What Has Led To Pune’s Affordable Housing Crunch?

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

No discussion about the hottest real estate markets in India today is complete without a generous reference to Pune. In fact, Pune is one of the most-talked-about and desirable places in India to live and work in today.

People are attracted to this city because of its vibrant job market, the much more clement climate and environment when compared to the neighboring financial capital Mumbai, and – very importantly – the superior quality and spread of options in housing.

However, there are some important factors that property buyers who are not familiar with Pune should be aware of so that they can make the right choice while buying their homes here. Pune is doubtlessly a marvelous place to live in, but this has over the recent years actually become a problem.

The areas closest to Pune’s business district and Information Technology hubs have gained attention for being the most desirable places to buy or rent a home in. However, as the popularity of these areas increased, so did the cost of living.

Because these areas are seen as high profile and naturally attract people from the higher income brackets, most of the housing supply there is now in the premium segment. The property rates of such housing also drive those of non-premium housing upward.

It is not only real estate prices which are affected in these locations, but the overall cost of living. The high property prices in these areas mean that shopping outlets, entertainment centers, restaurants and healthcare facilities all have to pay much higher rents.

Astonia Classic in Undri
Astonia Classic in Undri

The higher costs are directly passed on to the customers in these catchments. Moreover, because of the overall premium ethos of these locations, they tend to attract retail, hospitals and F&B outlets which cater primarily to high-income customers.

True, Pune is one of the most vibrant cities because of its high lifestyle quotient, spunky neighborhoods and Information Technology hubs. Unfortunately, the very residents who made the city this upscale, happening place where everyone wants to live and work are now challenged by the increased property prices and cost of living. In Pune, affordable housing options are becoming fewer and far between.

As a result of the rapidly increasing capital values, housing rents in the most popular areas have also been rising inexorably, and this trend shows no signs of stopping anytime soon. Right-priced housing is decreasing because of the swanky new apartment buildings in the more happening locations.

Pune’s inner locations and those closest to its IT hubs now have no affordable housing left for people to buy, even as the influx of new renters in these limited areas drives up demand and prices for a limited amount of units available for rent.

The only solutions would appear to lie in Pune’s far-flung outskirts, where land is still cheap and developers can keep their prices low. However, these areas are also very far from most of the city’s workplace hubs, and also lack the kind of support infrastructure that makes decent living possible. Fortunately, Pune still has a small handful of locations which are neither too remote not too costly for budget home buyers.

Among these, Undri in the Southeast of the city and Ambegaon in the Southwest are two of the best-connected areas which are still receiving a decent supply of affordable housing and also rapid infrastructure deployment. Keshavnagar and Manjri in the East are also still quite affordable, though relatively less enabled in terms of infrastructure.

These locations offer home buyers the benefits of rational housing prices as well as very good connectivity in terms of road network, public transport and proximity to good schools, shopping, entertainment and affordable healthcare.

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 the Mediterranean-style township Astonia Royale in Ambegaon.

Real Estate’s Demands From The Union Budget

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

Real estate stakeholders in every Indian city are looking forward to the upcoming financial budget 2016 to see whether it will provide any relief to the sector.

Developers have their own expectations, because positive announcements for real estate buyers made during the budget will help increase the market sentiment, and therefore sales.

The general hope is that the budget will provide cheer to intending home buyers who have been deterred for various reasons.

Make Home Loans More Affordable

The Union Budget should make the rate of interest specific to home loans more reasonable. Currently, the banks are offering interest rates which are still too high.

Paying so much interest has serious implications on the family budgets of most middle-class wage earners. It is not surprising that many of them currently shy away from home loans.

The budget should bring the interest rate on home loans down to between 7.5% to 8.0%. The new government has clearly stated that it wants to make Housing For All Indians a reality by 2022. It is impossible to achieve this goal if home loans do not become affordable to all, as well.

interest-rate-149879_640

Additionally, the home loan interest amount exemption under Income Tax benefit should be increased from the existing limit to Rs. 3 lakh. Further, this exemption should be made applicable for more than single property purchases.

