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.

Pune Property: The Power of Location

What are the factors that make a residential project popular? Speaking in contemporary real estate terms, there are some fundamentals:
1. The builder’s brand equity
2. Attractive elevation, with tempting amenities
3. Competitive property rates
4. Location
One could argue that a builder’s brand, driven by reputation and prestige, shouldn’t be a major consideration. However, the fact is that a well-known developer’s banner sells project simply because it is a trusted name on the market. Such a builder is known for quality construction, clean titles, decent property rates and overall transparency.
Of course, elevation and amenities count for a lot, too. After all, a property is basically defined by its physical characteristics. Attractive rates certainly matter, but one should not have to forgo basic quality, aesthetics and proper amenities just for lower rates. However, since Pune is a city of passionate bargain-hunters, this is what often happened in the past – buyers overlooked the fact that a cheaply-priced property does not really appeal.
Fortunately, these days Pune property buyers have become aware that neighbouring Pimpri-Chinchwad offers residential projects that are vastly superior to anything that Pune has to offer – at much lower rates, and in far more pleasant surroundings.
woodsville-1-1478
Which brings me to location – the last but certainly not the least consideration in my list above, and the primary topic I want to address here. Location is a vitally important factor to consider while buying a home in Pune. In fact, location should be a priority consideration.
location1-150x150
What gives location such power on the Pune property market? Take the area near the Pune International Convention Center in Pimpri Chinchwad, for instance. Obviously, a location that is now so popular with property buyers from both Pune and the PCMC area does not win its reputation in a lottery. There are qualifying aspects involved. It is home to the integrated residential project called Woodsville, and is very favourably connected in terms of public transport. The roads are wide and spacious, ensuring that traffic bottlenecks cannot happen. There is ready and limitless availability of water, the scenery is a homebuyer’s dream come true and the development in this area is carefully regulated.
The last point is very significant – regulated town planning ensures a sufficient amount of
open spaces and prevents cluttering. In other words, homeowners in Woodsville are assured that what they see from their windows and terraces today is exactly what they will see ten years down the line. Another developer cannot buy up the plot in front of their unit and build some kind of monstrosity there. The massive green cover is being maintained for ecological reasons, so the generations to come will breathe the same unpolluted air.
The fact that this area is within easy reach of a number of crucial points within Pune as well as from important cities like Mumbai and Nasik has contributed to its popularity. In other words, location – especially from the point of view of a Pune property buyer – should be seen both from both a present and future perspective.
Anil Pharande is President of CREDAI PCMC and Chairman of Pharande Spaces, a leading construction and development firm that develops integrated residential projects in the PCMC area of Pune, India.
On the Pune Property Blog he discusses the market fundamentals that drive one of Pune’s most dynamically emerging real estate investment destination.
You may reprint or quote this article with full credit to the author and a link back to PunePropertyBlog.com

PMC To Propose Appointment Of Arbitrator For Water/Property Disputes

PUNE: The Pune Municipal Corporation (PMC) is likely to come up with a proposal to appoint an arbitrator for settling cases related to property and water tax disputes.
The move assumes significance as there are nearly 350 disputed cases related to taxes and the total amount which is to be recovered is nearly Rs 280 crore. The cases have been pending in courts for many years. The issue came up for discussion at the standing committee on Tuesday.
Civic officials told the committee members that around Rs 210 crore dues pertain to water taxes while dues worth Rs 70 crore pertain to property taxes.
Senior committee member and corporator Ujjwal Keskar suggested that the municipal corporation should appoint an arbitrator to resolve the tax disputes. He also suggested that the municipal corporation should first announce an amnesty scheme for citizens to pay their tax dues. He pointed out that a few years back, when the corporation had announced an amnesty scheme for new property holders, nearly 14,000 property owners had come forward to pay their taxes. According to Keskar, the civic administration has agreed to both the suggestions and is likely to come out with a proposal next week for appointing an arbitrator.
Meanwhile, the committee deferred the hoardings policy tabled by municipal commissioner Mahesh Zagade. Civic officials told the meeting that there are a total 2,313 authorised advertisement hoardings in the city, but the number of unauthorised hoardings is over 5,000.
The committee also discussed the issue of taking action against jewellery shop owners who have not paid octroi on gold and silver since April this year. The administration stated that it had issued notices to the jewellers in this regard. The committee was informed that the new Rajiv Gandhi hospital in Yerawada will start functioning next month.
Meanwhile, committee chairman Arvind Shinde directed the PMPML to stop the CNG pump for autorickshaws at the Narveer Tanaji Wadi bus depot as the pump had been started without taking any prior permission from either the PMC or the PMPML board of directors.

