Infrastructure: The Key Real Estate Investment Criterion

– Anil Pharande, CMD – Pharande Spaces

We keep hearing the term ‘market drivers’ being used in real estate. What are they? Market drivers can be defined as developments in an area that increase the value of living there. It is a well-established fact that infrastructure is by far the most important driver for real estate demand and property appreciation growth.

Infrastructure can take many forms. It includes road development to boost connectivity of a location, civic infrastructure such as dedicated water and electricity supply, public gardens, etc. that increases the quality of living in the area, and social infrastructure such as schools, colleges and healthcare, which result in shorter travelling time to such very essential services.

Pharande Vaarivana Pune

Infrastructure must be put in place either before or along with other real estate development. Attempts to put it in place retrospectively create the kind of mess that we can see in many of our cities today. The building of flyovers and road widening are attempted in highly congested areas, disrupting the flow of normal activity and taking ages to be built, causing great inconvenience and massive costs to the city because of the incessant delays.

Building infrastructure is like growing trees – in both cases, there needs to be enough space for them to grow, and sufficient opportunity for a root network to deploy. Without space and depth, neither trees nor infrastructure can grow and flourish. If we take the case of Pune as an example, we can see that building infrastructure as an afterthought to real estate development, rather than as a precursor, does not really work well.

Pune’s haphazard development in the past has not been favourable for decent infrastructure deployment to complement its rapid development on other fronts. Battling severe constraints, Pune’ development authorities are doing their best to counter the ill-effects of unregulated development which has so far been taking place.

Pharande Vaarivana Pune

We are seeing some good results in building support infrastructure, but the Pune Municipal Corporation is actually a losing battle. This is amply illustrated by the fact that the Pune Municipal Corporation is not able to provide suitable parking, traffic management solutions and utilities supply despite enormous investments.

Guidelines For Homebuyers & Investors

  • The infrastructure of a location is a major focus area for property investors for a very good reason. Real estate investors want to attract end-users, either as rental or purchase clients, to the properties. They know that an area without sufficient infrastructure will be unattractive to their clients, because the quality of living quotient is low.
  • Again, properties in areas without good infrastructure tend to have cheaper property rates for a reason. Developers with projects in such locations know that the area has little or nothing to say for itself in terms of quality of life. The only way they can hope to sell their projects is to offer very attractive rates.
  • Buyers should place infrastructure availability prominently on their checklist while scouting for suitable homes. Road and rail connectivity, water supply, proximity of schools, hospitals and shopping outlets are of paramount importance. Buying a home cheaply if the location does not offer these is meaningless, and will give cause for regret.
  • If one is buying a property purely as a long-term investment and primarily for capital appreciation, one can afford to be a bit philosophical about existing infrastructure. After all, one is not planning to live there and does not expect very fast appreciation. As long as there is a reasonable assurance that it will arrive in the foreseeable future, it makes sense to invest in a property located in an emerging area where infrastructure is in its nascent stages.
  • However, if one is buying the property in order to generate rental income, existing infrastructure is far more important than upcoming infrastructure. People looking for rental options are also looking for a certain ease and dignity of living. They are willing to put the option of buying a home aside so that they can live in a good home in a good location on rent.
  • Where the option exists, give a high preference to townships over all other options. While checking out townships, ensure that they are located in areas which have a good saturation of support infrastructure as well. Most large Indian cities now have township projects coming up.
  • In Pune, the infrastructure-rich Pimpri-Chinchwad Municipal Corporation is attracting the highest number of buyers and investors of township properties. In other parts of the country, Navi Mumbai and the Kalyan-Dombivli and Vasai-Virar belts are becoming important township hubs.
  • In Delhi NCR, the areas to look at for townships are Ghaziabad, Faridabad and Greater Noida. In Bangalore, the growth hubs for townships are Yelahanka and Devanhalli, and in Chennai they include Sriperumbadur, Perambur, the OMR belt and Anna Nagar.

