Indian Millennial Homebuyers: The Times Are Changing

Pharande Vaarivana

Anil Pharande, Chairman – Pharande Spaces

Everything that your parents may have communicated to you about owning a home may be incorrect if you are a millennial under the age of 35. However, don’t blame yourself for this – your parents operated by a rigid set of values that they have simply passed on to you. It was a simple enough formula – get a good education, get married, have kids and buy a big flat in the city. This is – or was – the quintessential Indian middle-class dream.

This dream – and the formula – may continue to have relevance to quite a few younger people in India, but the way life works for today’s millennials in India is no longer so cut and dried as it was for their parents. In the first place, we have a rapidly evolving and increasingly competitive job market in India.

The career charts of Indian millennials are no longer as predictable as those of their parents were – nor does a sound college education mean that one can actually get the best jobs anymore. Also, millennials are the ‘job hopping’ generation which wants to sample different lines of work and also different companies with varied work cultures before they ‘settle down.’ This is one reason why many Indian millennials initially prefer to rent rather than buy their homes.

Secondly, because their careers are no longer cast in the concrete of limited options like engineer, doctor, lawyer, banker or ‘Government job, young Indians today are marrying later and are not necessarily in a hurry to have children once they do, either. When they do decide on having children, having one child is, more often than not, enough. The typical millennial family of today is essentially nuclear and does not subscribe to the values that drove the much larger and much more complex joint family package.

Pharande Vaarivana

They are more flexible and value their freedom, so they are not overly invested in making heavy financial commitments as soon as they are able to (making such commitments was a defining factor of the previous generations of Indians).

What does this mean in terms of their home purchase decisions? For one thing, it means that a smaller flat – even for a dual-income household – is perfectly adequate to begin with. What increasingly matters for the young, smart socially conscious Indian nuclear family of today is not necessarily size, but:

  • Value for money (banks and developers should understand by now that dual income does not equal dual gullibility)
  • Being able to get to and from work conveniently (not because getting to work fast matters most, but because getting home faster leads to better work-life balance)
  • Good public transport connectivity (because using public transport is good for the family budget as well as the environment)
  • Two car parking spaces (because two earning members may need to be as mobile as possible)
  • Fast broadband + Wi-Fi connectivity and other smart home features (because many Indian millennials can and do work from home, or from home as well as an office)
  • Environmental sustainability of the project (because most Indian millennials do believe that the world can become a better place)

Upgrading to larger homes should be an option, but it is by no means the only acceptable path for the Indian millennial to follow. For the previous generations, the ‘upgradation’ route was more or less socially enforced – but that trend is now history.

Strangely, many residential developers in cities like Pune have not caught on to the reasons why their projects are not selling as fast as they used to. They choose to believe that it is because ‘market conditions’ are currently ‘slow’. That may be true, but the larger fact is that housing projects that appealed to their parents may not have the same attractiveness for today’s millennials.

Projects that do not meet the requirements of today’s younger generation of working professionals are not going to work for this buyer segment, regardless of the market conditions.

One truth about the real estate market has not changed, even for millennials – while it is not all about ‘location, location, location’ for them, location is still certainly very important. It’s just that ‘central location’ is no longer the Golden Rule – Indian millennials are far more inclined to purchase their first homes in the suburbs, not in the city centre.

They are also far more likely to buy homes in organized townships with stand-alone infrastructure and their own schools, healthcare and shopping / entertainment facilities. Townships with their own office complexes offering potential walk-to-work or cycle-to-work possibilities and those close to major employment hubs such as IT parks and manufacturing belts are the most preferred.

About The Author:

Pharande Vaarivana

Anil Pharande is Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in West 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.

Festive Season: Tips On Freebies And Offers On Property

– Anil Pharande, Chairman – Pharande Spaces

In Maharashtra, Diwali is definitely the time of choice for property buyers to invest in their dream home. In fact, property buyers look forward to this festival to sign the papers on their homes because this city cherishes this traditional time of investing in the future.

