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.

Concrete: A Highly Sustainable Building Material

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

With the term ‘concrete jungle’ having become so popular and widely used, it is easy to overlook that this building material has been around for so long for very good reasons.

Also, that it has some excellent attributes which make it very important in today’s context.

Yes, it is easy to produce and use, but the fact is that concrete is an eminently environmentally friendly building material during the entire span of its life cycle, beginning from its production as a  raw material right until it is demolished.

This renders it the perfect and obvious building option for the construction of sustainable homes.

The cement utilized in concrete is sourced from limestone, which is an abundantly available mineral that will literally never deplete.

However, one can also manufacture concrete from materials such as slag cement and fly ash, both of which are generated by industries like steel mills and power plants as waste byproducts.

From the point of recycling of existing resources, concrete is therefore a real boon to the planet.

Concrete is also highly durable, and is used in erecting buildings which are not subject to rust, do not burn or otherwise degrade.

In fact, buildings built with concrete have twice or even thrice the life- span of buildings erected with many other construction material.

The life-spans for concrete building products can be double or triple those of other common building materials.

Concreting Work Construction Worker

What is equally important from a sustainability perspective is that the use of concrete in forming the foundation, floors and walls of a building renders it extremely energy-efficient.

One of the benefits of this building material is its ability to absorb and retain heat. In other words, people who live in homes built of concrete save significantly on both cooling and heating bills.

In a concrete building, one can install air conditioners of lower capacity, resulting in significant electricity savings. Also, concrete reduces the incidence of processes that result in urban heat islands.

When concrete, which is inherently light in colour, is used to build pavements and roofs, the end result is that less heat is absorbed and more incoming solar radiation is deflected.

Finally, concrete as a building material, results in the least waste of raw building materials, as it can be manufactured and used in the actual quantities required to build a building or other project.

Once a building or structure built of concrete has completed its life-cycle or fulfilled the purpose for which it was erected, the concrete can be recycled into aggregate which can then be used to lay concrete pavements or provide an underlying base for roads.

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.

Pune’s Real Estate Market – At The Cusp Of Revival

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

It’s a much-asked question – is this the right time for first-time home buyers, or should they wait as there is another price correction expected? In a price-sensitive real estate market like Pune, this question has been asked for more than a year now, and the market’s answer has been quite consistent.

There appears to be no possibility of  further price corrections in Pune. Demand in the right locations and at the right price points has returned, which means the right kinds of properties are selling. Rather than a price correction, it appears that  it is likely to be appreciation which is on the cards once again.

First Homes Market – Returning Rationale

The prolonged market slump from which many of the Indian cities are only now beginning to recover certainly served an important purpose – that of bringing property prices down to their lowest possible levels.

As market pundits have correctly pointed out, the only way for inherently strong markets like Pune is up going forward. However, as of now, the advantage still lies squarely with the buyer. The current time is, in fact, optimal for first-time home buyers to make their play.

For a while now, property valuations in Pune have been at their lowest point. Also, there are very good value-adding offers available, especially in terms of innovative financial structuring.

The financial burden of buying a home in Pune has indeed never been easier to bear than today. Many leading developers are now proactively assisting buyers to reduce the financial implications of buying a home in their projects by way of attractive schemes.

Among the most successful offer available in Pune right now is, all-inclusive rate packages, which include all the usual add-on costs such as stamp duty, registration and VAT.

EMI holidays have also found some favour, though buyers considering such a scheme must definitely carefully study the fine print and long-term implications of the offering.

Second Home Market – Once Again Gaining Traction 

Apart from the first-home market, we are also seeing a revival in Pune’s second home market. Buyers who have been hoping to buy second properties to house their extended families or as investments are finding this the ideal time to make a decision for purchasing the second home.

However, to accurately gauge the exact nature of the revival in Pune’s second homes market, one needs to understand its exact nuances. It is a common error to equate second home with holiday homes in remote locations.

real estate development

This particular market segment, in fact, continues to languish across the country for lack of demand. It usually thrives only during periods of prolonged economic prosperity and protracted vibrancy on the primary homes market.

It is only when people have been secure in their jobs for a sufficiently long time and seen a series of salary hikes that they see any rationale at all in investing in ‘non-performing’ real estate assets like holiday homes. During any other time, they will usually focus only on buying properties which serve the primary need of accommodation or rental income generation.

Investment Advice

Regardless of whether one is looking to buy a first or second home in Pune, the basic success fundamentals remain the same. One should go for locations which are close to primary workplace areas which have a good saturation of office complexes, if one can afford it.

Other important aspects to focus on are the availability of good social and civic infrastructure like schools, hospitals, shopping, etc., and presence of public transport.

With regards to whether one should opt for under-construction or ready-to-move projects – both options have their distinct individual merits, so it is not an either-or scenario at all.

