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.

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.

What Makes A Real Estate Investment Location Lucrative?

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

A simple Google search on real estate investment locations will throw up hundreds of results. Finding genuine online advice – the kind that can lead you to a truly lucrative real estate investment decision – is like finding the proverbial needle in the haystack.

The Internet’s usefulness as a tool to guide your property investment decisions depends upon the individual’s capacity to read between the lines of a mammoth amount of information which may or may not lead to house one is looking for.

Year 2017 should be a year for residential real estate investment, as the Government is ensuring low interest rates and a slew of incentives via schemes such as the Prime Minister’s Awas Yojana (PMAY).

So, interest in and appetite for real estate investment is back in force – but where should one invest? After all, successful real estate investment is proverbially driven by ‘location, location, location.’

When you are trying to identify the right location to invest in, you are obviously ready to put up a lot of saved or leveraged capital. This is no time to rely on sponsored advice and blanket generalizations.

What must come into play here is some basic knowledge of what makes the real estate market tick, and more specifically what drives demand in any location. The viability of a location is what will result in the hoped-for returns on investment.

So, how does real estate location viability actually work? From a residential property investment perspective, every city – especially if it is a tier 1 city – has its hot investment corridors, and other micro-markets which are simply not working currently.

Some of the important real estate drivers to look for are employment generation, infrastructure creation and historic price growth.

Mumbai, being the country’s financial capital, has been attracting massive investments over the years despite its astronomically high ticket sizes.

Bangalore has become India’s prominent Information Technology capital and been attracting consummate investments.

However, Pune has begun stealing Bangalore’s thunder as a preferred InfoTech destination, owing to:

  • Better real estate affordability
  • Global reputation for Business Process Outsourcing (BPO) services, and
  • Massive wealth of trained workforce.

The third factor is a very important one, and plays a big role in the city’s viability as a real estate investment destination.

Pune Mumbai Bengaluru

Pune – the veritable ‘Oxford of the East’ – has numerous high-quality educational institutes which regularly churn out graduates who are directly absorbed not only into the city’s IT firms but also into its manufacturing belt and services sector.

This directly translates into housing demand across a broad budget band, and in various locations of the city.

All such cities have micro-markets which are suitable for either commercial or residential investment, and others that are probably avoidable right now.

Because of the amount of business Mumbai, Bangalore and Pune generate – and the fact that they are in the cross-sights of many large commercial players – these cities are excellent choices for commercial space investments as long as:

  • One picks one’s location and property size wisely
  • Achieves a reasonable entry point in terms of ticket size

Commercial real estate investment calls for larger capital and longer investment horizons, and ROI is generally derived from rental income.

Areas which are close to relatively affordable residential catchments or at least provide good connectivity to them should be favoured.

When it comes to residential real estate investment, it pays to remember that speculative investments may have played a role in escalating prices beyond affordability in some areas.

Several factors have now combined to drive out speculators from most Indian cities, and price corrections have occurred. If the prices have bottomed out or the location is still in growth mode, it is a good time to invest in it.

One should look for factors like proximity to workplace hubs, infrastructure availability – especially in terms of connectivity and public transport – and a decent saturation of social infrastructure such as shopping outlets, healthcare and schools.

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.

The Advantages of a Pre-Approved Home Loan

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

A self-owned home is the dream of every Indian, and all of us want to see ourselves being able to go in for it one day. When that day comes, the last thing we want is any reason for delay or insecurity to cloud the decision.

This is especially true if one is a first-time home buyer. Obviously, the most challenging and confusing part of the home buying process is the financials.

Confusion here can relate to which the best lending institution is, what type of loan is best and what the conditions are, and what size of home loan one can comfortably pay off over the years of tenure.

However, one of the biggest worries for a first-time home buyer with regards to a home loan is how long one needs to wait for its approval. In this scenario, the best bet for a first-time home buyer is to apply for a pre-approved home loan.