Pharande Vaarivana PuneObviously, builders also respond to the vastly improved market sentiments and do all they can to sustain them. During the Diwali period, property buyers will be presented with a slew of offers which developers introduce to induce sales. The Diwali period this year will see a lot of such activity, because property developers are eager to create sufficient interest in their projects. The residential property market has seen slackness over the preceding months, and Diwali is the time that developers have been looking forward to as much as property buyers.

The question here is – do such ‘freebies’ constitute real value for property buyers? The answer to this does not depend solely on what is being offered. It is a normal market phenomenon for incentives to be offered during the festive season, but property buyers should consider the actual value of the property.

They should be cautious about extravagant freebies and take a close look at the factors that add or reduce value in the case of real estate. If the project is by a developer known for sub-standard construction, or if it is located in a ‘blind spot’ of the local real estate market, no amount of freebies can compensate. The property itself will not represent a good investment, and the buyer will not benefit in the long run.

Another aspect to watch out for is freebies being offered for properties in over-priced projects. At a time when property buyers seek the best options for their money, getting a free car along with an overpriced flat does not make sense. If the flats in this project do not represent good value for money, freebies will not improve the situation. If a buyer wants to buy a flat in Pune such a project, it is best to negotiate for a better price than to accept freebies – or ask for them in addition to a discount.

Home buyers should especially beware of freebies being offered by investors who have put their money into properties in locations that are known to be ‘overheated’ (in other words, where rates have been artificially inflated by excessive investor activity). In such cases, freebies are meant to act as psychological encouragements to make an unwise property purchase.

There are certain incentives that buyers can definitely take seriously. These are not in the form of cars or vacations, but represent actual savings to them. Such incentives include:

  • Reduced down-payments to book flats, with balance payable on possession, resulting in an extension of the period between booking and full payment. Normally, buyers would have to pay the balance as the building progresses
  • Waiver on stamp duty, VAT and registration charges
  • Free or significantly reduced clubhouse memberships
  • Free parking, furnishing, interior decoration and smart home features (which would otherwise be charged for)
  • Waiver on premium for floor-rise

About The Author:

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. Woodsville in Moshi is another highly successful PCMC-based township by Pharande Spaces which is now in its 3rd phase.

Thriving Real Estate in Pune

(StockMarketsReview.com, October 13, 2010)
Pune is a well established premier IT centre in the country that houses units of various leading IT and ITes companies. Once known as pensioner’s paradise, Pune property market is witnessing mushrooming of various luxurious and affordable housing spaces equipped with modern amenities. It has apparently metamorphosed into a bustling mini metro over the years and ranks among the most preferred property investment destinations today.
The entire realty sector in Pune is flourishing with humungous developments in residential, commercial and retail segments. Some of the popular residential localities in the city are Hadapsar, Kalyani Nagar, Kharadi, Viman Nagar, Baner, NIBM, Koregaon Park, Wakad and others. Similarly, commercial property in Pune is most sought after in areas of Baner, Viman Nagar, Aundh, Lonavala, etc. The entry of technology honchos has not only triggered its economy and created employment opportunities galore but also put it forth as a potential real estate destination.
As is the case with other tier-II and III cities, the large scale migration of professionals and students created the housing needs. Already working hard to cater to the commercial demand, developers then began focusing on the inadequate residential property. With the youth settling in, demand for retail realty in Pune also witnessed a considerable upsurge pushing developers to launch retail property projects in the city.
Undoubtedly, builders have been instrumental in taking Pune real estate to a different level. The coming up of high quality developments in terms of modern apartments equipped with state-of-the-art amenities, commercial spaces with excellent infrastructural support and swanky multi storied shopping complexes and multiplexes are all their efforts. Besides the colossal growth within the city, residential property is burgeoning in the peripheral areas of the city as well.
The demand is increasing relentlessly encouraging more and more realty projects to be launched by both national and local property builders. While corporate companies are scouting for commercial properties in Pune, migrant professionals are eyeing accommodation facilities in the city. The supply of real estate constantly falls short even as housing and office spaces multiply speedily within and around the city. With this conspicuous deficit, the property prices are soaring higher year by year.
The emergence of numerous integrated townships and condos among green environs make Pune an ideal place for living. And the considerably high returns on its realty put it across as a rewarding investment destination. The great capital and rental values spells enthusiasm in the property sector with hordes of realty investors thronging the city’s market. With an attractive 30 to 40 percent appreciation in prices, NRIs are also taking interest in investing money here. As a result, the demand for premium housing- deluxe villas and luxury apartments has also gone up by several notches.
This addition to the already fuelling up demand makes Pune one of the most lucrative realty destinations. It is among the most happening cities, located in proximity to the financial capital of the country and that serves as another advantage for Pune realty. The emergence of tier-II and III cities as property hubs is instrumental in heightening the importance of real estate in India.
Pune has not only come across as a cosmopolitan city but also as the cultural capital of Maharashtra. It offers a wonderful blend of tradition and modernity symbolizing historical past as well as a software and industrial center of today with global presence. It has been attracting huge foreign investments from NRIs, MNCs and FDIs in its realty sector. Real estate in Pune has been expanding ever since the Government started liberalizing its policies to attract investors. It is expected to flourish furthermore in coming years being a favorable investment destination.
Deepika Bansal writes on behalf of 99acres.com, which is an internet portal dedicated to meet every aspect of the consumers needs in the real estate industry. It is a forum where buyers, sellers and brokers can exchange information, quickly, effectively and inexpensively.

