Pune Property: All Roads Lead to Ambegaon

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

No discussion on Pune’s property boom locations is complete without an extensive evaluation of Ambegaon.

An increasing number of Pune’s homebuyers are opting for areas with generous natural endowments and absence of the crush of the city’s central areas.

As Ambegaon offers superb connectivity in addition to a green, hilly environment, it has naturally emerged as one of the most favoured property locations in Pune.

As a matter of fact, Ambegaon will be one of Pune’s most exciting property boom regions for several years to come during the following ten years.

Apart from its abundant greenery, the backdrop of hills and excellent connectivity, it is also an eminently affordable location.

Moreover, it offers a good spread of housing options, from multistoried apartment projects to luxury townships.

Ambegaon is also close to the new MIDC in Shirval, which is a massive employment hub which has given rise to ever-increasing demand for both budget and premium homes here.

Some of Pune’s leading developers have responded to this demand with projects that bear the brand of reliability, are very suitably priced and additionally offer tremendous investment appreciation value.

The growth of Ambegaon has been partially because of the spill-over demand from Sinhagadh Road, which has developed very rapidly and seen unattractive price growth as a consequence.

But one of the leading factors for Ambegaon’s quick rise to fame has been the fact that it gives property buyers a diversified choice of homes, ranging from premium bungalows and villas to budget flats.

This location’s natural ambience and absence of congestion and pollution lend it a distinct aura of exclusiveness, simultaneously providing homebuyers a welcome option to live and raise their families in bracing, naturally blessed surroundings.

Residential areas with the kind of abundance of trees and green open spaces available in Ambegaon are home to healthier and happier people, and have a cooler climate than the inner-city concrete jungle.

It is no accident that Pune’s core city dwellers tend to be more susceptible to suffering from conditions like asthma, bronchitis and hypertension – most of the city’s previously splendorous green cover has been eroded by real estate development.

In contrast, Ambegaon is a haven of peace, calm and greenery – the hallmarks of Pune’s glory years.

Moreover, Ambegaon is constantly seeing upgradation of its support infrastructure by the Pune Municipal Corporation – a very important factor driving property investors’ interest in this location.

Investment appetite here is also because of the accelerated development of places like Bavdhan, Sinhagad Road, Wagholi, Bhugaon and Undri.

These locations have for long been catering to the demand for quality housing coming from employees of Pune’s Information Technology sector, but Ambegaon additionally gains from its proximity to the Pune-Mumbai Expressway, the famous Sinhagad Technical Institute and the Bangalore Bypass.

In other rapidly growing locations of Pune like Baner, Wakad and Hinjewadi, the predominant demand for investment properties comes from neighbouring Mumbai.

Ambegaon, on the other hand, has unique location advantages, Ambegaon is also a hot favourite with investors from cities like Sangli, Satara, Kolhapur and Shirval.

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 projects like Montecito in Sahakar Nagar and other 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.

What REITs (Real Estate Investment Trusts) Mean For Indian Real Estate

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

The real estate sector in India has been lucrative for savvy investors over the last decade, but it has not been without accompanying uncertainties.

The introduction of REITs (Real Estate Investment Trusts) will open up a platform that will allow all kinds of investors – even those with smaller budgets – to make safe and rewarding investments into the Indian real estate market.

The best thing about REITs is that investors can start with as small a sum as Rs. 2 lakh to secure units in exchange.

The REIT platform has already been approved by the Securities and Exchange Board of India (SEBI) and like mutual funds, it will pool the money from all investors across the country.

The money collected from the REIT funds will subsequently be invested in commercial properties to generate income.

A REIT will need to be registered via an IPO or initial public offering. REIT units, as such, will have to get listed with exchanges and consequently traded as securities.

The SEBI board has kept the minimum asset sizes to be invested in at Rs. 500 crore. However, the minimum issue size would have to be less than Rs. 250 crore.

As with stocks, the investors here would be able to buy the units from either primary and/or the secondary markets.