While under-construction properties cost less, one should only consider this option if the developer is reputable and has a good track-record of timely completions. Currently, some builders are offering attractive packages even for ready possession flats – serious end-users and investors should certainly not miss this chance.

Finally, a guideline to pure investors (as opposed to pure end-users) for managing expectations is in order. High capital appreciation may not be a factor in Pune at the moment, which is precisely what has led to the amenable prices prevalent on the market today.

Pune’s real estate market currently stands at the cusp of revival; it is expected that it will take at least 2-3 years for substantial appreciation numbers to become a norm again across all locations.

The investment factor to zero in on currently is good rental potential, which is certainly a possibility in high-performance locations such as Undri, Ambegaon, Wagholi and Bhugaon. For optimizing rental income potential, the flat’s size, amenities, location and builder’s brand value must be considered as integral.

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.

Should You Buy A Home In Pune This Festive Season?

Kishor Pate, CMD – Amit Enterprises Housing Ltd.

There are many reasons why people decide to get off the rental housing bandwagon and buy their own homes. One of the most important ones is that a self-owned home is an investment-grade asset which appreciates and safeguards one’s financial future.

Also every family has a cherished dream of having their self-owned house, which is a lifetime shelter for them as well as for the future generations.

Having a home of their own is the fondest wish of every Indian family. Among other things, the Indian festive season celebrates wealth and prosperity, and nowhere is this spirit displayed more strongly than in Maharashtra.

woman holding diya

For realizing the cherished dream of a self-owned home, all aspire to look for property during the festive season. Even from an investment perspective, buying a home in Pune makes more sense than ever before.

Property prices on Pune’s residential real estate market saw year-on-year appreciation to the tune of 7.9% last year – and though appreciation has moderated somewhat this year, the current market readings are still between 5-6%.

Price growth has been moderate in 2016 so that buyers are not discouraged from making purchase decisions, especially during the critical festive period.

However, given the positive investment scenario and increasing demand for office spaces in Pune, residential real estate demand in the city is going to pick up tremendously in the future. This increased demand is bound to exert upward pressure on housing prices.

In the last quarter of 2016, sentiment on the Pune residential property market has seen the return of outright positivity, and areas that offer better affordability and returns on investment have been receiving healthy traction.

Most of the residential project launches in the city have been in the North-West and North-East regions, with the highest demand for housing emanating from the IT/ITeS, BFSI and manufacturing workforce. Areas like Ambegaon, Kharadi, Hadapsar, Balewadi, Hinjewadi, Nagar Road and Wagholi and Nagar Road have continued to attract good demand on the basis of improved connectivity with the key business districts.

However, it is the fringe areas of South-East Pune – specifically Undri and Pisoli – which have seen the most notable pick-up in demand, leading to a significant number of launches over the past few quarters.

Relatively lower property prices and good connectivity to central areas with their reputed schools, hospitals and other important social infrastructure has led to the strong emergence of South-East Pune as a real estate contender.

All in all, given the attractive offers and pricing schemes from developers and the continued affordability of the city’s emerging areas, this festive period brings with it a strong rationale for homeownership.

For investors, the time is right to identify the hottest growth corridors and make their play before they miss the most favourable entry point and have to contend with higher prices in the future.

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’s Suburban Real Estate Transformation

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

One does not tend to think of Pune a Metro city, especially when compared to neighboring Mumbai. Unlike Mumbai, however, Pune has the benefit of being able to grow spatially and it has been doing so at a very rapid rate.

With the constant absorption of surrounding villages, the city will at some point overtake Mumbai in terms of developed and developing urban areas. Even today, Pune’s suburbs account for a massive geographic spread – and these suburbs are seeing the highest rate of affordable and mid-range housing development.

As of today, Pune’s suburban market includes areas like Ambegaon, Undri, Baner, Pashan, Warje, Bavdhan, Dhayari, Katraj, Mohammedwadi, Mundhwa, Manjri, Hadapsar, Daund, Kharadi, Wadgaon Sheri, Dhanori, Pirangut, Hinjewadi, Kalyani Nagar and Koregaon Park, Wagholi, Chakan, Fursungi, Saswad , Katraj, Chikhli, Kasarwadi, Kalewadi, Phugewadi, Pimple Saudagar, Pimple Nilakh, Pimple Gurav, Tathawade, Thergaon, Talawade, Sangvi, Wakad, Dapodi, Hinjewadi, Bhosari, Pimpri, Chinchwad, Dighi, Nigdi, Moshi, Charholi Budruk, Ravet and Akurdi.

Given the vast multitude of locations in Pune which can technically be classified as suburbs, we can immediately see that some of them perform better than others. Suburbs closer to the city’s IT / ITeS parks perform best, as they attract steady demand from buyers with stronger budgets.