Getting a pre-approved loan means that you have already dealt with one of the trickiest parts of the purchase process, and can now focus your time and attention on finding the best property options available. Pre-approved loans also give you an upper hand when you at the negotiation table with a developer.

Understanding the difference between loan pre-approval and pre-qualification

Pre-approval and pre-qualification of home loans are completely different things. Pre-qualification is more like an educated guess on the part of the bank or lending institution about how big a loan you qualify for.

This estimate or loan eligibility is based on your current earning power, credit score, financial history, and so on. A pre-approved loan, on the other hand, is a written guarantee by the lender that you have secured a loan.

To grant a pre-approval certificate, loan officers will conduct an employment, remunerations and ‘credit worthiness’ check.

This will include collecting all past financial data like loan of credit card repayment history, credit card statements, disposable income, current debts, and more. Generally, all of this would be done using special software.

Home Loan

How to get a pre-approved home loan

The first step towards obtaining a pre-approved loan is finding a lending agency you can trust. It might be one that you know, one that an acquaintance works for, or one that has been reliably referred to you.

While any lenders would conduct an extensive credit check, you must find one that is not only willing to lend to you but also has a good reputation on the market.

Another important thing to check is the rate of interest that will be charged on your home loan. The best agencies will come up with competitive rates and also offer helpful customer service.

In these cases, the loan officer will actively help you out to get the pre-approval, and discuss the type of settlement you would be eligible for given your salary, investments, tax returns, debts, credit score, etc.

How does a letter of pre-approval help?

An important advantage of a pre-approved loan is that you know your spending limit. You are precisely aware of what kind of property you should be searching for. This eliminates from your search properties that you are not eligible for.

Secondly, with a pre-approval letter, you will not have to wait for many of the formalities of property purchase once you come across a suitable option. You have the advantage of being immediately able to book the property using the pre-approval letter. A pre-approved loans also gives you a lot of credibility with builders/promoters, and increases your negotiation power.

Getting a pre-approved loan is the easiest way to buy your dream home in the current market scenario. It is not only assuring but also keeps you within the limits of your affordability – and makes you a highly credible buyer whom any seller will take seriously and extend the best possible deal.

The approval should give you an opportunity to make a choice at leisure, but should not lead to the trap of landing in a circle of indecision and complacency. The pre-approved home loan should be a tool which lets you make a decision when you find a house of you and your family’s choice, and to act on it.

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.

Pune Real Estate – Green Is the New Gold

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

If we look at Pune’s real estate landscape, it is quite evident that the city has taken a hit in terms of its previously legendary green cover. This is of course unavoidable in the urban areas, which must accommodate the constantly growing population in the city.

This is the price we must pay for growth, which is ultimately good for the economy. However, there’s no escaping the fact that there is a deep link between green environment and the quality of living that a city’s residents enjoy.

Residential neighborhoods that are bestowed with trees, foliage, lawns and natural open outdoor spaces also have healthier and happier people. This is by no means just a romantic concept.

The existence of green spaces actually contributes to air quality, as trees and other greenery absorb toxic pollutants like sulphur dioxide, carbon monoxide, nitrogen, ammonia, nitric acid vapor and ozone – and give back life-giving oxygen. Greenery and green open spaces also play a major role in controlling urban temperatures.

Just a decade ago, Pune was known for its abundance of green cover, which generously embraced almost all of its residential areas. Today, a lot of this green cover has gone under the development hammer with the unconstrained proliferation of real estate and massive industrialization.

This, coupled with road development and the unbelievable increase in traffic movement within the city, has given rise to serious health issues now cropping up into once healthy neighborhoods.

As a result, today Pune’s citizens are far more prone to suffering from ailments like high blood pressure, bronchitis, asthma, depression and overall stress. A city that was once an epitome of modern natural living is now starved for oxygen and visual relief from the ever-expanding concrete jungle.

