Investment In Pune Property Market Remains Rewarding

Kishor PateKishor Pate, CMD – Amit Enterprises Housing Ltd.

What makes Pune such an attractive property investment destination, despite the fact that Mumbai – India’s legendary real estate par excellence – is right next door? A few years ago, the reasons for this were not as obvious as they are now. Today, they are – more than ever.

Despite their proximity to each other, Mumbai and Pune are two very different markets. Mumbai’s legendary space crunch has made residential property there exorbitantly costly, driving more and more aspiring middle-income home buyers to the outer fringes.

Meanwhile, Mumbai continues to grapple with its notorious infrastructure deadlock. Prices in most areas of Mumbai have stagnated and there is considerable pressure from the market to bring them down. If Mumbai does see a correction in prices – which is very likely in the near future – its residential real estate market will pick up pace again.

On the other hand, Pune’s residential property market has maintained its momentum even in a challenging economic environment. Various research agencies have confirmed that Pune has prevailed as one of the best-performing residential real estate markets over the past two years.

It is true that residential sales have slowed down even in Pune. However, it is also a fact that they have remained healthy enough to sustain the viability of the city’s real estate market. This is why Pune’s developers continue to launch fresh residential projects in all budget categories – affordable housing, mid-income housing and even in the super-luxury category.

Thanks to the sustained viability of the Pune property market, it will not see a price correction. The excessive speculative investment activity which caused prices to rise faster than they should have in earlier years has now been curbed. Pune’s developers are now actively discouraging mass purchase of units to speculative investors so that the market retains its rationality.

Sahakar Nagar Pune

The investors who remain are operating from sufficiently wide investment horizons. This means that they will hold on to their properties for at least 3-5 years before they will put them on the resale market. In the interim, they are content to earn very satisfactory rental incomes from their properties. Property investment which is conducted in such a manner does not cause the wild price fluctuations and erratic supply patterns that speculative investment does.

Pune is a property investment market that provides options to wide spectrum of investment budgets, as the city has a steady supply of options in all price brackets. Meanwhile, the city’s eminently healthy rate of employment generation – especially from the IT/ITeS, manufacturing and automobile sectors – ensures demand and property purchasing ability.

Even in high-ticket luxury housing, the investment potential in Pune is high and rising. Similar to Mumbai, luxury housing in Pune has its own segment of wealthy buyers as well as its own upper-crust residential locations.

The future supply in these prime locations – which include Sahakarnagar, Prabhat Road, Boat Club Road, Kalyaninagar and Koregaon Park, is extremely restricted due to lack of land parcels. Prices in these elite neighbourhoods will continue to rise as the available stock is absorbed. This will ensure that investment in Pune’s luxury housing segment will continue to be extremely attractive.

Important Home Buying Tips For Women

Kishor Pate, CMD – Amit Enterprises Housing Ltd

A decade ago, an Indian woman independent and capable enough to buy her own home was a rare case. However, things have changed today. Latter-day Indian women are very well educated, have good jobs with excellent career growth prospects, and even hold important government or corporate leadership posts.

In any case, they certainly have the ability and confidence to craft their own lives, and are very much able to fulfill their dream of owning a home regardless of whether they are married or not.

In fact, buying a home is fast beginning to figure as a bigger priority for many Indian women than marriage. This is not surprising, since a self-owned home is correctly seen as the #1 security anchor in India – and the best foundation from which to make long-term life decisions.

For women who investigating the market for suitable properties, here are some points to consider:

  • Prepare For The Initial Costs:

First-time home buyers tend to save a considerable while to get a sizable down payment together. However, keep in mind that property purchase involves several other initial investments like government duties, utilities connection charges, transfer fees in the case of resale flats, insurance and taxes.

Apart from your down payment on a home (or your contribution towards a home loan) you need to have an additional fund of 5-6% over the base cost of the property available.

  • Be Confident About Monthly Outgoings:

Anyone eyeing a property purchase should first figure out the monthly mortgage and whether they will be able to afford it. Online mortgage calculators can be helpful, but they will only tell you the value of the principal and associated interests.

There are other monthly expenses involved in home ownership, and these include insurances, taxes, maintenance charges, utilities charges, etc. For working women, it is important that all these amounts put together do not exceed 35 to 40% of their net income.

Do not neglect to figure out your overall cost of living before deciding on how big a home loan you can safely service, and keep in mind that property is not the only investment you should make towards your ongoing financial security. You should also put at least 10% of your monthly income into a retirement plan.

woman buying house

  • Be Realistic And Maintain Forward Focus:

Home ownership is a great step ahead in a woman’s life, and towards independence in your retirement age. But your first home is not necessarily the only home you will ever buy.

Remember that you can always upgrade in the future if required or desired, so there is absolutely no need to buy the biggest-possible flat now. Never compromise your current financial viability by buying a needlessly expensive home.

  • Shop Around Extensively For Home Loans:

When it comes to choosing the right lender, do not go by the recommendations of friends or relatives alone. Do extensive research on the several different lending institutions available to you.

Ideally, you should get pre-approved for a home loan the interest rate should be the most competitive. Remember that as an Indian woman, you are entitled to ask for a lower rate of interest on a home loan – be sure to insist on this benefit.

