Making Pune India’s IT Capital

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

Chief Minister Devendra Fadnavis’ announcement of his intention to make Pune the IT capital of India has brought mixed reactions. However, this is not a Utopian dream but in fact becoming a reality even as we speak. Pune and information technology are already inseparable concepts today, and all it will take is a decisive push by the BJP government to establish it as the country’s foremost IT hub.

Pune is already a well-established IT destination, and has been giving the likes of Bangalore and Hyderabad very tough competition. The burgeoning IT industry in areas like Kharadi, Hinjewadi, Magarpatta and Tathawade are drawing massive amounts of information technology business into the city. This has also had a major impact on the city’s real estate sector.

Pune has over 50 established and prominent IT/ITeS companies who have their main offices in the city, including organizations such as Accenture, Amdocs, AtoS, Capgemini, Cognizant, Deloitte, GlobalLogic, Hexaware Technologies, Infosys, Larsen & Toubro Infotech, Mastek, MphasiS, SunGard and Symantec. These companies are generating scores of jobs for Pune’s highly qualified software professionals each year, in addition to hundreds of BPO jobs.

It is by now a well-established fact that Pune is one of the most preferred software and business-process outsourcing destinations in the country. There are many reasons for this beyond the wealth of IT professionals that it produces from its various top-notch educational institutions every year.

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Eon IT Park, Kharadi

Information technology companies prefer Pune over a city Bangalore because of the lower real estate costs involved in setting up operations here. In fact, the more rational real estate costs in Pune provide another major plus-point. This is the fact that IT/ITeS employees who are looking at buying their own homes can easily avail of home loans and buy properties in the city which are conveniently close to the companies they work in, even on entry salaries.

Moreover, the city is replete with attractive rental options. In fact, Pune has the highest incidence of IT/ITeS professionals who start out in rented homes and graduate to purchasing homes in the city later on. Pune’s affordable housing rates are not the only factor at play in this dynamic. The city is also far more attractive in terms of the overall lifestyle quotient it offers, where it once again beats Bangalore hands down.

Another factor which is very important from an attrition management point of view is that commuting is not a big problem when compared to cities like Mumbai, Bangalore and Delhi NCR. Pune is a relatively compact city, and this ensures that employees can travel to and from work easily. This plays a very significant role in talent retention and overall employee satisfaction. Pune’s IT professionals are a far more contented lot than in any other Indian city.

Finally, IT/ITeS firms are attracted to Pune because it offers significant cost arbitrage on salary outgoings, specifically in terms of the dearness allowances payable to employees in various cities. In this respect, Pune presents a favourable proposition as it does not max out on the cost of living index the way cities like Bangalore and Mumbai do. For example, housing rental costs in Bangalore are 13.5% higher than in Pune. Though individual purchasing power in Bangalore is higher by around 3.5%, a large part of an employee’s income is spent on paying rent.

It could be argued that as chief minister of Maharashtra, Devendra Fadnavis should not ignore Mumbai. However, the financial capital capital’s rating on the cost of living index – which, as already stated, plays a big role in a firm’s capex on salaries, is way off the charts. Housing rentals are as much as 55.5% higher in Mumbai than in Pune, while purchasing power in Pune is about 43.5% higher than in Mumbai.

All these factors mean that in Pune, Devendra Fadnavis has definitely backed the right horse in the race for IT prominence in Maharashtra. Pune will eventually overtake every other city in the information technology sweepstakes, and there is no time like the present to stack all bets in this city’s favour.

BJP Must Fast-Track Single Window Clearances For Residential Projects

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

The Indian real estate market is in dire need of single-window clearances for residential projects, and this is something that the new BJP-led government must action on a priority basis. The process of project approval must be revised so that developers can launch more projects and increase supply, which will help in keeping prices down. The current system is completely counter-productive in its present form – if it can be called a form at all.

The lack of a streamlined projects approval mechanism is a symptom of India’s retrograde bureaucratic machinery which causes untold losses to all stakeholders. The ill-effects are most visibly seen in Maharashtra, where the various constraints on real estate development have in fact played a big role reducing the pace of State-level growth.

It is certainly a well-known fact that real estate is one of the major contributors to GDP, and this sector cannot perform optimally in a scenario where a bewildering multitude of agencies are involved in processing approvals for real estate projects.