Though a green environment evidently benefits everyone, it is particularly important for the very young and elderly. Children obviously thrive most in green surroundings, and senior citizens living amidst sufficient greenery have fewer health problems and lead a considerably fitter lifestyle than those who live in an environment of unrelieved concrete inside the city.

The more the availability of greenery and green open spaces in a residential neighbourhood, the likelier it is for its residents to spend time outdoors and avoid a sedentary lifestyle.

Without a doubt, life in a city should not be merely about owning a beautiful home, but also about being happy and healthy. As the world continues its fight against global warming and urban areas grow, home buyers in cities like Pune are starting to prefer neighborhoods that have amenities like parks, gardens and enough natural green cover.

sahakar nagar pune
Sahakar Nagar, Pune

Locations like Undri and Ambegaon, where the benefit of protected green cover is still available, score high on their preference list – not only because of their greenery but also because they are also more price-friendly than the congested inner city areas.

These are also among the most preferred locations for property investors; as Pune continues to develop rapidly, its greener areas will eventually command premium prices.

After all, green cover is the pièce de résistance that gives luxury areas like Sahakar Nagar, Koregaon Park and Boat Club Road their unique appeal. And for home buyers, it’s not just about giving kids the opportunity to play outside but also living in a healthy environment – and a more active and vibrant community.

Green spaces in and around residential projects have been proven to bring people outdoors to engage in healthy interactions with neighbors. Common gardens and parks are spaces where people meet and spend time together.

Consequently, people who choose greener living spaces over concrete jungles enjoy better social bonding, are more concerned about the development of their community and neighborhood – and live longer and happier lives.

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.

Pune Real Estate: The Year That Was, And The Year Ahead

Kishor Pate, CMD – Amit Enterprises Housing Ltd.

2016 did not bring as much cheer to Pune’s real estate market as previous years had. Nevertheless, Pune outperformed Mumbai by between 20 to 25% in terms of overall sales.

The highest-selling category in Pune was mid-range properties priced between Rs. 35-50 lakh within the city’s municipal limits and its nearby periphery, followed by lower budget housing on the outskirts priced between Rs. 15-30 lakh.

The latter pricing category offered on the market saw some response; however, whether it sustainable is debatable.

The questions which bothered most buyers in 2016 were:

  • What are the hidden cost?
  • Does the location serve my purpose?
  • Will the project I am interested in be completed as per promised timeline?
  • Is the developer inherently RERA-compliant?

Due to these completely understandable apprehensions, reputed builders saw the most number of serious inquiries in 2016. It would not be an exaggeration to observe that the year saw developers being examined with microscopic scrutiny.

There was clear evidence that Pune’s property buyers have become very aware of their rights, and that they can expect their interests to be protected by the upcoming RERA; promoters will not be able to dictate terms as they so far have.

However, irrespective of the potential protection that RERA will provide, buyers were more focused on the reputation of the builder than prices.

This was a significant change of temperament among Pune’s traditionally price-sensitive consumers. It indicated that long-term investment value and growth now matters more to them than short-term savings.

More than ever before, the inherent value of sticking to players with an established track-record will make itself felt in 2017.

When RERA becomes a nation-wide reality in mid-2017, Pune’s established developers with a good track record quality products and transparent dealings via official financial channels will emerge as dominant.

Once the Real Estate Regulatory Bill kicks in, fraudulent builders will be pulled off the market, and there will be more clarity than ever before about the genuine opportunities that Pune’s real estate market offers.

For the entire year of 2016, Pune remained a buyers’ market and primarily end-user driven. Developers vied with each other for customers in most locations – a ‘competition’ in which only those with projects nearing completion emerged as clear winners.

High buyer caution prevailed throughout the year with regards to pre-launches and under-construction projects in the earliest stages of development.

With many projects offering ready-to-move options to buyers and investors, the thought of having to wait for 2 to 3 years before gaining possession simply failed to entice.