Flat Registration Offices To Be Linked To Curb Scams

At a time when property registration frauds are becoming increasingly commonplace, the state government has decided to interlink all sub-registrars’ offices. The move will curb instances of a single flat or a property being registered in names of multiple buyers. Once the offices are connected, registration officials will be able to verify if a sale deed has been registered at any other sub-registrar’s office on an earlier occasion.
At present, property transactions in Mumbai, Pune, Thane and Nagpur can be registered at any of the sub-registrars’ offices located in each district. This means that even if your house is in Bandra, you can get it registered, say, at the Borivli sub-registrar’s office. However, there’s a flaw in this system. As the sub-registrars’ offices are not interlinked, officials have no way of ascertaining if the same flat or property has been registered elsewhere.
Unscrupulous minds have been exploiting this very lack of coordination and instances of a single flat being registered in the names of multiple buyers have surfaced. In the absence of a common database on property registrations, many citizens had to run from pillar to post to get their home loans approved as banking officials found it hard to get correct details during the verification process.
The issue was recently raised in a meeting called to discuss how to better disbursement of home loans. The meeting, held in Mantralaya, was chaired by chief secretary J P Dange. During the meeting, housing secretary Sitaram Kunte pointed out that there has been a sharp rise in property registration frauds. “Taking cognizance of the issue raised by Kunte, Dange directed the officials concerned to rectify the registration system at the earliest to prevent recurrence of such scams,” a senior Mantralaya official said.
Collections from registration and stamp duty have witnessed a four-fold hike in the last decade. The government earned Rs 2,200 crore during the financial year 2000-01, while the figure shot up to Rs 9,600 crore in 2009-10.