If we study the massive numbers of clearances and approvals that are required for residential projects in India, the challenges that developers have to face become very apparent. The old English proverb ‘there’s many a slip between the cup and the lip’ is very fitting here. The extensive efforts that a developer in India has to put in before a project is even approved for construction are not well understood.

Moreover, the procedural complications only increase once a project is cleared for development. A project can get road-blocked at any stage between construction commencement and completion because one or the other clearance or approval is being delayed by some government department or the other.

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Developers face multiple repercussions because of these delays. In the first place, it affects the time it takes for returns to come in from a project. Secondly, delivery timelines play a big role in how attractive a developer’s projects are to investors, and how much confidence end users will have in a developer. In other words, developers not only suffer financial loss because of approval delays, but also lose credibility because of this.

All eyes are now on the BJP, which has assured the Indian real estate fraternity that it will pay due attention to its issues. Prime Minister Narendra Modi has made it his mission to make housing affordable to all, but it is difficult to see how this can happen when the currently employed multi-agency approach to project approvals adds as much as 40% to the cost of constructing projects.

If the new government indeed provides single-window approval to housing projects, residential prices can come by 30-35% as a result. The introduction of a single-window housing project approval system would make it possible for residential developers to increase the supply of housing, which would not only help in addressing the country’s massive requirement for housing but also increase the government’s revenue collections from increased stamp duty and registrations.

Also, increased housing supply will mean healthier competition among developers, which will result in more rational and uniform pricing as well as boost innovation in project designs. These considerations combine to make a very compelling case for the BJP-led government to finally make single-window approvals for housing a reality.

Amit Enterprises Housing – The Men Behind The Real Estate Legend

One of Pune’s most respected and reputed real estate development firms, Amit Enterprises Housing Ltd. has redefined the city’s real estate landscape several times over. With more than 40 completed projects and several more on the anvil, AEHL has pioneered some of the most outstanding and award-winning residential concepts that have become industry benchmarks.

The roots of this firm took hold as early as 1963, when a schoolteacher with vision beyond the conventional confines of a classroom first dreamed a dream that would be immortalized in steel and concrete by his son. Even today, the men who are the driving force behind Amit Enterprises Housing Ltd. continue to build on the vision that launched one of Pune’s most outstanding real estate development firms.

Kishor Pate, Chairman & Managing Director

Kishor Pate2 smA well-known and respected personality in real estate circles, Kishor Pate is also Secretary of CREDAI, Maharashtra and Vice President of CREDAI, Pune Metro.

Under his guidance and stewardship, the firm has attained a current business volume of INR 250 Crore and is well on its way to raising this bar to an annualized business growth of INR 1000 Crore in the next three years.

Kishor Pate is the son of Shri Govindrao alias Appasaheb Pate (Wani), who migrated to Pune from Chalisgaon, a town in Jalgaon District of Khandesh and, after an initial stint as school teacher, launched a real estate brokerage under the name of ‘Vijay Estate Agency’ in 1963. His eldest son, Kishor Pate involved himself in this business from the age of 17 and quickly mastered the skills and intricacies of the real estate business.

After earning a Baccalaureate degree in Political Science, he turned his attention to breaking new frontiers for the family business. Kishor Pate incorporated Amit Enterprises Housing Limited as a construction firm in 1983. The rest, as they say, is history.

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Extremely well-connected and incredibly savvy about what makes the real estate business tick, Kishor Pate continues to drive the Firm’s steep growth curve. Like AEHL’s brand ambassador Sachin Tendulkar, Kishor Pate is ‘Built For More’.

Rohan Pate, Director

Rohan Pate smBesides being second-in-command to his father Kishor, Rohan Pate is the mastermind behind some of AEHL’s most successful and ambitious projects.

He has over eight years of hands-on experience in the real estate development and marketing industry – and as an avid technology buff, he has been instrumental in AEHL’s determined sustainable real estate development push.

Rohan’s primary focus is on maintaining the Firm’s edge in construction know-how and the digitization of project planning and execution.

Rohan considers AEHL’s choosing of the cricket legend Sachin Tendulkar as the Firm’s brand ambassador as his most important contribution. A cricketer himself, Rohan Pate’s relentless passion for the game is a well-known aspect of his personality among the jet-set of Pune and Mumbai’s real estate circles.