The locations which scored highest with buyers in 2016 were not the overpriced central locations, but those which offer good connectivity to Pune’s various workplace hubs while circumventing the steep price points of the city’s central areas.

property investment

Most buyers had a firm list of must-haves to refer to:

  • Proximity to the city’s various workplace centers; good overall connectivity via roads and public transport
  • Rational property prices
  • Availability of good schools, affordable healthcare, shopping and entertainment
  • Market-proven reliability of developers’ brand

In terms of location, Undri-Pisoli in Pune’s south-eastern sector was a clear favourite with buyers employed in the city’s Infotech sector and manufacturing industries, as all the requirements were available as above,

Also Ambegaon in the south-western part saw a lot of conversions, thanks to its good connectivity to Mumbai as well as onward to Satara and Kolhapur.

Apart from the fact that these locations are extremely well-connected, they also drew demand because they have a good supply of completed projects by reputable developers.

Fast-paced infrastructure deployment also helped bring these two locations to the top of the charts in 2016, and will continue to sustain their desirability in 2017.

Bhugaon, Keshavnagar and Manjri in the city’s eastern quadrant saw a lot of absorption because of overall access they provide to various key areas of the city. Though they are still emerging in terms of general infrastructure deployment, these are certainly locations to watch in the future.

In terms of general pricing, Pune saw a correction of 3 to 6% in property prices in most markets. Most developers rolled out additional schemes to attract buyers to their projects, with varying degrees of success.

Construction-linked plans drew some interest, but the clear winners among such schemes were all-inclusive packages which included all statutory costs such as VAT, stamp duty and registration fees.

Buyers showed a lot of preference for transparency in pricing, a decent saturation of in-project amenities and facilities, and developers whose trustworthiness was not in question.

2017 will be a year of significant and much-needed change for Pune’s property market. The Government’s demonetisation initiative has kick-started a process of elimination of fly-by-night developers and the cash components in the transactions will come to an end- a process which the final implementation of RERA will bring to culmination.

There will be a lot of consolidation throughout the year, with such players yielding whatever marketable land parcels and incomplete projects they hold to more established players.

2017 will not bring any further correction in Pune’s residential property prices, as demand is already returning in force to the city’s property market. Also, the fact that RERA will bring with it a significant additional financial burden on developers with regards to various statutory compliances, prices may go up towards mid-year.

Nevertheless, the year ahead will be favourable for property buyers in Pune. It will continue to be a buyers’ market, and the relationship between developers and buyers will see a major upgrade because buyers’ rights and interests will be well-defined and well-protected by the new Real Estate Regulatory bill. This is what the Government wants to achieve.

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 Affordable Housing Really Means In India

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

Affordability, especially in the Indian real estate sector, can mean a wide range of things. Specifically, the term holds different meaning for different categories of demographics. Further, there are also several socio-economic variables governing a city or location to consider.

Generally, ‘affordable housing’ refers to residences that have been especially designed for the economically weaker section (EWS) and Lower Income Group (LIG) who are looking for the same comfort and security of a self-owned property/home that the more fortunate middle class enjoys.

In the earlier years of real estate development in India, the EWS and LIG categories did not get much attention to their needs. However, with changes in administration and especially with the current government coming to power, a significant amount of changes has taken place in this respect.

These two sections make up the thickest segment of the demographic for India, and form the base of the country’s economy. It has been overdue that their requirements are looked into.

Thankfully, there have been several initiatives by the BJP government under the leadership of PM Modi that have boosted affordable housing sector. For example, it is seriously looking into is the betterment of accessibility – read reduced commute times.

Lack of accessibility has been one of the top reasons why low-cost housing was inaccessible. Even if such housing is outside of the main city periphery, improved connectivity makes distances shorter and such areas more viable and desirable as residential destinations.

Why is affordable housing important?