How does a REIT work?

REIT is a process to generate funds from a lot of investors to directly invest in profitable real estate properties like offices, residential units, hotels, shopping centers, warehouses and more.

All trusts with REIT will be listed with stock exchanges as they would be structured like trusts. Consequently, REIT assets will be held with independent trustees for unit holders / investors.

Role of the trustees

Trustees with REIT have defined duties which typically involve ensuring compliance and adherence to all applicable laws that protect the rights of the investors.

The objective of REITs

A REIT’s objective is to provide the investors with dividends that are generated from the capital gains accruing from the sale of the commercial assets. The trust distributes 90% of the income among its investors via dividends.

Apart from minimum entry level, a REIT is supposed to provide diversified and safe investment opportunities with reduced risks, and under a professional management to ensure the maximum return on investments.

The advantages with REITs include:

  • Income dividends: 90% of distributable cash at least twice in a year
  • Transparency: REIT will showcase the full valuation on a yearly basis and will also update it on a half-yearly basis
  • Diversification: According to the guidelines, REITs will have to invest in a minimum of two projects with 60% asset value in a single project
  • Lower risk: At least 80% of the assets will have to be invested into revenue-generating and completed projects.

The remaining 20% of the properties that include properties like under construction projects, equity shares of the listed properties, mortgage-based securities, equity shares that derive a minimum of 75% of income from Government securities or G-secs, money market instruments, cash equivalents and real estate activities.

The REIT concept has been in the news for some time now. However, the real estate regulations rolled out so far have not quite helped bring them to Ground Zero in India as yet.

REITs’ exemption from tax on the distribution of dividends would make it much more attractive for investors.

According to a recent report by Cushman & Wakefield, commercial properties in India that are ‘REITable’ investment opportunities are between $43 billion and $54 billion across the top cities.

Are REITs more attractive than actual property purchase?

Investing in REIT can be compared to investing in Gold Bonds. Indians are partial to buying physical gold rather than in Gold Bonds, implying that having one’s own investment in property will always provide Indians greater satisfaction than mere paper investments.

The Indian property market is now almost stabilized and it is the right time to buy self-owned homes. While it is human tendency to wait and watch, the bottom of the market cannot be fathomed accurately at the best of times.

At the end of the day, REITs are investment instruments and not a means to acquire actual property – which is always high on every Indian’s wish-list.

A budget that clearly favours purchase decisions for first- time home buyers and is a step closer to the Prime Minister’s mission to provide Housing for all by 2022 is in place. 2017 is certainly the year to make home ownership a reality.

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 projects like Montecito in Sahakar Nagar and other 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.

 

Reaction To Union Budget 2017-18

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

The Union Budget has announced that 1 crore rural houses will be created by 2019, and the outlay for rural housing under PMAY is Rs. 23000 crores from the previous Rs. 15000 crores.

This will help address the housing needs of the homeless and those living in ‘kachha’ houses in the rural areas, and potentially help reduce pressure on urban areas if it is in conjunction with employment generation

The total allocation for infrastructure is a whopping Rs. 396135 crores in 2017-18. This is very good news for the real estate sector, as the correlation of infrastructure with real estate growth is a well-established fact.

Affordable housing has finally been given infrastructure status. This will mean cheaper loans for developers of budget housing and significantly boost the Government’s target of Housing for All by 2022.

The Affordable housing has seen a significant change in the Government’s existing scheme, with the qualifying size requirements now changed from built-up area to carpet area of 30 sqm and 60 sqm for projects within the municipal limits of the large 4 cities.

On the all-important front of personal income tax, the existing tax rate for incomes between Rs. 2.5 lakh to 5 lakh has been reduced to 5%, and taxpayers in other categories will also save Rs. 12,500.

While this will definitely boost the overall consumption story, it, unfortunately, will not have any significant impact on housing demand.

However, the FM did indicate that lending rates are likely to come down in the wake of the demonetisation move. A decline in interest rates would have positive implications on housing demand.