About The Author:

Pharande Vaarivana PuneAnil 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: Pune’s New Townships Capital

Anil Pharande

Townships are more than a new real estate mantra – for the larger cities in India, they are without any doubt the only remaining hope for decent living standards. Gradually but surely, residential conditions in cities like Pune are on the decline, and township properties are gaining increasing significance as the final answer to quality-based living.

In areas like the Pimpri-Chinchwad Municipal Corporation, the ‘Infrastructure First’ approach has preserved and consistently enhanced living conditions for PCMC residents. However, the Pune Municipal Corporation (PMC) has not been able to stay on top of the infrastructure situation. Traffic congestion, air, water and noise pollution and a heedless approach to development have compounded the problems on all levels.

All Eyes On PCMC

The city’s inhabitants are facing major problems with reaching emergency services and educational institutions for their children, and access to adequate parking. In this depressing scenario, the large integrated townships being developed in thriving locations of the PCMC region are the new lifestyle standard. In the PCMC, the township movement first began in areas like Moshi and Ravet, and the region’s leading developers have now launched luxury townships on Spine Road and Punavale as well.

Integrated townships have, in fact, been on the rise ever since they were identified as the most suitable residential solution by the Government’s National Housing and Habitat Policy of 1998. After this policy included townships in its ‘Housing Revolution’ initiative, the Government of Maharashtra had begun actively encouraging the development of integrated townships to reduce the pressure on urban areas and to improve infrastructure in cities like Pune.

However, such projects require large land parcels and these have been all but fully consumed in the core areas of the Pune Municipal Corporation. As result, the focus shifted to the Pimpri-Chinchwad Municipal Corporation, where land availability and superlative support infrastructure make townships a very viable proposition.

Lifestyle Aspiration Driving Demand For Townships

Today, Pune citizens’ yen for a better lifestyle quotient is leading to an increasing demand for systematic and fully-enabled residential formats. The city’s deteriorating living conditions are the prime reason why the Township Revolution is now in rapid spin.

In the integrated township format, the problems are infrastructure deficit and deteriorating living conditions are completely negated. They offer a very high grade of living conditions set to the backdrop of aesthetic environments.

Offering the township-grade facilities in smaller residential projects would involve prohibitive costs for developers – cost which the consumers would have to pay. Thanks to the economies of scale, township developers in the PCMC are providing ultimate lifestyle solutions at far more rational costs. High-quality infrastructure, open spaces and immediate access to all the necessities of daily living result in a superior lifestyle proposition, since all residents in a township benefit from one large integrated and centrally managed system.

Why Township Properties Cost More – And Why It Is Worth It

When developers offer township-grade facilities in smaller housing projects, the costs to consumers is comparable to those of luxury homes. In townships, the vast range of facilities, fully-integrated infrastructure and the availability of schools, hospitals and shopping complexes within the premises means that township properties come at a slightly higher cost than normal multi-storey apartments. However, the additional expense is vindicated by the fact that those who buy into township properties are assured of a vastly superior living standard – not to mention exceptionally higher returns on investment.

For property buyers who simply do not want to compromise on their lifestyle options, the township properties of PCMC are the most obvious solution. The direct advantages include complete security, convenience, the comfort of high-grade infrastructure and various facilities within the premises, and immediate access to retail outlets and recreational facilities. This results in a very high degree of comfort and convenience within a completely cosmopolitan ethos.

About The Author:

Pharande Vaarivana Pune

Anil 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.

PMRDA: New Era Of Planned Growth For Pune Real Estate

Pharande Vaarivana Pune

Anil Pharande, Chairman – Pharande Spaces

The Pune Metropolitan Development Authority (PMRDA), which took up seat in the PCNTDA offices in Akurdi, Pimpri-Chinchwad on May 1, heralds an era of much-needed change for real estate development in Pune. From this point onward, PMRDA will introduce the concept of scientific town planning to every part of the city.