Creating affordable housing is not just about helping a certain demographic to achieve their dream of home ownership. True, from a political viewpoint it is obviously important to cater to the demands of a massive vote bank.

But there is an important economic angle to be considered, as well – the working class must have a good-enough reason to not move out of their city to be able to work and earn. It is important to understand that we are not just talking about people living on below or on the edge of the poverty line.

In 2012, the Housing and Urban Poverty Alleviation Ministry made an upward revision on the criteria that define EWS. With this revision, families with an annual household income of up to Rs. 1 lakh now come under the classification of Economically Weaker Section (EWS). This was a significant change from the earlier limit of Rs. 5,000 a month or Rs. 60,000 annually.

The category of Lower Income Group or LIG also saw an upward revision – now, families with an annual income of between Rs. 1 to 2 lakh came under the LIG category. Previously, the definition applied to families earning Rs. 5001 to 10000 a month or Rs. 60,012 to 1,20,000 annually.

Colori Phase 2 Undri

The people who fall under both these categories are extremely important for the country’s economic progress. They provide myriad services which our cities can simply not do without, but are very prone to migrating out of cities which do not support their needs.

For them, as for everyone else, home ownership provides not only a strong psychological anchor but also financial security and a better lifestyle – important incentives to stay put rather than migrate elsewhere.

What about affordable housing for the middle class?

This is an important question, and calls forth the real definition of affordability in the Indian context. Affordable housing also comes under the ambit of a much wider local meaning, wherein it constitutes homes that are affordable to the maximum segment of demographics.

It can also apply to the local population in a city which, despite being more economically fortunate and flexible than the EWS and LIG segments, are sensitive to high home prices within their city.

Such buyer groups will have sufficient funds to buy a decent-sized property on the outskirts, but face challenges when buying a home closer to the employment hubs and conveniences available within the city limits. Another way to understand this situation is the deficiency of properties within the city locations for buyers in the budget groups of Rs. 35 to 50 lakh.

Thus, a city would be said to be deficient of affordable housing even if it has enough homes in the outskirts within a price range of Rs. 20 lakhs. In this case, the potential buyers are those who can pay beyond Rs. 20 lakhs and are not interested in living on the outskirts.

Affordable housing as a whole is a profitable business because of its high rate of absorption. However, such housing also advances socio-economic growth both at a locality and city level, because it invites in higher earning groups.

Overall, if the majority of a city’s working class does not find suitable homes meeting both their needs and budgets, it can be said that there is a dearth of affordable homes.

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.

Demonetisation: Immediate And Long-Term Impact On Real Estate

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

PM Modi’s surprise move to remove Rs. 500 and Rs. 1000 currency notes from legal use came as a shocker to all Indians. As of now, everyone is still inconvenienced, but all Indians also realize the greater good this move will accomplish in cleaning out black money from the economy.

Crowds outside ATMs are already thinning out and life is gradually normalizing across Indian cities. However, the ones who will continue to be affected the most are obviously those who have been holding and transacting in large amounts of unaccounted cash.

When considering the business sectors on which the demonetisation move has greatest pertinence and effect, the real estate sector comes almost naturally to mind, and Indian real estate industry has historically seen a high incidence of cash transactions.

However, the large-scale turmoil that many market pundits have been predicting is an exaggeration. The market is expecting a correction in the resale properties segment, which is very likely to happen.

The primary sales market in the larger cities is not going to be affected, especially when it comes to strong, established developers.

Prices have already stabilized in view of the situation prevailing prior to the demonetization move, and there is minimum chance of further correction – especially in low-end projects. High-end and luxury projects may see a correction to some extent.

Land transactions, which have historically been driven by cash, are taking a major hit and we can expect a correction of 20-30% in land valuations in the unorganized sector.

Lower land costs in emerging areas and smaller cities will eventually result in lower cost of budget housing, as developers will assuredly pass on the benefit of these savings to their customers.