Because of this, such locations also see better civic and social infrastructure being put into place. Other suburbs have large integrated townships being developed. Many of the extended suburbs are currently seeing only budget housing being developed; however, as these suburbs see infrastructure creation and pick up on the back of spill-over demand from saturating areas close by, they see corresponding improvements in their profiling.

Contrary to popular belief the suburbs are, in fact, where the actual real estate action lies. In a growing city like Pune, the common misconception is that the most valuable real estate locations are in the city center. Of course, housing options in and around the center of the city will always see demand thanks to the proximity to the Central Business District and Secondary Business District.

However, many of the central locations are also unaffordable and congested. Developers are usually able to acquire only very small land parcels in central areas – plots which will accommodate only a limited number of flats in the housing projects.

astonia classic_night

Since the available space on such plots is very restricted, these developers offer very limited amenities or no amenities in these projects. As a result, residents have few of the benefits which a modern urban life should provide.

At the end of the day, what one sees is minuscule strangulated residential areas that offer little or no lifestyle accoutrements while simultaneously adding to the urban issues which defines almost all inner-city living in Pune today.

As a result, Pune’s peripheral suburbs and newly emerging real estate markets are the hottest residential property destinations, drawing considerable interest from residential property investors who are attracted by the high demand in these markets as well as the fact that property valuations have sufficient potential for healthy growth.

Some of the best-performing suburbs which host well-facilitated projects by reputed developers are Ambegaon, Undri, Hadapsar, Baner, Wakad and Hinjewadi. These suburbs are more or less driven by Pune’s burgeoning IT/ITeS sector which has proved to be the single-largest booster for residential and commercial real estate in the city.

While properties in and around the IT hubs tend to be too expensive to attract the bulk of end-user and investor demand, areas that are well connected to these employment generators while at the same time offering lower property prices are very hot tickets indeed.

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 Time Is Right To Buy A Ready-Possession Flat

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

Do ready-for-possession or close-to-possession homes make more sense than properties which will be delivered only 2 to 3 years down the line? There was a time when the answer of most end-users and real estate investors would have been a resounding ‘No’.

After all, it is common knowledge that ready-possession homes or homes which would be delivered in six months or less were costing more by about 30 to 35%. In price-sensitive markets like Pune, paying such a premium merely for the benefit of earlier possession made no sense at all.

The budget constraints of end users aside, even investors would shy away from paying such higher price, since they are obviously focused on entering at the lowest possible point and exiting when the property has appreciated sufficiently.

They were certainly not open to foregoing the highest possible returns on investment for ready-possession flats, even if it meant being able to rent them out sooner. After all, the potential resale price would still take a massive beating.

The Current Scenario

Thanks to the protracted slowdown on the property market in most Indian cities, developers across the country have witnessed their inventories piling up.

Reduced sales traction has induced a major sea-change in their pricing strategies, resulting in ticket sizes coming down even in ready-to-move properties in their projects. This has proved necessary because selling existing inventory is the only way they can build capital to fund future projects.

In fact, there has never been a time in the history of the Indian real estate market when properties which are ready or close to possession were so cost-effective. The property market has stabilized.

Quality properties by reputed developers in very good locations are now available at prices which were previously possible only if buyers were willing to wait for two years or longer.

Sound Rationale For Both Options

The option of opting for quick possession or under-construction projects is debatable. In the current scenario, it is for the individual to decide on the budget and on the urgency of buying a house. Individuals with long-term requirements who also need relief in the payment of installments should definitely opt for under-construction projects.

Today, most builders have come up with the scheme of pre-payment of EMI, which helps in reducing the interest burden and monthly EMIs. While opting for this route, the builder should be selected wisely to ensure the safety of one’s investment – only builders with a good reputation and financial background should be considered.

However, buyers in need of a home for immediate possession who have the requisite funds arranged for and are keen to dich their landlord for good have never been in a better place than today.

Colori Phase 2 Undri

As things stand today, buyers who are eyeing popular growth corridors like Pune’s Undri can actually buy a 2 BHK flat from a reputed builder which will be delivered within six months or less, at all-inclusive prices which they can very much afford. Simultaneously, there are projects offering the under-construction opportunity.

It should be noted that real estate markets across India are beginning to revive, and prices in Pune – a city which held on to its strength as a preferred investment hotbed – will start increasing significantly within the next 6 to 8 months.

Advice To Buyers

In the existing market environment, it is easy to be confused by the various seemingly attractive offers that most developers are doling out. In fact, quite a few players have officially announced astounding rate cuts on their projects in the hope of generating faster sales.

Buyers should be aware that such offers are almost always tied to projects which are in the earliest stages of development, and often have hidden costs or features which are not in the best interest of buyers.

Buyers must therefore assess the builder by his previous track record and study the projects he has completed so far. The cost should not be only aspect which should be weighed for taking decision while buying a property.

In fact, the price aspect should be the last one to consider – once committed to a builder or project, the buyer is tied to his or her choice.

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.