Pharande Vaarivana Pune

So far, proper town planning had only been followed in the the Pimpri-Chinchwad Municipal Corporation. The entire Pradhikaran belt has been developed by the PCNTDA (Pimpri Chinchwad New Township Development Authority) under strict development guidelines. As a result, PCMC has become a showcase of planned urban development.

The jurisdiction of PMRDA will cover the whole or Pune, including PCMC as well as several talukas such as Maval, Bhor, Haveli, Shirur, Mulshi and Khed which fall in the Pune district. Talegaon Dabhade, Lonavla, and Alandi and also be included along with several outlying villages. For the very first time in Pune’s history, there will be a unified planning and development authority to bring order to the entire district. The model of development will be similar to the approach which PCNTDA has followed to develop Pradhikaran over the years.

PMRDA will develop massive land parcels in a planned manner, areas will be zoned for residential and commercial development and support infrastructure such as electricity, water supply, sewerage and road networks will be put in place. Thereafter, they will be released for development under a newly-formulated development plan (DP) and regional plan (RP) which will replace all previous plans. In the meantime, PMRDA will also eradicate illegal developments. In the future, no construction will take place without complete vetting and authorization by the PMRDA.

This approach to urban development will have a profound effect on real estate in the Pune region. The value of land as well as any kind of built-up real estate will rise considerably, and the region will attract more and more investments from both within and outside the country. PCMC, which is already home to hundreds of global manufacturing companies, will see even more of such industries moving in and setting up operations. This will lead to incremental employment growth, which will bring with it massive requirements for commercial and residential spaces.

In short, Pune will now be able to reach its fullest potential under PMRDA. The local economy is set to boom, and Pune will eventually become the new economic capital of Maharashtra.

About The Author:

Pharande Vaarivana Pune

Anil 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.

PMC’s Proposal To Extend Duration Of Lease Period Faces Opposition

(TOI, Nov 7, 2010)
PUNE: The civic body’s proposal to extend the duration of the lease period of civic properties is mired in controversy with civic activists alleging that the Pune Municipal Corporation (PMC) has not prepared a draft for the changes proposed in the policy.
Six years after it became the first civic body in the state to have a land lease policy, the PMC now wants to extend the duration of the lease period from the current 30 years to 99 years. The policy was ratified by the Bombay high court.
The PMC has invited objections and suggestions from citizens to the proposed changes. The suggestions and objections should be sent to the land and property department of the civic body within a fortnight from November 3.
“The PMC has not prepared any draft to seek suggestions and objections on the proposed change. On what basis should citizens register their suggestions and objections?” civic activist Vijay Kumbhar asked. Kumbhar and other activists have approached the municipal commissioner on this matter.
Deputy commissioner (land acquisition) Sudhakar Telang, however, said that the suggestions and objections were sought only to extend the duration of the lease period. “If citizens want to go through the existing policy it is available with the PMC. Suggestions and objections have been invited only on the issue of duration,” said Telang.
At present, the civic land lease policy bans the PMC from selling its properties, but allows it to lease the property for 30 years. The PMC has leased out many of its properties, including open spaces.
Activists allege that most properties have been leased out to organisations and people with connections to corporators and politicians. In 2003, Kumbhar had approached the high court which had ordered that civic properties be leased only through a tendering system.
The civic body owns about 3,500 properties reserved for hospitals, community halls, libraries, schools and other amenities. Many properties have been leased out for various purposes, but there is no system in place to check whether the properties are being used for the purposes they have been leased out for. The PMC has not recovered rent from hundreds of properties for several years.