Pricing is a critical factor in the current market environment, and no player will lose the chance to offer more benevolent price tags in order to secure business.

The full impact of demonetisation will be more visible only after the next Union Budget is announced in February. The negative sentiment currently prevailing is likely to be negated to a large extent by some very positive announcements.

We expect the Finance Minister to roll out special incentives for first-time home buyers in the budget properties category, and also a positive revision of income tax slabs – which will help reduce the financial burden on home buyers and increase purchasing power.

With home ownership always being a priority investment objective for all Indians, this will have very positive implications for the residential real estate sector.

DEMONETISATION

On the whole, the demonetisation move is very good news for the health of the Indian real estate sector. The Real Estate Regulatory Bill (RERA) will be deployed across the country by mid-2017, and Maharashtra has recently put forth its own draft laws.

Along with the impact that the demonetization move has had on India’s parallel ‘black economy’, we will see a lot of sanitization in the industry.

The Indian real estate sector will now become more transparent, credible and attractive to all kinds of serious investors, especially institutional investors.

In the long term, we will see a much more holistic and healthy pattern of growth in the Indian real estate sector.

The Government’s many initiatives to render the Indian business environment more attractive for both domestic and foreign investments will definitely bear fruit.

For end-users and investors, the current time is extremely favourable to make their move to secure the best real estate bargains.

Smaller residential developers and investors will be more eager than ever before to offload their inventory so as to alleviate their liquidity woes to some extent.

The salaried class which uses home loans to purchase properties will not face any problems at all because of the demonetisation move.

Since the above measures will serve to make the real estate sector more transparent and wholesome, future growth in the residential property sector will be steady and rational.

Those who invest in residential real estate now can, therefore, look forward to very satisfactory long-term capital appreciation.

Also, to be noted – the slowdown induced by the demonetisation move has nothing to do with the huge pent-up demand for housing in India. This is still very much intact and in fact growing at steady pace.

The residential sector was in fact in revival mode shortly before this move, and though overall sentiment has now faced a new setback, this is strictly temporary.

Fly-by-night developers get driven out and large players who have already made transparent transactions a standard will emerge stronger.

Within the next 12-18 months, we will see a much more sustainable and robust real estate market emerging in India.

About The Author

 Kishor Pate, Chairman & Managing Director ofAmit 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.

Wait For The Real Estate Regulator Bill (RERA) Or Buy Now?

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

Across the country, aspiring property buyers are waiting for RERA – or the Real Estate Regulation Act – to be implemented by the States.

Time and again, it has been stated that the consumer must consider the reputation of the builder prior to taking a decision to buy a property/asset which is likely to remain for generations.

On implementation of RERA, only builders with sound reputations will remain in the fray – this probably its most important function in protecting consumer rights and interests.

Once RERA becomes a enforceable law, it will change the ways in which residential housing projects are planned, offered, sold and possessed across India. Property buyers will no longer need to worry about unfair contracts, delayed possessions, non-notified alterations in building plans and other risks.

The aim of RERA is to make real estate purchase simpler by bringing in better accountability and transparency. In doing so, it will also infuse a lot more confidence among buyers – who, at the end of the day, should feel as comfortable about investing in a home as they are about buying gold.

RERA lays forth several ground rules for real estate buying and selling, including:

  • Registration of every real estate project with the appointed tribunal (with some exceptions). Non-registered projects cannot be offered for sale or booked by promoters.
  • Mandatory uploading of project details by the developer on the RERA website, including layout planning and completion schedule.
  • 70% of the advance collected from buyers needs to be maintained in a separate bank account and be used only for the stipulated project construction. These funds cannot be hived off for other purposes – a practice that has contributed majorly to delayed projects in the past. The individual state governments have reserved the power to alter the amount, but the principle is very much in place.
  • Establishment of Real Estate Appellate Tribunals that will handle any issues related to property disputes, with the intention of delivering quick and unambiguous resolution.
  • Setting up of an advisory body to deal with matters related to government-sponsored real estate development.