Home And Personal Loans To Cost More

The Reserve Bank of India (RBI) on Thursday hiked policy interest rates, sending a message to banks that they need to do the same for their loans. The silver lining is that interest rates on fixed deposits will also rise from the current 7-8% levels.
The RBI increased the repo rate (the rate at which it lends money to banks) by 25 basis points to 6% and the reverse repo rate (the rate at which the RBI takes out excess cash in the banking system) by 50 basis points to 5% with immediate effect.
The central bank did this primarily to contain inflation and to ‘normalise’ policy rates, considering the speed at which India’s economy is growing. Interest rate is a monetary tool used by central banks to ensure that a fast-growing economy doesn’t get out of hand — primarily, that prices of goods, or inflation, don’t spiral out of control due to excessive demand, the hallmark of fast-growing economies.
This is done essentially by controlling the amount of money floating in the economy by raising or lowering interest rates. When an economy declines, the opposite happens — central banks lower interest rates so that people are persuaded to buy goods and thereby generate demand.
“The RBI believes inflation has plateaued (and the declining trajectory inline with its projection), but it highlights that it will remain at ‘unacceptably’ high levels for a few more months.
It hence believes that there is a need for continued policy response to contain inflation and anchor inflation expectations,” said Ashutosh Datar, economist with the brokerage IIFL.
“The broad indication of the RBI action on Thursday is that lending rates will rise. We will take a call in a few days on increasing our personal and home loan rates because the impact of this rate hike will have to be passed on to consumers,” said Kamlesh Rao, executive vice president (personal loans and home finance), Kotak Mahindra Bank.
The timing of the hike will vary from bank to bank, depending on the cost of their money.
“On the interest rate scenario there is definitely an upward bias. But the hike may not be immediate. It will depend upon the credit pickup. Initially, it may be a hike of 25 basis points,” said MD Mallya, chairman and managing director, Bank of Baroda.
It seems both the RBI and the government want fixed deposit rates to rise.
“If bank credit is not to become a constraint on growth, real interest rates need to move in the direction of encouraging bank deposits,” the RBI said on Thursday.
On Wednesday, the government raised the employees provident fund rate by 100 basis points to 9.5%.
Banks had already resorted to hiking their benchmark prime lending rate, or BPLR, in August, citing reasons that their costs were going up. In the near future, they may hike it further and may even hike the base rate, which came into existence from July 1 this year.
“The BPLR may be hiked further as most of the lendings happen through it, and there is also the likelihood that the base rate may be hiked in the next quarter since banks have the option to change the base rate every quarter for the first year,” said Deepak Tiwari, banking analyst at KR Choksey Shares & Securities.
“Borrowing rates will go up for both consumers and developers,” said Shobhit Agarwal, Joint Managing Director (Capital Markets), Jones Lang LaSalle India, a real estate consultancy. Conversely, this could mean demand for homes, and therefore their prices, may decline.
“The projects that are already priced high, the impact in terms of demand erosion will be higher. We don’t see much impact on low-cost housing, that is Rs25-50 lakh purchases,” said Agarwal.
But teaser home loan rate — where you pay a low interest rate in the first year and more later — won’t be discontinued as they are a hot favourite among borrowers.
“I expect teaser loans to continue as they are so popular with people. But I think banks may continue those schemes with a slight increase in rates, said Harsh Roongta, CEO of apnapaisa.com, a personal finance advisory. The State Bank of India (SBI) is offering teaser home loans till September 30 and the committee will take a decision on whether to extend it further or not on September 28, said a senior SBI official.