PMC Losing Rs 150 Cr Property Tax Annually For Lack Of Draftsmen To Measure Building Plans

(Pune Mirror, October 20, 2010)
Can the property tax collection of Pune Municipal Corporation (PMC) get a boost just by inducting some draftsmen on staff? Yes, if one goes by the proposal by some corporators. A proposal before the standing committee of PMC states the civic body needs more draftsmen to increase the revenue.
Corporators Sanjay Nande and Shrikant Pujari have put forth this proposal. According to them, “The city is witnessing an explosion in constructions. The tax department is responsible for taxing them, so collection will see a boom.”
Property tax is levied in accordance with the area of the building. Since draftsperson can measure the area correctly, they are needed in the tax department. However, most of the draftsmen are currently in the building department, they said. Hence, they have recommended some draftsmen be hired.
The PMC has various pending tax complaints. The civic body has to recover Rs 51 crores from 210 cases of property tax. The standing committee has also approved a committee headed by retired High Court judge R M Bapat for this purpose.
Speaking to Mirror, Nande said, “The tax department has already asked for two draftsmen to be recruited for the assessment. There are not enough technically sound persons in the department.
Builders usually show the partially completed buildings which are never assessed again. They escape the tax net easily. Hence, if a draftsman is in the department, he can calculate how much tax the PMC can collect simply by studying the plan.”
The PMC had collected property tax of Rs 274.44 crore against the estimated amount of Rs 482.82 crore in 2009-2010. During the preparation of the budget this year, the standing committee had claimed that 45,000 properties do not fell in the tax net, eroding revenue by Rs 150 crore.
Vilas Kanade said, “I know about such a proposal but do not know the exact details of it. We have started charging tax on one lakh properties, which is the highest number of properties in the history of the PMC. However, some properties escape because of lack of manpower.”
The Current System
The PMC levies property tax on buildings in three ways. First, the building department sends occupation certificate to the tax department, depending on which tax is levied. Some residents approach the PMC and declare their properties voluntarily. The third way is the manual scrutiny of the building in PMC limits.
Explaining the reasons of less taxing, Kanade said, “Sometimes, the building is ready but only two or three families are moved in. The properties can’t be taxed until they are occupied totally. Sometimes, the buildings are used rarely and other times the completion certificate does not come in time.”
However, lack of manpower does not allow the department to scrutinise all properties. According to Kanade, there are no special teams to scrutinise such properties and has to be carried out by the employees, who are not experts.

Rs 18-Lakh Dues In 15 Days From Pune Property Tax Defaulters

(Indian Express, Oct 17 2010)
Copy-of-tax
Over the past fortnight, the Pune Municipal Corporation (PMC) has collected Rs 18 lakh property tax dues, including the penalty, from nearly 16,000 defaulters. The civic administration decided to impose a fine of 2 per cent on people who have property tax dues in their names.
Based on the directions issued by the state under the Bombay Provincial Municipal Corporations Act of 1949, the move came into effect from October 1. Owners of 2.5 lakh properties, out of 6.8 lakh assessed, have to pay the 2 per cent penalty. The civic body is looking at collecting approximately Rs 2 crore exclusively through the penalty this year.
“We started imposing the penalty on property tax from October 1. We found that out of 6.8 lakh assessed properties, there are about 2.5 lakh owners, who are yet to pay their property tax dues. While some of them had not paid tax in the first semester, some others had not paid the tax over the past couple of years,” said Vilas Kanade, chief of the property tax department.
He said though the people were complaining about the penalty, they have no option but to pay up. “Till Friday, about 16,000 property owners paid their dues worth Rs 18 lakh, inclusive of the penalty. This move is likely to provide an additional revenue of Rs 2 crore this year,” said Kanade. The property tax bills are distributed to property owners within the city limits twice a year, with a six-month division. For 2010-11, property tax had to be paid before September 30. The second installment has to be paid by December 31, 2010.
While the property tax collection in 2009-10 was Rs 370 crore, this year the initial six months have given the civic body Rs 320 crore of property tax. This year, the tax collection department has set a target of Rs 500 crore, the official said.

PMC Appoints New Panel To Resolve Water, Property Tax Cases

The Pune Municipal Corporation (PMC) standing committee on Tuesday directed the civic administration to appoint a commission to resolve the pending cases with disputes on water tax and property tax.
The committee urged the administration to resolve the disputed cases before incurring two per cent tax on the dues of property tax. “The administration has assured of setting up the commission with immediate effect,” said Arvind Shinde, chairman of standing committee. There are pending dues of Rs 200 crore of water tax and Rs 75 crore of property tax with the civic body.

