What Lies Ahead For The Pune Property Market

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

Pune’s real estate market is the stuff of legend, and justifiably so. All the five main verticals of the property sector – residential, commercial office space, retail and hospitality – are performing optimally in Pune.

This is by all standards an exceptional real estate market. Moreover, Pune is always growing and adding to its geographical spread, making it by far the largest and most vibrant real estate market in Maharashtra and beyond.

Therefore, it comes as no surprise that investors from Mumbai, dissuaded by the high property rates and slow market conditions in the financial capital, are extremely active in Pune.

Apart from these, there is a constant flow of investments coming in from other Maharashtrian cities like Nanded, Nasik, Sangli, Kolhapur, Nagpur, Jalgaon and Amravati. As a result, the Pune property market is extremely resistant to stagnation.

Know what drives demand

The huge degree of job creation the city’s manufacturing, automobile and Infotech and services sectors is causing inward migration from almost all parts of India and very rapid absorption of commercial office spaces.

This, in turn, is constantly ramping up residential property demand as well. Additionally, thanks to its many educational institutions, Pune boasts of constantly replenishing talent pool which fuels the growth of all the sectors active in the city.

Because of the multidimensional growth drivers that the city enjoys, the Pune residential property market is quite resistant to the severe demand fluctuations being seen in a number of other cities.

However, successful investment into the Pune residential real estate sector still calls for knowledge about what works, and what doesn’t.

Pune_India

Know where to invest

Like in every other city, Pune’s residential property sector sees the most rapid impetus in pockets or locations that are still developing. It is primarily in these emerging locations that we find the most real estate activity, both its terms of development and demand from buyers.

Areas like Undri, Ambegaon, Keshavnagar and Bhugaon have already established themselves as Pune’s fastest-growing new suburbs. The growth of such locations also serves the important purpose of decreasing demand and development pressure in the central regions. However, even in these areas, there is danger lurking for uninformed property investors.

In many of the emerging residential property destinations, we have seen a huge load of housing projects where construction has either been stalled or delayed far beyond the initially committed completion timelines.

Investors and end- users who bought into such projects at the pre-launch phase to take advantage of attractively low rates have literally become stuck along with the projects.

Know your developer

In Pune, the difference between beneficial and hazardous housing investment lies primarily in the reputation and credibility of the developer. While credibility is a much-abused qualification that almost every developer lays claim to, it is actually quite simple to verify.

One merely needs to examine the builder’s track record of successfully completed housing projects. ‘Successful completion’ does not mean ‘eventual completion’, but completion within 1-1.5 years of the delivery timelines promised to buyers.

RERA Compliance – the new Gold Standard

With the Real Estate Regulatory Act (RERA) slated to finally become a nation- wide reality by mid-2017, Pune’s residential real estate market is going to become more vibrant and lucrative for property investment than ever before.

Thanks to this key reform in the real estate sector, the city is set to shed a lot of its ‘bloat’ – or burden of small-time, inexperienced builders out to make a quick buck with small, shoddily designed and executed projects which are also often of dubious legal status.

Such players will simply not be able to sustain operations post-RERA, and will vanish from the market.

What will remain are builders of good repute, market standing and track record – credible players who are able to abide by the strictures that RERA lays down to protect the interests of buyers and investors.

While this landmark is understandably a source of fear and trepidation for fly-by-night builders, it heralds the even more powerful emergence of strong, credible developers.

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 Has Led To Pune’s Affordable Housing Crunch?

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

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

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

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

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

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

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

Astonia Classic in Undri
Astonia Classic in Undri

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

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

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

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

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

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

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

About The Author

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