In one of the most important addendums to RERA, real estate brokers and the way they conduct their business now also fall under its ambit. The days of unscrupulous property agents either acting solely in their own interest or in collusion with developers are now numbered.

In fact, RERA will protect both the buyer and the seller – for instance, it protects developers from non-payment. While the promoter is required to obtain necessary documentation such as the completion certificate, the buyer is liable to be fined for delays in payment. Failure to register the property or comply by other regulations of the Act will lead to hefty fines and even imprisonment in certain cases.

All this may sound too good to be true – and in fact, it is for now because RERA is likely to come into full force from May 2017. All the individual state governments need to get their ‘acts’ together to comply with its requirements and adopt it.

The good news is that they do not have the option of not doing so – the Central Government has amply demonstrated that it is determined to push the Real Estate Regulation Bill through come hail or high water.

The Indian real estate market is currently showing positive signs of revival. Even as smaller builders struggle – now also because of the recent demonetization of larger currency notes – credible developers continue to launch new projects and raise funds to meet the committed completion timelines.

With RERA in place, several not-so-credible developers will go out of business. Buyer will be protected from players with ulterior motives – in short, fly-by-night operators. This will, in turn, infuse a much-needed positive sentiment among buyers and consequently help increase demand.

Increased sales will improve the cash situations of the credible developers that remain after the weeding out, and projects will be automatically delivered in time.

real estate law

Should You Wait For RERA Or Buy Now?

At the current point in time, because of the lower demand seen over the last 2-3 years, property prices across India’s major cities have sunk to incredibly low levels. Buyers have a wide range of options in locations, budgets, amenities and – perhaps most importantly – in developers.

In previous times, buyers with budget constraints could only consider projects by builders with doubtful reputations and questionable business practices. This is no longer the case – today, a home in a quality project by a trustworthy and reputable developer is very much an option even within a modest budget.

RERA will take another year to be implemented; meanwhile, there are other dynamics which are changing on the Indian property market. Reduced pricing coupled with attractive deals in most cities, and the fact that more and more fence-sitting buyers have run out of patience and are coming onto the market with firm ‘buy’ decisions, have kick-started the modest but very real recovery we are seeing on the residential market.

In Pune, we have witnessed a 25% increase in buying activity in high-demand areas like Undri-Pisoli, Ambegaon, Bhugaon and Wagholi in the last 4-5 months alone. In Mumbai, buying activity in Navi Mumbai, Thane and some other relatively affordable areas has also picked up significantly.

What does this mean for property buyers? Very simply – any revival in buying activity eventually leads to increased prices. Such is the immutable law of demand and supply. Given that demand is increasing steadily even now, property prices will begin rising even before RERA becomes a market reality next year.

What Experts Say

Industry watchdogs unanimously agree that there is no scope for current property prices to decrease further. Whatever correction in prices could happen has happened, and developers cannot reduce prices further even if they wanted to – doing so would, in many cases, seriously impact their ability to stay on the market.

In fact, RERA will mean that promoters will be bound by more procedures, and this may increase the cost of their projects – costs which are likely to be passed on to the consumer. In other words, RERA could be instrumental in inducing cost escalations in many cities.

It should be noted that while RERA will ensure that unscrupulous developers and their business practices will be driven off the market, it will simultaneously ensure that builders with sound reputations and impeccable track records will become stronger.

One of the most important intentions of the new law is to support such developers so that they can continue to serve the needs of property buyers in the wholesome and transparent manner which they are known for.

In short, for buyers who have no intention of dealing with any but the most reputed developers, there is no real advantage in waiting for RERA to kick in. If one is working with a reputed developer, the privileges, benefits and safeguards that it will bring already apply today.

