Why Live In A Green Home?

Kishor PateKishor Pate, CMD – Amit Enterprises Housing Ltd.

With the constant chatter about sustainable real estate in general and green homes in particular, you may wonder what the deal really is.

Why live in a green home? Are conventional apartments not good enough? Is the concept of green homes even relevant to the Indian real estate market?

There are very good reasons why more and more Pune flat buyers are opting for green homes. They are not just following the West (where green buildings are fast becoming the norm) but using plain common sense.

To begin with, green homes are designed and constructed in a manner which reduces their impact on the environment. In India, real estate development is still one of the main contributors to environmental damage.

The wastes produced during construction seriously degrade the quality of the environment. In fact, buildings in general are responsible for close to 40% of the world’s Green House Gas (GHG) emissions. This directly impacts global warming, which is a major concern now. And yes, it affects all of us.

The Evils Of Environmental Damage

Have you noticed that every new summer in Pune seems to be hotter than the previous one? Have you noticed that our winters are now warmer than ever before? That is the greenhouse effect at work.

The greenhouse effect is a destructive process in which atmospheric greenhouse gases absorb thermal radiation from the Earth’s surface. This radiation is then re-radiated everywhere on the planet’s surface and into the lower atmosphere, thereby raising the average surface temperature abnormally.

The greenhouses gases being referred to here are water vapour, carbon dioxide, methane and ozone. Methane and carbon dioxide produced in massive amounts during the normal real estate construction process.

The resulting buildings continue to generate these gases just by being used, because they have not been designed, built and are not being operated to have a lower environmental impact.

green home buyer

Green Homes – And You

If all this sounds too disconnected with your personal concerns, you should know that there is a lot more to green buildings than just lower environmental damage. People who live in green homes actually enjoy better health, a higher quality of life and a lower cost of daily living!

Yes, that’s right. Green buildings are around 25–30% more efficient in their energy consumption, because they get at least 2% of the energy they consume from renewable or green sources such as solar power generators. This reduces the demand for normal electricity and also the pollution levels around the green homes project.

Also, green buildings use around 20–30% less water than conventional buildings, reducing the water bills. In fact, most of the water used in green buildings is treated and can then be used for landscaping and air conditioning. But that’s not all.

The materials used in the construction of green home projects last a lot longer than the conventional ones. In other words, they help save on the cost of replacement, repair and maintenance. This is one of the main reasons why resale homes in green buildings fetch a much better price than normal ones.

Finally, green homes have superior ventilation systems which bring in fresh outdoor air instead of recycling used-up indoor air. In other words, you breathe cleaner air in a green home.

These are among the many reasons why Pune property buyers are increasingly choosing to buy homes in green buildings.

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Demand For Luxury Housing In India

Kishor PateKishor Pate, CMD – Amit Enterprises Housing Ltd.

The demand for luxury housing in India varies from city to city, and also the definition of the label ‘luxury’ for a particular city.

As such, a 2 BHK in a central location or a location close to major employment hubs in Mumbai, Pune or Bangalore would be defined as luxury based on the location as well as a reasonable degree of good amenities.

The demand for such properties is considerable, owing to the convenience factor inherent in the location in terms of closeness to the most important work hubs of the city and also the value of the addresses.

Examples of such high-priced locations are Cuffe Parade, Worli, Lower Parel, Dadar and Prabhadevi in Mumbai and Sahakarnagar, Bund Garden Road, Aundh, Kalyani Nagar and Koregaon Park in Pune.

Another definition of luxury housing on the Indian market is projects with large living spaces embellished with ultra-modern luxurious amenities. Since the land parcels required to develop such spaces are generally not available in the larger cities, except in the case of redevelopment of older structures, such projects may not be very centrally located.

Mumbai, Pune, Bangalore, Delhi, Gurgaon and to a certain extent Chennai are the most responsive markets for luxury housing today. Currently, the overall demand for luxury housing is stable. Developers who come up with such projects generally tend to have an inner circle of HNI buyers and investors to which a significant number of units will be sold.

Investors understand that luxury housing is not as prone to the negative influence of recession, since the target audience itself is not dependent on home loans but operates largely with personal funds.

Luxury Housing In India

The investor and HNI demand for luxury housing is therefore healthy, though the number of buyers who are depend on home loans in order to fund their aspirations for a more luxurious life style has reduced because of the lagging economy.

Many HNI buyers and investors who look at luxury housing enter the project at the pre-launch or under construction phase and get better rates. However, the prices for ready-to-move-in luxury homes is much higher, and demand for such units has naturally decreased in the current economic environment.

Demand from HNI buyers who purchase these homes for personal use is still healthy, as is the demand from long-term investors who seek to rent out these units while the sales market is low and then sell them at a healthy profit once economic momentum revives.

The marketing strategy for luxury homes differs from that of homes aimed at the middle income class. It is more focused on addressing the yen for exclusiveness and status among those who can afford it.

Apart from word of mouth among core investors ,the advertising for luxury homes is usually seen in status and lifestyle magazines and airport lounges than in weekly property supplements.

The future for luxury housing is very positive in the main cities, but the trend will be slower in smaller cities with less wealth creation and economic advantages.

The Small Investor’s Guide To Pune Real Estate

Kishor PateKishor Pate, CMD – Amit Enterprises Housing Ltd.