Realty Bubble To Escape Action

An extraordinary sharp rise in property prices and robust growth in banks’ housing loans portfolio is drawing attention of policymakers, economists and bankers said this week.
It is not clear whether the Reserve Bank of India, in its mid-quarter policy review on Thursday, will take more than cognisance of these developments that have impact on the effectiveness of its battle against inflation. Some economists believe RBI won’t impose curbs on bank credit to realty sector although housing inflation is fed by easy availability of banks loans.
Not that it has ignored this development.
Late August, the central bank’s annual report noted, “Although housing prices witnessed correction during the global financial crisis, there was a sharp rebound in the subsequent period.”
“Greater pace of rise in asset prices continued to remain a concern from the standpoint of macroeconomic management,” the report said.
Realty bubble
Rising property prices in past one year have raised fears an asset bubble may be forming in real estate sector.
Reliable data on housing prices is limited. According to Makaan.com, a website on real estate, property prices in Mumbai and Pune rose 10-14% in the year to July 31. In Delhi’s National Capital Region, prices were up 30%. An official indicator of housing prices is the consumer price index for urban non-manual employees (CPI-UNME). This puts housing inflation at 33% from a year ago in June.
The escalation in property prices “is somewhat out of sync from fundamental viewpoint”, said Abheek Barua, chief economist at HDFC Bank. In the past, RBI has increased risk-weights on banks’ loans to real estate to limit lending to the sector. RBI hiked risk-weight on advances to commercial real estate sector to 1% from 0.4% in October 9. Rating agency Crisil’s economist dismissed ideas the banking regulator would impose stricter sanctions on real estate loans in Thursday’s policy.
“Real estate prices have been on RBI’s radar for some time,” acknowledged Dharmakirti Joshi, chief economist of Crisil. But “I don’t think there will be any major changes (in real estate lending norms) on September 16,” he said, noting, “There are still downside risks to the economy.” For some, spike in home prices mirrors growth in economy, and therefore there is no need for RBI to up the ante on housing.
“I don’t think there is any bubble in property prices at this point of time,” said Madan Sabnavis, the chief economist of Credit Analysis & Research, also a credit rating agency.
“Overall, if one takes a sanguine view of the Indian economy, things are looking positive. So it is natural realty prices will also go up,” he said. “I don’t think RBI needs to act or will act immediately. But if this upswing (in property prices) persists, RBI may act accordingly,” he said.

Finolex Industries Selling Pune Land To Raise 4 Billion Rupees

Finolex Industries Ltd., India’s biggest maker of pipes made of polyvinyl chloride, surged to its highest in almost three years after the company said it expects to raise about 4 billion rupees ($86 million) selling land.
The company revived its plan to sell 78 acres (31 hectares) of industrial land after an increase in real estate prices, said P. Subramaniam, chief financial officer, said in an interview. Finolex had in 2008 proposed selling the property, he said.
The land sale will help Finolex improve its cash flow, said Tejas Doshi, vice president of equity research at Sushil Financial Services Pvt. The company, which reported a 67 percent drop in profit in the three months through June, also plans to spend 800 million rupees to build a new factory, Subramaniam said by phone today.
The land sale will help “improve the balance sheet,” Mumbai-based Doshi said. “It will also help their expansion plans.”
Finolex will raise 500 million rupees by selling non- convertible bonds to build the plant and will fund the balance from its profit, Subramaniam said. The company hasn’t “finalized” the land sale yet, he said.
Source

