New Fuel For The Property Boom At Ambegaon

Kishor Pate 2Kishor Pate, CMD – Amit Enterprises Housing Ltd.

No discussion on Pune’s real estate boom areas is complete without an extensive examination of Ambegaon. This fertile and rapidly developing area is rapidly turning out to be among the most energetic property boom regions in Pune.

More of the city’s home buyers are now opting for properties in areas that offer uncluttered and bracing environment. Ambegaon is one of the most favoured locations in this respect, as offers generous greenery and hilly surroundings as well as excellent connectivity.

Ambegaon has also come into the limelight by emerging as a magnet for home seekers with religious inclinations. The Veeraliyam Temple located in Ambegaon, has by now been drawing worshipers from Pune, Mumbai, Chennai and beyond for over three years. Fully equipped with a ‘Goshala’, ‘Dharmashala’ and ‘Bhojanshala’, this very important Jain temple has a capacity to accommodate 500 visitors at a time and distributes ‘prasadam’ thrice a day. The temple was launched by its trustee Mr. Chhaganlal Gundesha, who donated his personal property for this unique place of worship which, though primarily for Mahaveer Jains, is open for all communities.

Likewise, Ambegaon will soon boast of its very own Swaminarayan temple – again primarily a major worship destination for Jains but an attraction for all religions. This temple will be spread over a massive 27 acres at Narhe, Ambegaon and be a focal point for followers from Gujarat, Mumbai and Pune.

Its development as a religious destination has added a completely new facet to real estate at Ambegaon and is now creating demand for homes across all typologies and budget segments. Yearly appreciation has so far been clocking in at between 20-25%, but with the arrival of these major temples, Ambegaon has now become an investment hotspot that will have few precedents in Pune over the next five years.

Historically, the real estate market in Pune is eminently suited for diversified offerings in a single location, and the areas that work best are those that offer buyers multiple options in terms of configurations, sizes, budgets and positioning.

Today, Amit Enterprises Housing Ltd. has recently launched new phases for both its budget homes project Astonia Royale and Bloomfield, the premium Singapore-themed township.

Amit's Bloomfield at Ambegaon
Amit’s Bloomfield at Ambegaon

Investors are increasingly attracted to the rapid growth of property rates in Ambegaon, which are fuelled both by its own inherent market drivers and the rapid development of areas like Sinhagad Road, Bavdhan, Wagholi, Bhugaon and Undri. These locations have been catering to the next wave of information technology-driven demand for homes and have appreciated considerably. Ambegaon already benefits from closeness to the Mumbai-Bangalore Bypass and NBN Sinhagad Technical Institute.

Also, Ambegaon is still the area of choice when it comes to natural ambiance, freedom from traffic congestion and pollution. This is an important factor for a real estate location, since green scenery and unspoiled surroundings attract demand for homes from all income segments. For all these reasons, Ambegaon has pulled ahead of most neighbouring locations and is attracting demand for ownership homes and investment properties from both within and outside the city.

 

Kishor Pate’s Reaction To Budget 2014

Kishor Pate 2Kishor Pate, CMD – Amit Enterprises Housing Ltd.

The reduction of personal income tax ceiling and the raising of home loan interest deduction will definitely increase demand for homes in cities like Pune. True to his promises, the Finance Minister has made significant allocations towards infrastructure projects in the country. The allocation of Rs. 37,850 crore into the National Highway Authority of India will result in vastly improved road networks, which will in turn result in new vibrancy in the real estate sector. The National Housing Bank has received an allocation of Rs. 8000 crore for this program, which will have. I am especially enthusiastic about the Rs. 7060 crore allocation towards the government’s program for creating 100 smart city projects.

Single-Window Residential Project Clearances Are Imperative

Kishor Pate 2Kishor Pate, CMD – Amit Enterprises Housing Ltd.

Considering the increasing furore about delayed housing projects,  It is often assumed that developers delay projects on purpose to gain some kind of profit, but the fact is that most of the time lose heavily because of approval delays.

Developers make significant investments into land, and the purpose of this investment is not to hold on to it but to develop it. In order to do this, they must even today face a crippling gauntlet of approvals, sanctions and permissions. Until these approvals are obtained, they have to pay the cost of holding the land and keeping their construction materials and workforces on standby, in addition to having to face the ire of their customers.