Pune Property Tax Defaulters To Face 2% Monthly Fine

PUNE: The Pune Municipal Corporation (PMC) has decided to execute the state government’s notification to impose a two per cent penalty on people who fail to pay their property tax for the first six months of the year 2010-11 before September 30.
The government notification of May 31, 2010, has authorised the civic body to impose a fine of two per cent on the tax amount for every defaulting month if the property tax is not paid within a given period of time. The second instalment of the property tax has to be paid before December 31, 2010.
In the last two years, the PMC has brought nearly 80,000 properties under its tax net. However, an estimated 45,000 properties still remain out of its reach. The standing committee has repeatedly told the administration to make an effort to widen its tax net. Once the unassessed properties are covered, the civic body is expected to get an additional revenue of Rs 100 crore to 150 crore.
The PMC’s tax collection and assessment department has already submitted a plan regarding this to the standing committee. After octroi, property tax is a major source of revenue for the PMC. The department has proposed that digital pictures of all properties be taken for records and an aluminium plate be fixed on each property, identifying its survey number and other details.
Meanwhile, in order to improve collection of property tax, the civic administration has proposed that zone-wise agencies be appointed to assess properties and bring unassessed properties under the tax net.

Pune Property Tax Rates May Rise With New System

Based on the directions of the state government, the Pune Municipal Corporation (PMC) has decided to introduce the capital value system (CVS) for computing the Annual Rateable Value of a property, for fixing the property taxes in the city. The civic administration has tabled a proposal before the standing committee regarding the move.
The move has been designed to bring uniformity in the taxation system in all the municipal corporations across the state. As a result, if the proposal is cleared, the property tax charges might go up.
At present, the ARV is fixed on the standard rents fixed by the Rent Control Act. Under the ARV system, the probable gross rent of a property is taken into account. For domestic buildings, 20 percent of the amount is calculated. For commercial buildings 25 percent of the amount is calculated.
Under the new CVS, the calculation of tax is based on the value of the land as well as that of the building. It takes into account the capital value of the building, which is in turn based on the cost of the land as well as the cost of the building, net of depreciation.
The proposal says: “In different municipal corporations in the state, there are different methods of fixing the ARV of a particular property. But, in order to bring uniformity, transparency and introduce simplicity, the new method of CVS is being considered.” The ARV fixed under the capital value system, will be updated every five years.
Source
http://www.indianexpress.com/news/New-system-on-anvil-to-evaluate-property-tax-likely-to-push-up-rates/677588

Property Tax Defaulters To Pay Two Per Cent Penalty To PMC

PUNE: Starting October 2010, the Pune Municipal Corporation (PMC) will execute the state government’s notification to impose a two per cent penalty on property tax defaulters.
The state government on May 31, 2010, issued a notification, according to which the civic body has been authorised to impose a fine of two per cent every month if the property tax is not paid in the given period of time.
For the year 2010-11 property tax for the first six months has to be paid before September 30, 2010, and those who fail to pay it will have to pay a two per cent penalty on the tax amount every month till the tax is paid. The second instalment of the property tax has to be paid before December 31, 2010.
“The standing committee on Friday approved the proposal to impose a penalty. This will help the PMC to collect property tax on time and even citizens will respond positively to paying on time,” said standing committee chairman, Arvind Shinde while speaking to reporters.
In the last two years, the PMC has brought nearly 80,000 properties under its tax net. However, an estimated 45,000 properties still remain out of its reach. The standing committee has repeatedly told the administration to make an effort to widen its tax net. Once the unassessed properties come under the tax net, the civic body is expected to get an additional revenue of Rs 100 to 150 crore.
The PMC’s tax collection and assessment department has already submitted a plan to the standing committee. After octroi, property tax is a major source of revenue for the civic body. The department has proposed that digital pictures of all properties be taken for records and an aluminium plate be fixed on each property, identifying its survey number and other details.
Source