June Pune Real Estate Prices Went Up By 12.5 %

As per a recent survey of the Property Index (MPI) by a real estate business website, real estate prices in Pune have grown by 12.5 per cent in June compared with the same month last year.
The index for the month of June stood at 1094 vis- a- vis 972 a year ago. The increase in the Pune index can be attributed to the hardening of property prices in the underlining markets of Aundh, Pimple Saudagar, Chinchwad, Karegaon Park, Wakad, Wanowarie, Hadapsar, Viman Nagar and Talegaon, found a study by Makaan.com.
Aditya Verma, COO, Makaan.com, the organisation which conducted the survey, said “Pune property prices have moved up at a rapid pace keeping many home buyers at bay. The un-expected fast run-up has lead to a mood of caution in the near term. The home buyers seem to be in a wait and watch approach. The price movement over the next few months will determine the next definitive trend”
“The trend for June’10 deserves a special mention as it was around this time last year that the property prices started to look up after nine months period of continues decline caused by global slowdown,” said the report.
Other popular markets like Baner, Kalyani Nagar, Kharadi, Kothrud, Magarpatta and Vishrantwadi saw an appreciation lower than the city average. If one looks at the short term (quarterly) trend and compare the price index for June’10 with that of March’10, one would observe softening in property prices.
The Pune index during this period has moved from 1197 in March’10 to 1094 in June’10 signifying a fall of 8.6 per cent. This indicates a short term fatigue in the property prices after an upturn seen earlier in the year.
Read the rest of this article here.

Twin Levies Hit Home Sales, Registrations In Maharashtra

It’s turning into a battle between property developers and home buyers in Maharashtra, as the two argue over who will pay the service tax and the recently-imposed value added tax. The twin blow is holding up a large number of property registrations across the state, say top realty brokers and developers.
In Pune, the auto and information technology hub, property sales have come down by half because of this issue, says Pankaj Kapoor, managing director of Liases Foras, a real estate research and ratings firm. “The Pune market was doing well in the last quarter, now with the imposition (of the levies), it is badly hit. Even the sales have been hit in the peripheral areas of Mumbai [ Images ],” Kapoor says.
According to Kapoor, home sales in Mumbai have been impacted to the extent of 15 to 20 per cent due to the problem. Recently, the state government imposed one per cent VAT on the contract price of the houses mentioned in the sale agreement registered on or after April 1 this year.
With the Centre’s imposition of 2.38 per cent service tax on under-construction properties, which came into effect at the start of July, the additional burden (excluding the five per cent stamp duty and registration charges) comes to 3.38 per cent of the property value.
Suppose, if a person buys a house of Rs 1 crore in Mumbai, he has to now shell out an additional Rs 338,000 as VAT and service tax, which effectively translates into an equated monthly installment of around Rs 4,000.
What has made matters worse for buyers is that the additional burden is coming on top of the sharp rise in home prices. According to a report from brokerage house IIFL, residential prices in Mumbai and the National Capital Region of Delhi have increased 20-30 per cent since March and have reached new highs.
“Any additional cost is going to impact sales,” says Mrunal Duggar, vice-president, Homebay Residential, a unit of Jones Lang LaSalle Meghraj. Already home sales in Mumbai went below 6,000 units in May after 11 months of 6,000-plus a month, the IIFL report says.
Developers say the state government might also impose one per cent of the cost of construction as labour charges, which will increase burden further. Duggar of JLLM say developers should look out for the any additional burden on the potential customer in the reviving market.
Read the rest of the article here.

Pimpri-Chinchwad: Pune’s Last Hope For Planned Residential Development

woodsville
Pimpri-Chinchwad, the twin city located south-east of Mumbai, is the fifth most populated city of Maharashtra and also one of the most prominent industrial destinations outside Mumbai. In fact, Pimpri-Chinchwad is the decisive factor in making Pune the second largest industrial city in Maharashtra after Mumbai.