The fact is that every day of delay costs a developer both financially and in terms of market goodwill and reputation. He is unable to market the units within the project efficiently because of lack of visible progress on site, and can therefore not generate capital to fund his next project. Simultaneously, the government is not able to generate revenue by means of stamp duty and registrations.

The process of obtaining all the necessary approvals, of which there are currently more than 40, often takes as long as two years and sometimes even longer.
The list of permissions or clearances for development of real estate in India varies from state to state. It generally includes but is not limited to the following:

• Land Conversion
• Change of Zone for usage of Land
• Ownership Certificate
• Non-encumbrance
• Demarcation Plan
• Tree cutting approval clearance
• Bore well registration certificate
• Environmental clearance
• Consent to Establishment
• Firefighting scheme approval before and after completion of construction
• Site office approval
• Consent for operate (for earthquake resistance along with plan approval
• Approval related to explosive substances such as gas and petroleum
• Other common facilities approvals
• Road access
• Permission for excavation
• Lift-Escalator installation approval
• Lift escalator operation license
• NOC for electric substation for every substation transformer within the building
• Clearance certificate for every electrical installation within the building
• Diesel generator sets installation approval
• Fitness certificate for diesel generator sets
• Swimming pool operation license
• NOC for rain harvesting
• Damp-proofing certificate
• Electricity scheme approval
• Infrastructure layout approval
• Sewer connection approval
• Water connection approval
• Layout approval
• Development License
• Commencement certificate
• Building completion certificate
• Occupancy certificate

approvals

The approval system we have today is a hangover of the ‘license raj’ that started in the era of India’s occupation by the British and continued into its independence. The reasons why this system continues are self-evident and do not need to elaborated upon. However, in this era of progressive reforms in almost all business segments, it is high time that the government enacts a single-window clearance system for housing projects.

The provision of such a system will enable residential developers to multiply their output several times over. The increased supply would not only go towards meeting India’s urgent housing needs but also increase revenue for the government. At the same time, the additional supply will increase competitiveness among developers and thereby help keep real estate prices in check.

No doubt, there are a number of provisions and safeguards that need to be put in place that such a system is not exploited by unscrupulous elements. However, this issue has been already been debated upon extensively by the most qualified experts, and such safeguards have already been isolated and ratified.

What remains to be actioned is the provision of single-window clearance for residential projects that qualify for it at the Central as well as State levels. The lack of such a system is a serious impediment not only for the real estate sector in particular but also for the economy in general.

The Issue of Vacant Investor-Held Flats In Pune

Kishor Pate 2Kishor Pate, CMD – Amit Enterprises Housing Ltd.

Pune has a high incidence of vacant flats in completed projects – properties that are not in use by the owners, nor rented out. Many of these flats are owned by NRIs who are working abroad and intend to return in the foreseeable future to occupy these flats.

However, a significant number of these properties is held by short-sighted investors who are waiting for sufficient upward movement in property prices to sell them at a profit. Because of this speculative intent, they do not rent these flats out in the interim, as they do not want to contend with problems that could arise from asking tenants to move out at short notice.

This is, in fact, a very negative situation that works against everyone – the current owners, future buyers and the market in general. In the first place, the owner is paying society charges and property tax without any corresponding benefit. Secondly, it is known market fact that occupied properties tend to sell between 25-30% quicker than vacant ones.

This is because properties that have been standing vacant for considerable periods are usually not maintained and often fall prey to vandalism, illegal occupancy, degradation of fixtures, appliances, door and window fittings, electrical wiring and overall lack of maintenance.

In a market like Pune where there is a sufficient supply of new projects as well as well-maintained second-sale properties, vacant properties are always at a distinct disadvantage.

for rent

Such properties are often associated with increased criminal activity as well as health and safety concerns in the neighbourhood. In metropolitan areas with high urbanization pressures, the fact that a property is in disuse may also rightfully or erroneously be associated with legal disputes or a faulty title.

To prevent such negative fallout, owners who for whatever reason do not intend to use a large residential or commercial property for extended periods should either rent out these flats or employ the services of a professional property maintenance service.

Individual owners of single office or residential properties should retain a caretaker to maintain the unit. The best plan is always to rent out the flat to tenants who are looking for shorter tenures.

Image courtesy of Stuart Miles / FreeDigitalPhotos.net