When it comes to investment in Pune real estate, smaller investors do not enjoy the same bouquet of options as their institutional counterparts. While the latter category of investors can afford to handle portfolios consisting of many properties, smaller investors are limited by the fact that lending institutions will usually not anything over and above a second home loan.

The RBI has imposed these restrictions because it is trying to curb speculation – which is the opportunistic purchase and disposal of properties (also known as ‘flipping’ in markets like the US). This is justifiable, since speculation has, in the past, been the main cause of driving up prices unrealistically in many cities such as Mumbai, Delhi NCR and even Pune.

Of course, smaller investors can still use their personal funds to invest in more than one property. Where this is possible, such investors tend to plug their funds into rent-generating properties which, depending on their choice of location and project, will potentially yield good, regular income.

Is this is wiser option that investing limited funds in gold or the stock market? It certainly is. Investment in a well-chosen residential property in Pune is a perfect way to counter inflation.

Neither gold nor real estate relinquishes their intrinsic market value. But while gold does nothing but sit in the bank locker or the home safe while it appreciates, a residential property bought for investment will earn the owner rental income even as it appreciates.

If the market dynamics in the chosen location are favourable, the rental come on the property will increase in line with the growing demand for rental properties there.

Guidelines To Investment

The first factor to be considered while purchasing an investment property in Pune is location. Pune is a diverse market, and it is possible to get confused by the multitude of options available.

Depending on one’s budget, one can consider luxury housing in established locations and premium or budget housing in upcoming locations. There are two main criteria for making the right decision – the property needs to be either centrally located, or located close to one of Pune’s IT or non-IT commercial hubs.

real estate investment

The second factor to look out for is the legal sanctity of the project. The investor must be sure that there are no litigations or documentation shortfalls involved – either on the project or on the plot on which it has been built.

The third important factor is the right point at which to invest. Many lay investors prefer to wait indefinitely for prices to fall. However, the fact is that the demand for residential property in the most lucrative locations of Pune is only going to rise.

Waiting for the ‘magic price point’ will invariably mean missing out on very good options which were affordable at one time and will be too expensive to invest in a year or even a few months down the line.

The fourth factor is how long one intends to stay invested in the property. The minimum period required for avoiding capital gains tax is three years, but certain locations will require a longer time to gain sufficiently in capital value for profitable resale.

An investor must know when the right time to sell the property comes around. In Pune, a well-chosen property will continue to gain in intrinsic value as well as rental income generation potential. The temptation to exit and make a tidy profit may be strong at times, but it may make more sense to defer such a decision for yet a while longer.

The fifth – and by no means the least important – factor is the professionalism and credibility of a developer on Pune’s residential real estate market. Even with all the above factors attended to, the fact is that many good investment projects in Pune are still under construction.

The developer should have a good record for time-bound project completion. The investor should ensure that he is not dealing with an obscure, unscrupulous and potentially under-funded developer or else the investment could turn into a nightmare situation.

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NRI Property Investors Zero In On Pune

Kishor PateKishor Pate, CMD – Amit Enterprises Housing Ltd.

There has been a decisive resurgence of interest by NRIs in Pune property investments. The scale of rise has not spectacular, but it does indicate that NRI investor confidence is returning.

NRI property investors tend to stay away from unfamiliar, historically over-speculative cities and focus on either on their cities of origin or on those that offer assured and stable returns on investment.

The fact that Pune, with over 210 software companies, has overtaken even Bangalore and 208 in terms of IT-driven demand for residential properties has stood in the city’s favour.

Naturally, NRIs prefer to invest in residential property in Pune that can earn them handsome rental returns and will also appreciate for eventual resale. They are showing a lot of demand for luxury homes as well as higher mid-income residences in the price range of Rs. 65 lakh to Rs. 3.5 crore and above.

There is considerable interest in under-construction residential projects nearing completion, since these are available at lower rates. NRI property investors who are focused on rental income are on the look-out for projects in areas with sustainable demand from potential tenants.

In commercial properties, NRI investors looking at the Pune real estate market look for projects by reputed developers which are fully or almost fully leased out. Their investment appetite in this segment ranges between Rs. 5-30 crore.

Despite Pune’s burgeoning retail sector, NRIs are largely staying away from investments in retail projects as there far too much supply on the market. This makes investing in retail properties unattractive to them.

nri investor

Challenges NRI Investors Face

Apart from a generic understanding, NRIs tend to be out of touch with Pune’s real estate market. Therefore, they are not attuned to what locations and typologies work best for residential property investment.

There is a lot of investigation required on the ground before a residential property investment becomes viable – especially in large-ticket assets. Also, the previous route of buying a property by ‘remote control’ via a power of attorney has now been closed.

The NRI Modus Operandi

NRIs who are currently abroad therefore ask their relatives or close associates in Pune to co-ordinate with reputed developers and also brokerages. Most NRIs focused on Pune property will visit the city during the festive season to finalize the property and conclude the transactions.

However, it should not be assumed that NRI property buyers are entirely clueless. In fact, they are extremely discerning. The fact that they have been exposed to the transparency of real estate markets in developed nations understandably raises their expectations in term of value for money, construction quality, facilities and amenities offered, and overall transparency.

Contrary to commonly held belief, most NRI property investors looking at Pune are aware that expecting substantial short-term gains on their investments is unrealistic. They are not ‘quick buck’ hunters, but rather serious portfolio players.

If you’re an NRI investor who needs assistance, download our NRI handbook.

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