Industrial Utopia

Over 4000 industrial units in the large, medium and small sectors dot its landscape, among these some of the most reputed industrial companies in the country. If one includes Bhosari and Dapodi in its purview, Pimpri-Chinchwad’s repertoire reads like a regular industrial Who’s Who. Among the major names are:

  • Bajaj Auto Ltd.
  • Force Motors
  • Sandvik Asia
  • Alfa Laval
  • Forbes Marshall
  • Atlas Copco
  • Kirloskar Filters
  • Kalyani Sharp
  • Mahindra and Mahindra
  • Hindustan Antibiotics
  • Kirloskar Pneumatics
  • Tata Motors
  • Indian Card Clothing
  • Finolex
  • SKF Bearings
  • Greaves Cotton

… and many more
Pimpri-Chinchwad’s status as a power-driven property destination also derives from its matchless connectivity. Its strong road network encompasses major transportation corridors – the Mumbai–Pune Road, the NH-4 Bypass, NH-50 (Pune-Nashik Highway) and the roads connecting Aundh to Kalewadi and the Mumbai–Pune Road to Bhosari.

Development Potential

Until fairly recently, Pimpri-Chinchwad was perceived primarily as an industrial hub and not a residential destination. However, with industrial development on ascend the population has grown exponentially there. Today, Pimpri-Chinchwad has emerged as a as a metropolis in its own right, with a thriving residential market on par with the best-planned cities and towns in India.
The residential market has multiple market drivers. The proximity to Hinjewadi IT Park apart, there is no doubt that this area’s future development will now be driven by the industrial clusters which are heavily concentrated in the PCMC area. Many landmark developments such as the International Convention Centre are coming up here, which clearly indicates that the PCMC area has a high potential for development. These projects are all part of the PCMC master plan laid down three decades ago.
Residential real estate development in Pimpri-Chinchwad has picked up rapidly in the last three years, and this area’s tag of an ‘Industrial City’ has vanished forever. The first wave of housing projects was driven primarily by the redevelopment of industrial campuses and plots into residential projects that catered to the workforce at the MIDC/industrial areas in Pimpri-Chinchwad and Talegaon.
Today, however, the fact that the PCMC area is, in fact, a meticulously planned area is making a truly decisive play on its real estate fortunes. Government-planned cities have various advantages over cities that have expanded via organic growth.
Planned development such as witnessed in Chandigarh and Gurgaon are the wave of the future in Indian real estate. PCNTDA — the Pimpri-Chinchwad New Township Development Authority — is a model closely based on that followed by Chandigarh, Gurgaon and Navi Mumbai.
Pune has witnessed organic growth, and the deficits in proper town planning have resulted in much of its infrastructure problems and shortfall in residential developments. In contrast, the properly planned Pimpri Chinchwad area – especially industry-intense areas like Chakan – should be able to avoid the mistakes done in central Pune.
PCMC has the advantage of proper town planning and the resultant infrastructure. However, there are areas of concern about how adequately development is being addressed in this vital growth area.

Residential Space Shortfall

The PCMC MIDC area encompasses approximately 3000 acres. The Chakan and Talegaon belt comprises about 11000 acres, which means that Chakan will need about 50,000 acres of planned residential development.
This kind of development will happen in a periphery of around 50 sq km. However, the magnitude of actual development today is lamentable. This is a major lacuna. 50% of Chakan’s industrial era is already developed and occupied. Major industrial giants like Volkswagen, Bajaj and Mercedes Benz have already started production.
The key area of Pradhikaran is the logical location for absorbing the residential demand of this industrial belt; however planning for the residential requirements of employees in these industries in Pradhikaran is completely inadequate. This needs to be done soon. To boost the residential sector in Pradhikaran, proper road connectivity between Pradhikaran, PCMC and Chakan must be established.
Pradhikaran has the potential of becoming the latest real estate growth area – not only for PCMC, but in terms of Pune as well. Pune is, in geographic terms, a small city typified by haphazard development of its real estate market. The PCMC area is a diametric opposite – it is 100% planned, with the groundwork for the planning in place since 1965.
Pune’s growth boosters are education and IT / ITES. In PCMC, and particularly in the Pradhikaran area, there is a plethora of factors to amplify economic and real estate market growth, including IT, automobile and various other industries.
The result is that a huge magnitude of residential and utility space needs to be developed in Pradhikaran alone. However, this has not been addressed by developers.
Three years back, the average property rates in the PCMC area were below Rs. 1000/sq.ft. Now, the average rate throughout the region is between 2500-3000/sq.ft. – a growth rate that Pune has been able to replicate only in certain IT-centric or high-profile residential areas.
At the current time, it is still possible to locate residential projects to commercial projects in Pradhikaran. This allows for maximum appreciation potential, since the demand for either of these two segments feeds the other. In another five years, the area will have reached such a high level of development that such juxtaposition will no longer be feasible.
Developers still have an opportunity to take advantage of this fact and develop residential and commercial projects close to each other. While this makes excellent business sense, it will also ensure that Pradhikaran will attain a balanced real estate profile that dovetails perfectly with the PCMC master plan.
Currently, the residential property rates in Pradhikaran range between 2500-3000/sq.ft. Once the International Convention Centre and the new International airport are launched, these rates have the potential of doubling. Until then, the minimum appreciation potential for Pradhikaran will remain at a steady 15-20% year-on-year.
Anil Pharande is President of CREDAI PCMC and Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in the PCMC area of Pune, India.
This article may be reprinted with proper attribution to the author and a link back to PunePropertyBlog.com