RBI Pitches For Higher Deposit Rates

Unfortunately, banks look set to raise lending rates by October, too.
A day after the Employees Provident Fund Organisation trustees raised the interest rates on PF deposits by 100 basis points to 9.5 per cent, the Reserve Bank of India on Thursday signalled banks to raise deposit rates to attract investors who have been shifting to other instruments.
In its first ever mid-quarter monetary policy review, RBI said if bank credit was not to become a constraint to growth, real rates needed to move in the direction of encouraging bank deposits.
“The policy actions taken over the past three quarters were partly driven by the need to end the prevalence of negative real interest rates,” it said.
Interest rates are said to turn negative when the interest rate on deposits are lower than the prevailing inflation rate, eroding the value of depositors’ money. While inflation has been hovering in double digits, deposit rates have been in the range of 6-7.75 per cent in this financial year. As a result, banks have seen deceleration of deposit growth, as savers have been shifting to other instruments for higher returns.
Hinting at upward rise in deposit rates, S S Mundra, executive director of Union Bank of India, said: “There is a clear signal in the mid-quarter review of policy on deposit rates. There is probably need to rethink. The extent of revision would differ from bank to bank.”
Deposit growth has not exceeded 15 per cent since the second half of April, against RBI’s projection of 18 per cent deposit growth for the current financial year. Banks have mobilised Rs 44,396 crore in this financial year since April, while the incremental lending went up by Rs 1,10,996 crore.
Deposits grew 14.4 per cent year-on-year as of August 27. During the fortnight ended August 27, deposits mobilised by banks had gone up by Rs 38,658 crore.
Following the central bank’s cues from the first-quarter monetary policy review on July 27, as many as 40 banks had raised interest rates on short-term and medium-term fixed deposits by as much as 150 basis points. The central bank had asked banks to beef deposit mobilisation in the first-quarter policy review to avoid any asset liability mismatch.
Since March, RBI had raised the repo rates by 125 basis points this year to six per cent and the reverse repo by 175 basis points to five per cent.
Lending rates to rise
As a result of tight liquidity, home and auto loans are expected to go up but not immediately. Bankers expect the credit demand to pick up on the back of good monsoon and strong IIP (index of industrial production) growth in July.
“There is upward bias on lending rates since we have increased our deposit rates. We will revise rates when we review our base rate in October. There is definite indication for it go up and (this) depends on cost of funds,” said Bank of Baroda’s executive director, R K Bakshi.
Banks will review their base rate for the first time in October. Subsequently, interest rates for the home, auto and commercial sectors will increase.
“Banks are at the onset of the busy season. The credit pick-up would also shape the interest rate trend,” added Mundra.
“Borrowing rates will go up for consumers as well as for developers. For the projects that are already priced high, the impact in terms of demand erosion will be higher. We don’t see much impact on low-ticket sizes such as Rs 25-50 lakh purchases,” said Shobhit Agarwal, joint managing director – capital markets, Jones Lang LaSalle India.
“Tight liquidity scenario is expected to prevail, which will further strengthen the policy transmission and is expected to result in banks increasing their lending and deposit rates,” said Ashwin Parekh, partner, Ernst and Young.
By increasing the repo and reverse repo rates, RBI had further reduced the liquidity adjustment facility rate corridor to 100 basis points. This is expected to reduce volatility in short-term interest rates.
Credit had grown by 19.4 per cent on a year-on-year basis at the end of August 27 as against RBI’s projection of 20 per cent for the financial year. Outstanding bank credit stood at Rs 3351396 crore at the end of the fortnight.

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

Free Parking Space Norm In Pimpri-Chinchwad Municipal Corporation

Pimpri-Chinchwad Municipal Corporation is the first civic body in the state to come up with a decision under which buyers of residential apartments get free parking space.
On June 11, 2009, the Pimpri-Chinchwad Municipal Corporation (PCMC) declared that no building permission plans will be sanctioned if the builders refuse to provide free parking space to apartment buyers across the twin industrial township.
This was after a series of reports in Pune Newsline, highlighting the Bombay High Court which had ruled that builders cannot sell parking space and that it should be made available to the flat buyers free of cost.

PCMC Coming Up With A Comprehensive Parking Policy

PUNE: The Pimpri-Chinchwad Municipal Corporation (PCMC) is planning to come up with a comprehensive parking policy for the twin township area.
Expressing the need for such a policy, municipal commissioner Ashish Sharma on Tuesday said that pedestrian safety issues need to be considered comprehensively while planning for road traffic and transportation projects.
Sharma, who was speaking at a symposium on land-use and transporation in Pimpri on Tuesday, said that the present approach regarding parking policy is ad hoc and that there is an urgent need to come out with a comprehensive policy.
Stressing on proper planning for pedestrian facilities, Sharma said that proper footpaths should be provided on all roads. While planning for footpaths the preference should not be on vehicles. Ways and means should be found out to prevent the encroachments that often result due to wider footpaths.
Issues like whether footpaths should be at the road level or at a higher level, need to be addressed, he said. The symposium was organised jointly by PCMC, Pimpri-Chinchwad New Town Development Authority (PCNTDA) in association with Institute for Transportation and Development Policy ( ITDP) and GEHL associates.
Source