means buying real estate in an area while it is on the rise – not when it is in saturation or decline mode. Buying investment property means buying it where people are going, not where they have already been for generations.

A hot property market is one where there are upcoming changes in the infrastructure, and where homebuyers are headed. Infrastructure can include things like major highway construction and shopping and entertainment facilities. Look for areas that have a lot of employment options, because people always want to live close to where they work.

Also keep your eyes open for areas where large corporations are relocating or already exist and have room to expand. When this happens, the real estate market in that area will boom due to demand for housing and small businesses. Business is one of the most reliable drivers for real estate prices.

In terms of the Pune property market, Pimpri Chinchwad has all the above ingredients of a hot property investment destination. This is the reason why more and more Pune developers are now concentrating on projects in this boom area. If you want to know more about this thriving property investment location, you are welcome to contact us to learn more about the various lucrative residential property investment options in Pradhikaran and other areas of Pimpri-Chinchwad  available.

Tips On Buying A Home In Pune

Every Indian dreams of having their very own home, and most people work all their lives to save up enough money to purchase it. In fact, this is the primary driver of the Pune property market, since this city holds to the traditional concept of homeownership as a gauges of security and success. And, of course, a new home is the best gift you can give yourself and your family.

Because of the recent economic crisis, a lot of Pune property buyers have begun thinking twice about purchasing a new home. The major reasons are increased interest rates and the rather unfriendly Pune property rates. While a number of banks are offering to help out families in Pune who want to buy their own home, there are still clouds of doubt that hover above the decision makers.

It is true that buying a home is a huge investment, and that you need to maintain it for a lifetime. For a middle class homebuyer in Pune, buying a residence is literally putting all the chips on the table. Here are some tips that are worth considering before you proceed with buying a property in Pune:

  • Location

Location is perhaps the most important factor to consider, because it will say a lot about your purchase. Do not forget that its location dictates the price of your new home in Pune. For example, a 3 BHK flat in the middle of nowhere will cost you a lot less than a 1 BHK in the middle of the city’s commercial district. Some areas are called prime because of their central location. They are close to the places that we need access to, such as schools, healthcare facilities and shopping centres. These places cost a lot more because they offer all of these.

However, the new concept of township properties has created an entirely new paradigm. The new townships in Pune allows property buyers to avail of all these facilities even if the location is not in the centre of the main city. Some of the best townships in Pune are coming up in the Pimpri Chinchwad area – for instance, Woodsville in Moshi and Celestial City in Ravet, both being developed by Pharande Spaces. These are integrated townships that offer every convenience of modern living in Pune’s flourishing sister city.

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  • Price

The cost of your flat in Pune is obviously one of the most important considerations. As already stated, certain properties in Pune cost more simply because they are centrally located within the city. It is significant to note that despite the higher pricing, the homebuyer has to put up with traffic congestion, air pollution, lack of greenery and inadequate parking facilities.

Those who are looking for a reasonably priced flat in Pune will only find it in the further locations. Many of these new areas do still have some greenery and less traffic congestion and pollution. However, in time these areas will also succumb to the hammer of indiscriminate development which has been the hallmark of the Pune real estate market.

Again, Pimpri-Chinchwad township properties offer the perfect alternative. The real estate development in the PCMC area is strictly controlled. This means that infrastructure keeps pace with property development at all times. In other words, these Pune township properties will never be strangled by over-development and traffic snarls. They are the perfect alternative for Pune property buyers who are looking for a clean, green environment to live in – not only for the current generation, but for all generations to come.

  • Security

Security is a major concern in a fast-developing city like Pune. Your choice of location for your new home also reflects on the safety of your family as well as your property. Security is definitely a very important consideration when you purchase a new home. It makes more sense to buy a property in a township project which offers round-the-clock security than in a urban city centre with a high crime rate.

  • Appreciation

While central location is a big driver for property prices, central locations are also the most volatile in terms of price fluctuations. This is because the property market in city centres is more often than not driven by investors rather than genuine end users. On the other hand, there are no other price drivers in a congested, overdeveloped city. Very little can be done to enhance the infrastructure and therefore the lifestyle quotient of property owners.

Though prices stagnate in the city centre for these reasons, property valuations for township properties in developing areas such as Pimpri Chinchwad increase because of the better infrastructure, more wholesome environment and the steady – yet controlled – addition of value-adding projects such as office complexes, malls, schools and hospitals.

While buying a flat in Pune, it makes a whole lot of sense to consider the purchase from all angles. In short, keep in mind what kind of standard of living you wish to enjoy in your lifetime and also pass on to your children.

Posted by: K. D. Nagarkar

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.