  • Be Sure Of The Developer’s Credibility:

Every day brings new stories about buyers who have been hoodwinked by unreliable developers. Either the project has been unreasonably delayed, has never even taken off or the delivered property (or amenities and facilities) are grossly different from what was initially promised.

Do not fall into such a trap – no woman looking for the security of home ownership should have to deal with such a setback. Make sure the developer has a strong reputation on the market by doing multiple checks with reliable agents, the home loan company and also on the Internet.

About The Author

Kishor Pate, Chairman & Managing Director of Amit Enterprises Housing Ltd. is the driving force behind one of the most successful real estate development firms in Pune and beyond. Apart from its signature luxury homes towers and premium gated townships, AEHL has also launched highly successful affordable housing projects like Astonia Classic and Colori in Undri and Astonia Royale in Ambegaon.

Investment Tips: Should You Buy A New Or A Resale Home?

Kishor PateKishor Pate, CMD – Amit Enterprises Housing Ltd.

Should you buy a new flat or a resale? There appears to be no easy answer to this question. People buy resale flats instead of new ones for various reasons. Sometimes, a certain location just does not offer suitable options on the primary market.

At other times, buyers do not to enough research and are unaware of the availability of very good new projects. Or they succumb to the pressure tactics of a persistent real estate broker and buy a resale flat when a new one was available in an excellent location, and within their financial reach. Or they believe that a serviceable flat available at a slightly lower price is always a good bargain.

Most often, people buy resale flats because they are in a hurry and want immediate possession. This renders them unwilling to opt for a flat in a project which is under construction, even if completion and possession are only a few months in the future.

Because real estate is an eminently re-sellable asset, many people put perfectly acceptable flats on the market after a few years of use because they want to upgrade. This fact makes the market for resale flats almost as big as the primary market. However, this does not mean that resale flats and new apartments fall in the same value chain.

Assuming that a buyer learns of both new and resale options in the location of choice, it is important to understand the benefits of opting for the former:

  • A home, both as an asset and a possession, is very much like a car – neither offers the same value or experience when it is second-hand. The feel of a used home or car cannot match that of a brand-new version, simply because it has already passed through the hands of one or more owners. It is true that this is something of an intangible psychological factor – but it is nevertheless very real.
  • Assuming that one has bought it from a reputable developer, a first-sale flat has newer fixtures and fittings that come with a minimum guarantee of problem-free performance. Nor is wear and tear the only problem with older fixtures and fittings – like in the case of most other products, there is also a question of product generation. To illustrate – a first-generation iPhone cannot perform with the same speed, efficiency and reliability as a first-generation one.
  • Flats in new projects by good developers tend to be more energy efficient, environmentally compliant, user-friendly and space optimized. Reputable developers are like doctors – they are constantly upgrading their knowledge, techniques and equipment. They do this to remain relevant and competitive in a market which they know to be replete with other options for buyers. The benefits of this mind-set are directly passed on to the buyers.
  • It is very difficult – if not impossible – to paint a unique masterpiece on a used canvas. Previous owners of a resale flat always leave a certain indelible part of their personality or culture imprinted on the property. While it is possible to fill in and paint over nail holes in unwanted parts of the wall, undoing serious structural modifications is a challenge.

Living Room 560

  • New flats in under-construction and sometimes even ready-to-move-in projects can, in fact, be cheaper than resale flats. In the case of under-construction projects, the sale value of individual units rises only in tandem with the stages of completion. But resale flats often cost as much as (if not more than) new apartments because the relative cost of original acquisition was higher. This is often a function of obsolete construction methods, which are costlier and more wasteful than more evolved construction technologies.
  • New flats have higher resale value and also longer shelf-life on the resale market because of the lower age of the building.

Home purchase is never a decision one should make in a hurry. Also, regardless of whether a new flat is slightly cheaper or marginally costlier than a resale apartment, it should not be made solely on the consideration of budget. Few investment decisions have as many long-term financial implications and appreciation potential as property purchase.

It is therefore important to understand the pros and cons of old versus new flats, and to always take an informed call when it comes to buying a home.

About The Author

Kishor Pate, Chairman & Managing Director of Amit Enterprises Housing Ltd, is the driving force behind one of the most successful real estate development firms in Pune and beyond. Apart from its signature luxury homes towers and premium gated townships, AEHL has also launched highly successful affordable housing projects like Astonia Classic and Colori in Undri and Astonia Royale in Ambegaon.

A Tame Budget For Real Estate

Kishor Pate, CMD – Amit Enterprises Housing Ltd

The budget has fallen short of expectations and not delivered on many of the expected counts. It has not provided any direct relief for the common man. It has not increased personal income tax deduction limits, nor has it provided any relief for home loan borrowers.

However, the previous budget had already given relief on those fronts, so it was not really likely that this budget would go further.

The budget has clamped down heavily on the use of unaccounted-for money and given more incentives for the use of online money payments and transfers.

It is no secret that the highest incidence of black money transactions is in the real estate sector, and the move to increase penalization of black money transactions will boost transparency in the sector.

union budget 2015On a positive note, the real estate sector was expecting a major announcement on the deployment of GST, which will serve to eliminate the multiple taxes associated with home purchase.

The fact that GST will become a reality from the next financial year is a relief to home buyers, who have so far been burdened with excessive taxes.

The above are positive, but I do not see this budget as a game-changer for the Indian real estate sector.