This is not an unreasonable expectation. In the current times and in many cases, a single home is not enough to accommodate all family members. The finance ministry should take due note of this fact and accordingly provide relief for both first home and second home buyers.

Eliminate Multiple Taxation On Property Purchase

The budget should also do away with the multiple taxes involved in the purchase of residential property. As of now, home purchasers are required to pay service tax and value-added tax (VAT) on top of stamp duty and registration charges. Goods and Service Tax (GST) should be introduced in the place of these taxes.

Bring In The Real Estate Regulatory Bill

The real estate industry expects the Budget to finally make the Real Estate Regulatory bill a reality this year, so that the industry has the benefit of an apex body via which all concerns can be addressed transparently and efficiently.

Reduce Cost Of Property Registration

Another expectation from the Union Budget is a reduction in the cost of property registration. Stamp duty and registration costs are as high as 6% in most cases, and this needs to be reduced by a few basis points to aid consumers.

Alternatively, a slab-based approach should be introduced. Stamp duty falls under state government purview, but the Center can nevertheless issue a directive to reduce stamp duty costs.

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 the Mediterranean-style township Astonia Royale in Ambegaon.

 

Mapping The Growing Demand For Smart Homes

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

For the gadget-conscious IT pros as well as most of the new IT savvy younger generation buyers, automated homes are definitely now something to aspire for.

Though smart homes are still something of a niche, there is definitely growing demand for them. In the past, only about 15% the overall number of aspiring home buyers were ready to consider smart homes as an option because of the higher costs involved.

In the past, they were largely luxury offerings, and there was a considerable premium attached to homes with ‘smart’ features which varied according to how many ‘smart’ features were included in the project.

Today, however, many of the developers catering to this segment have successfully right-sized and right-priced their projects, thereby managing to draw a much larger demand.

Typically, smart home buyers today are in the age group of 30-45 and are either well-established in their careers or very upwardly mobile. Another typical defining factor for these buyers is that they tend to be IT-savvy and usually very stressed-out in their jobs.

For these buyers, the comforts, conveniences and importantly the security that smart homes give them are critical factors influencing their purchase decisions.

Interestingly, smart homes have a definite status value attached to them, tend to have higher resale value both because of their locations and features and can make life simpler for those who know how to exploit these features. They are definitely not suitable options for those who will under-utilize the, except maybe from an investment perspective.

A large segment of the current demand for smart homes comes from people employed in software parks, BPOs and IT companies. It is for this reason that many of the smart home projects in cities like Pune tend to crop up in IT-centric areas.

Software professionals tend to have had considerable exposure to IT-specific concepts, which is one of the primary reasons for their preference for smart homes.

They also tend to draw above-average salaries, and quite often had training and even long periods of stationing in foreign countries. As a result of the latter factor, they have had exposure to technology-driven residential concepts in those countries and seek such a lifestyle back home in India.

Smart Home Technology

However, with the rapid proliferation of Internet usage across nearly all segments of Indian society, the target audience for smart homes has expanded considerably. It now includes a much larger section of gadget-conscious and professionally secure younger home buyers with a well-defined yen for automated homes.

Smart homes are not just an interesting variant. With the growing awareness of and concern about environmental issues, they are progressing towards becoming the default option for more and more home buyers over the next decade.

Smart homes offer technological features wherein home owners can operate almost anything in their homes (including lights, air conditioners, security systems, curtains and blinds) from within and even outside at the touch or click of a button.

Today, smart home technology uses user-friendly software that allows simplified control of climate, lighting, entertainment and communication. The technology involved impacts three key areas – energy efficiency, security systems and telecom systems.

Smart homes have a definite status value attached to them and tend to have higher resale value because of their locations, which are either close to the city’s IT hubs or in upscale areas where higher lifestyle aspirations play a big role.

Appreciation of such properties is also influenced by the very nature of the features that make life simpler, safer, more comfortable and more exciting. The technology that drives smart homes can be readily upgraded, making them completely future-ready. This increases their potential resale value many times over.

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 the Mediterranean-style township Astonia Royale in Ambegaon.