His passion for cricket led him to conceive and launch ‘Blades Of Glory’, Asia’s only cricket museum. Spread over around 4000 square feet, Blades of Glory displays a rare and constantly upgraded selection of cricket memorabilia, including personally autographed cricket-related items by the who’s who of the gentleman’s game.

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For Rohan, having Sachin Tendulkar as champion of Amit Enterprises Housing’s ‘Built For More’ motto was a no-brainer. “No other person could have so effectively reflected and represented our Firm’s values – to always breach new boundaries, to always surpass expectations and to make perfection a benchmark.”

Is Pune Real Estate In For A Correction?

Kishor PateKishor Pate, CMD – Amit Enterprises Housing Ltd.

In a correction, a property market changes from a sellers’ market to a buyers’ market. Demand for homes decreases and the value of one’s property goes down.

Every kind of property owner – be it end user or investor – worries about the property market going down and prices ‘correcting’. The word ‘correction’ in itself implies that there is something wrong which needs to corrected.

Is the Pune property market going to see a correction? Let us examine what really happens in a correction, and why.

In the first place, real estate corrections do not happen on a national, state or even city level. If and when they occur, they occur in areas of cities where there are a lot of apartments which are priced too high. When the prices come down, demand picks up again, so the local market has ‘corrected’.

However, there can be many more reasons why there are more flats on the market than people are willing to buy. Unwillingness to buy can be for many reasons:

  • Flats are available, but not in the budget category where the highest need is
  • Flats in the right budget category are available. However, the economy is weak and people are uncertain about their jobs – and therefore hesitant about making a home loan commitment
  • Home loan interest rates are exorbitantly high and therefore not affordable

If one or more of these factors prevail, people will not prefer to buy homes and instead opt for rental properties. As a result, property investors who want to make a quick buck out of residential property by buying cheap and selling higher stay away.

But even in such a market, investors who look at property as a source of regular rental income continue to look for good opportunities and thrive in a rental-driven market.

As far as the national economy is concerned, things are already looking up in India. Inflation is coming down, and the RBI has indicated that home loan interest rates will start decreasing from January 2013.

Meanwhile, employment is looking up. Indian companies – especially in the healthcare, manufacturing and Information Technology sectors, are already on a hiring spree. With more jobs comes more demand for homes.

Now let us have a closer look at Pune – both as a city and as a property market. Pune’s overall fortunes are generated by three industries – healthcare, manufacturing and Information Technology. The first may come as a surprise, but the fact is that Pune scores higher than many of the larger cities when it comes to popularity as a destination for obtaining medical treatment.

In fact, it ranks very high as an international medical tourism destination. This is because Pune is known internationally as a city that offers quality treatment at affordable prices. In fact, medical professionals in Pune charge up to 50-60% less than Mumbai, Bangalore and Delhi.

One of the main reasons why medical treatment costs less in Pune is because real estate prices are lower, which makes running hospitals and clinics cheaper. Since the cost of living in Pune is lower, medical staff also draw lower salaries.

At the same time, the city has some of the country’s most competent doctors and state-of-the-art medical facilities. Countless medical jobs at all levels are being created in Pune every year – and with these jobs comes a constant demand for housing.

Pune’s manufacturing sector is a national and international industry legend. Almost every global industrial company has operations here, from pharmaceuticals to automobile manufacturing.

These industries are attracted by Pune’s highly trained workforce, the cheaper real estate costs involved in setting up and running operations here, and the reduced commuting times – which translate into lower attrition and better housing options for employees. Again, the implications on Pune’s housing market are obvious.

In terms of Information Technology, Pune is running neck-to-neck with Bangalore and Hyderabad. The city has an incredible saturation of IT parks within a relatively small geographic area. This sector is once again driven by an highly trained workforce and lower real estate costs to both the company and its employees.

The employees from these three industries – from the blue collar cadre right up to senior management – are all on the market for homes in varying price brackets within the city. The transient component of these employees (employees that are not from Pune and will not opt to take up permanent residence here) are a constant source of rental income for investors with properties in the right locations of the city.