Another valid argument against waiting for RERA before buying a property is that that once the Act is in place, it will become mandatory for builders to invest extra time with regulatory bodies to work along the extensive details of construction plans, clearances, approvals and other details related to their new projects. Paradoxically, this will in fact result in delayed deliveries where the opposite effect was actually intended.

Even though many buyers feel that they should wait for RERA to be implemented before buying a flat, the fact remains that there are already many builders with strong reputations and credible market practices.

Buying a property from such a player now instead of later can turn out to be wise decision if RERA results in upward pressure on prices. Also, if one is looking to make the most of current attractive pricing and offers, there is actually no better time than now.

The time and effort spent in taking advantage of the favorable market dynamics existing today will prove to be the soundest investment. The sole proviso is that one should only patronize a reputed developer with a good track record for delivery and construction quality.

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.

How Education Influences Pune’s Property Market

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

Jawaharlal Nehru named Pune the Oxford of the East, and this title is more than well-deserved on account of the many schools, colleges and management institutes that the city boasts of. Each year, Pune attracts tens of thousands of students not only from India but all over the world.

A lesser-known fact is that Pune’s real estate market is a direct beneficiary of its highly developed educational environment. People in Pune are willing to invest considerably in their children’s education, and this includes a willingness to pay more for a home located close to a good school or college.

In fact, if we study the check-lists of features that most homebuyers in Pune consider important, more than 35% list proximity to good schools and colleges non-negotiable.

Also most of the migrants from other states generally fall in love with Pune and settle here. This also leads to demand for more houses  near the proximity of the schools as this is a most logical step for anyone to raise a family.

Not only that, but a significant number of homebuyers – predominantly young working couples – are willing to compromise on other aspects such as proximity to entertainment and even workplaces in order to secure a home close to a good school.

For these people, the welfare of their children ranks higher than their own convenience. What is even more interesting is that not all of these homebuyers are married or have children. Why do such buyers consider proximity to good educational institutions important while selecting a property?

The answer is as simple as it is profound. On the one hand, married homebuyers with children are definitely interested in quality schools and colleges because of the educational opportunities they offer. Such homebuyers have either just starting a family or are planning to do so soon.

Either way, they are considering the future of their children and are even ready to pay more for smaller homes in order to secure their chances of a good education.

In the larger context, however, most property buyers and investors in Pune understand that the availability of good schools in a neighborhood contributes directly to the overall value of the locality’s real estate.

Obviously, Pune’s educational districts rank very high as property investment destinations. This is underscored by another very interesting fact – namely, the resilience of the property values in areas of Pune which are close to the good schools, colleges and management institutions.

child in school

In the past, these areas did not see any drop in property prices even when other localities were seeing price corrections.

Historically, homebuyers focused on these areas of Pune were willing to make all kinds of compromises in order to secure the education advantage. They were ready to settle for smaller homes in projects without clubhouses and swimming pools, in congested areas without malls or any kind of organized shopping nearby.

Over time, these constraints have given way to some extent. Developers who were able to secure redevelopment rights in some of the core areas of the city were able to build more modern residential complexes which have a decent share of lifestyle amenities.

While examining the correlation of Pune’s educational institutions and the property pricing in the areas around them, some may argue that good schools and colleges have led to the higher appreciation of these areas.

The rationale would appear sound – homebuyers in Pune will always prefer residential projects located near an educational district and are ready to pay higher rates for them. So have Pune’s good schools, in fact, helped drive up the property prices in these localities?

Maybe so, but this is an incomplete argument at best. The fact remains these areas are also defined by higher historic affluence and that this affluence has triggered the development of high-quality schools there. There is no doubt that in Pune, the best schools and colleges are in localities defined by a higher standard of living.

In the final analysis, what perhaps matters most from a property market perspective is not the nature of the relationship between education and property values in Pune, but the simple fact that the relationship definitely exists.

Developers with projects in and around Pune’s educational institutions are able to ask for higher prices, and homebuyers are generally willing to pay them.

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.