Affordable Housing: The New Buzzword In India’s Real Estate Industry

The new buzzword in the country’s real estate industry today is ‘affordable housing’. Developers stung by a credit crunch, besides the drop in demand for commercial spaces and premium residences in recent times, have turned their focus to the middle-class segment.
Due to weak demand in commercial and retail segments, most developers have started looking at the affordable residential segment to maintain cash flow in order to meet their contractual obligations. Further, with buyers being extremely price conscious, the demand for affordable housing is on the rise.
A Relative Term
A simple definition for affordability can be — the consumers’ ability to purchase. However, this is a relative term. The idea of affordability may vary from individual to individual as well as from place to place. For example, what is considered affordable to a home seeker in Pune may not be affordable to someone else in Mumbai.
With the common man (read middle-class segment) constituting nearly 70 per cent of the demand for housing, we shall keep our understanding of ‘affordability’ limited to that which is deduced by the aam aadmi.
Affordable housing refers to residential units offered by developers at prices that are within the budget of low- and middle-income groups of a society. The housing units should also have all the basic amenities to cater to the daily needs of the household.
Monthly carrying costs of an affordable home should not exceed 30 per cent of the household gross income. Affordability is quantified by household income and price of the product.
Demand Growth
With the ever-increasing urban population, demand for affordable housing is witnessing a constant rise. According to recent a Planning Commission report, the shortage in urban housing as on March 2007 was estimated ar around 24.71 million.
The report went on to say that this shortage would to 26.5 million by 2012. Ninety nine per cent of this shortfall comes from the economically weaker sections (EWS) and low-income groups (LIG).
With real estate players witnessing a credit crisis, several of their big projects have come to a halt. Considering the huge demand in the affordable housing segment — which is relatively insulated — developers have now increased their focus on the fortune at the bottom of the pyramid.
An estimated 450 new projects have been launched, or are expected to be launched, in the affordable housing sector from big and small developers across the country.
Read the rest of the article here.

PCMC Seeks Rate Analysis From Bidder For City Centre Project

PUNE: The Pimpri-Chinchwad Municipal Corporation (PCMC) has directed the highest bidder for the city centre project to give a rate analysis and said that any decision regarding approval of the bid will be taken only after studying this analysis.
Addressing a news conference on Thursday, municipal commissioner Ashish Sharma said, “The bidder has to furnish the financial analysis of his bid. This should contain information about the estimated profit he expects to earn. Our financial adviser CRISIL will scrutinise the report and then the PCMC will take a call.”
The site of the city centre project is adjacent to the Kalewadi phata–Dehu Alandi road Bus Rapid Transit System (BRTS) route. The PCMC has taken a decision to allow builders to construct buildings with a maximum of 1.8 floor space index (FSI) along the BRTS routes.
The city centre project is to be implemented on a PPP basis on the open land near Autocluster in Chinchwad on a 34-acre plot. The project has been in the news for various reasons, right from its inception.
The PCMC had invited bids without the consent of the general body and, as a result, corporators cutting across party lines had objected to the process. The civic administration was forced to add some more conditions suggested by the corporators while inviting the bids.
Read the rest of this article here.