With all these factors working in favour of Pune’s property market, the justified clamour for a price correction in Mumbai has nevertheless sent its echoes into the Pune market.

Paradoxically, it is largely buyers and investors from Mumbai who have contributed to the fast rise in property prices in this city. Accustomed as they are to the sky-high rates in their parent city, they do not tend to hesitate to pay a premium for the larger, better appointed homes in tempting locations available in Pune.

By the same coin, Mumbai provides a clear contrast against which to weight the property investment options in Pune. For this reason, there will always be enough buyers for residential property in this city. Certain areas have certainly reached saturation point, but many of Pune’s growth areas are showing steady appreciation in property rates. Moreover, the city offers housing options in all budget categories in almost all locations.

In such a scenario, it is fairly certain that residential property in Pune will continue to be one of the safest and most rewarding investment avenues for a long time to come. It is certainly a mistake to view it from the same perspective as Mumbai. This market has stood the test of time and is growing rationally into a brilliant future.

With such a constant and steadily increasing demand for residential property in Pune, there is no likelihood of a property market correction. In fact, as indicated by the trends over the past years, property prices will continue to increase every year at a minimum of 7-8% in every location.

In plainer terms, this means that the housing options available today will not cost less but more in the next year. This is the main reason why Pune has such a large complement of active property investors – and a clear clue for end users.

Image courtesy of FreeDigitalPhotos.net

Kishor Pate’s Interview In Built Expressions

KP

Pate Group started Amit Enterprises Housing Limited in 1983. Can you take us through your journey in the realty business across nearly three decades?

One of Pune’s most respected and reputed real estate development firms, Amit Enterprises Housing Ltd. has redefined the city’s real estate landscape several times over. With more than 40 completed projects and several more on the anvil, AEHL has pioneered some of the most outstanding and award-winning residential concepts that have become industry benchmarks.

The roots of this firm took hold as early as 1963, when my father, a schoolteacher with vision beyond the conventional confines of a classroom first dreamed a dream that would be immortalized in steel and concrete by me and my family.

My father Shri Govindrao alias Appasaheb Pate (Wani) migrated to Pune from Chalisgaon, a town in Jalgaon District of Khandesh and, after an initial stint as school teacher, launched a real estate brokerage under the name of ‘Vijay Estate Agency’ in 1963. As his eldest son, I involved myself in this business from the age of 17 and quickly mastered the skills and intricacies of the real estate business.

After earning a Baccalaureate degree in Political Science, I turned my attention to breaking new frontiers for the family business. We incorporated Amit Enterprises Housing Limited as a construction firm in 1983 – and the rest, as they say, is history.

Which according to you are the innovative construction methods of delivering quality homes with reduced environmental impact?

At Amit Enterprises Housing Ltd, we are constantly finding and implementing new methods of cost-effective, eco-friendly, high-grade construction. Our continuing commitment to the principles and practice of sustainable development has logically led to our adoption of Alu-Form construction technology in our projects. This extremely progressive technology is now being used in many of our projects in Pune and also one project in Nasik.

The Alu-Form system is a revolutionary innovation in construction technology that allows for the speedy, accurate and highly consistent casting of all internal and external walls, columns, beams, floor slabs, stairs and other parts of a concrete building. It is an integrated system which merges the wall and slab panels into a seamless unit. With a drastic reduction of form-jointed sections, the end products have superior resilience to wear, tear and degradation.

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Using the building’s architectural blueprint as a guideline, highly resilient aluminium panels are pre-designed for all concrete elements of the building’s superstructure. Alu-Form technology allows internal electrical fittings and plumbing to be incorporated with a high degree of design efficiency, and as part of the overall building plan. This factor reduces the probability of electrical and plumbing failures. On the rare occasions when they do occur, such problems can be quickly isolated and fixed.

This contributes to the overall cost-effectiveness of owning a home constructed with Alu-Form technology. Moreover, the use of this construction technology vastly reduces the chance of on-site mishaps, making it one of the safest systems for building construction currently available.

In the present competitive scenario, what emerging technologies and methodologies can be adopted to provide affordable spaces to the end user?

Other ways of meeting the demand for cost-effective, yet environmentally friendly homes is through the use of alternate construction materials such as recycled fly ash (a waste by-product of coal combustion). This medium can be utilized to build budget housing of fairly high quality. Other alternate construction media are interlocking bricks, hollow concrete blocks, rubble filler blocks, stabilized mud-based blocks and funicular (or rope-like) shells.

By using alternate construction materials and methods, construction costs can be reduced by a minimum of 10-15% in terms of materials and up to 20% in terms of skilled manpower expenses and construction time.

Modular housing is yet another method that can be adopted by progressive Indian developers. When supported by the correct design, factory-build modular housing conforms to most standards of structural integrity, safety and environmental impact. This kind of construction involves the use of pre-manufactured components like roof and floor trusses that can be assembled quickly and with major savings on construction time and labour costs.

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

‘Smart cities’ is the buzz word now! What according to you are the true components of these cities? How are they different from well planned, well equipped cities with better infrastructure?

The primary difference between smart cities and commonplace cities, regardless of how well structured these cities are, is the fact that smart cities are IT driven, self-governing and sustainable in all respects. Also, they enjoy special incentives from the government similar to those given to SEZs. Smart cities also require the right kind of population, which means that they need to be inhabited by people who are aware of and embrace high levels of social governance, are tech-savvy and dedicated to the cause of environmental sustainability.

Pune is in the radar of real estate growth. What ticks the city for the growth? However, do you notice any challenges for its future growth? If yes, what remedial measures you suggest?

What works for Pune is that it does not have just one economic driver but several. These include manufacturing, IT/ITeS, healthcare and education. It is home to some of the biggest names in manufacturing, IT, services, retail players, healthcare operators and educational institutions. The steady growth of IT and ITES segments has set off the demand for quality residential projects in new areas of Pune.

The residential requirements of people working in the city’s IT/ITES as well as manufacturing companies are the biggest demand driver for Pune’s residential property market. Today Pune is ranked best for its quality of living and space, educational institutions, climate and affordable cost, compared to other major metros.

The challenges I foresee are largely related to infrastructure – Pune’s city development authorities need to be more proactive in creating the necessary infrastructure both within the core areas and emerging locations. Pune is facing escalating problems with traffic overload and pollution, and more roads and flyovers are the need of the hour.

What values and principles are being adopted by Amit Enterprises in terms of quality and customer satisfaction?

At AEHL, we are always careful to study the market and its requirements before planning and launching a project. Our business model is not based on reckless but need-based project development. We do not launch projects merely to generate revenue but to meet a specific need for housing in a certain locality. Some areas require mid-income housing, while others have a high demand for luxury housing. In some cases, the need for both coexists.

This dynamic needs to be carefully studied and understood. Therefore, in an area like Ambegaon in Pune, we have launched a high-end themed township called Bloomberg as well as a mid-range project called Astonia Royale. In a rapidly upcoming area like Undri, we have restricted ourselves to launching mid-income housing projects like Colori and Astonia Classic.

In Sahakarnagar, one of Pune’s traditional high-end locations, there has been no scope for further supply after AEHL launched its luxury project 9 Green Park there. Nevertheless, we are now launching yet another ultra-luxury project over 4.3 acres of Sahakarnagar’s most spectacularly beautiful hilltop location. This project comprises of two high rise towers of ultra-luxury living spaces, each supported by multi-storeyed reserved parking, and will deliver 62 apartments to Pune’s most discerning home buyers in the city’s most aspired-for residential location.

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Can you explain about some of your signature projects that were significant for the growth of the company?

Treasure Park, Bloomfield and 9 Green Park were definitive projects for Amit Enterprises Housing Ltd. In each of these projects, we moved beyond the confines of commonplace residential development and introduced something innovative and magnificent. Likewise, with our Astonia range of projects, we achieved the perfect balance of affordability and contemporary amenities and specifications.

Can you share with us about your upcoming projects?

Our most important launches in the immediate future are Astonia Classic in Undri, Amit’s Eka in Nasik and our ultra-luxury project in Sahakarnagar.

To conclude, what is the piece of advice you like to share for the new entrants in the realty segment?

Do not try to emulate other developers. The market has more than its share of cookie-cutter apartment blocks. Try to come out with something new and interesting and do not be afraid to break the mold. Above everything else, remember that the customer comes first. At any point in time, you will only be as successful as your customers are satisfied.