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.

As Mumbai Saturates And Stagnates, Pune Takes Over

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

Mumbai has for long held the title of being the most desirable city in India to live in. This had nothing to do with ease of living and everything to do with its economy. Despite the fact that life in Mumbai is hard for everyone but the richest of the rich, it trumped all other cities in the quality and availability of jobs.

However, this perception has now changed forever. Just 200 kilometers away, Pune has emerged as the more preferred destination on every count – lifestyle, job opportunities and real estate investment.

It all began with the Mumbai-Pune expressway, which reduced the distance between the two cities. Today, people can actually work in Mumbai and live in Pune.

Pune is still seeing a very healthy demand for property. While neighbouring Mumbai is now being seen a largely unaffordable, real estate investors are now flocking to Pune in order to participate in the real estate boom in this city.

According to Magicbricks’ Housing Sentiment Index, Pune saw only a marginal correction in sentiment while Mumbai, which was already looking at subdued sentiments for over a year now, is still in the grips of a prolonged slowdown in its real estate markets.

Thanks to the massive growth in Information Technology industry and rapidly improving connectivity, West and East Pune are now the most preferred real estate destinations.

Consistent Growth

Pune property market has been even more noticeable over the last two years. The steady momentum has been the key to healthy growth in real estate demand in Pune.

In terms of appreciation too, investment in the Pune market is far superior when compared to Mumbai. According to real estate property consultancy Cushman & Wakefield, Mumbai saw only 16% appreciation in 2014 while Pune recorded the highest national increase in capital values at 39%.

Cost Of Real Estate

Real estate in Mumbai is getting more and more expensive every day. For someone looking to buy a small apartment (600 sq. ft. of space) in Mumbai, the minimum required corpus should be nothing short of INR 1 crore.

As a result, more and more Mumbaikars are moving to the outskirts and fringes of the city including places like Thane and Navi Mumbai, where property prices are lower. On the other hand, Pune provides a variety of options within the city at prices between Rs. 30-70 lakh.

Mumbai Skyline

An Easier Lifestyle

More and more Mumbaikars finding it hard to maintain any kind of lifestyle at all in their parent city within their incomes are moving to Pune. Though Pune is not yet a metro, it offers property choices and a lifestyle that completely matches that of any metropolitan city in India, with a cosmopolitan lifestyle which is still very much affordable.

According to the data aggregator site Numbeo.com, the cost of living in Pune is decidedly lower than in Mumbai.

According to Numbeo.com:

  • Consumer Prices in Pune are 6.91% lower than in Mumbai
  • Rent Prices in Pune are 59.70% lower than in Mumbai
  • Restaurant Prices in Pune are 16.48% lower than in Mumbai, and
  • Local Purchasing Power in Pune is 4.25% higher than in Mumbai

The higher purchasing power in Pune is not without reason. Apart from the fact that almost everything is cheaper in Pune, the city is also the fastest-growing IT hub in India, which means that it is generating several thousands of well-paid jobs every year. This fact is drawing people from all parts of the country to Pune.

Today, even celebrities are moving to Pune – not because of the cheaper residential rates but because it is a less crowded and far more pleasant city with much better weather than Mumbai. Also, Pune’s property market offers larger and better-planned 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 homes towers and premium gated townships, AEHL has also launched highly successful affordable housing projects like Astonia Classic and Colori in Undri and the Mediterrenean-style township Astonia Royale in Ambegaon.

Is Pune Real Estate In For A Correction?

Kishor PateKishor Pate, CMD – Amit Enterprises Housing Ltd.

In a correction, a property market changes from a sellers’ market to a buyers’ market. Demand for homes decreases and the value of one’s property goes down.

Every kind of property owner – be it end user or investor – worries about the property market going down and prices ‘correcting’. The word ‘correction’ in itself implies that there is something wrong which needs to corrected.

Is the Pune property market going to see a correction? Let us examine what really happens in a correction, and why.

In the first place, real estate corrections do not happen on a national, state or even city level. If and when they occur, they occur in areas of cities where there are a lot of apartments which are priced too high. When the prices come down, demand picks up again, so the local market has ‘corrected’.

However, there can be many more reasons why there are more flats on the market than people are willing to buy. Unwillingness to buy can be for many reasons:

  • Flats are available, but not in the budget category where the highest need is
  • Flats in the right budget category are available. However, the economy is weak and people are uncertain about their jobs – and therefore hesitant about making a home loan commitment
  • Home loan interest rates are exorbitantly high and therefore not affordable

If one or more of these factors prevail, people will not prefer to buy homes and instead opt for rental properties. As a result, property investors who want to make a quick buck out of residential property by buying cheap and selling higher stay away.

But even in such a market, investors who look at property as a source of regular rental income continue to look for good opportunities and thrive in a rental-driven market.

As far as the national economy is concerned, things are already looking up in India. Inflation is coming down, and the RBI has indicated that home loan interest rates will start decreasing from January 2013.

Meanwhile, employment is looking up. Indian companies – especially in the healthcare, manufacturing and Information Technology sectors, are already on a hiring spree. With more jobs comes more demand for homes.

Now let us have a closer look at Pune – both as a city and as a property market. Pune’s overall fortunes are generated by three industries – healthcare, manufacturing and Information Technology. The first may come as a surprise, but the fact is that Pune scores higher than many of the larger cities when it comes to popularity as a destination for obtaining medical treatment.

In fact, it ranks very high as an international medical tourism destination. This is because Pune is known internationally as a city that offers quality treatment at affordable prices. In fact, medical professionals in Pune charge up to 50-60% less than Mumbai, Bangalore and Delhi.

One of the main reasons why medical treatment costs less in Pune is because real estate prices are lower, which makes running hospitals and clinics cheaper. Since the cost of living in Pune is lower, medical staff also draw lower salaries.

At the same time, the city has some of the country’s most competent doctors and state-of-the-art medical facilities. Countless medical jobs at all levels are being created in Pune every year – and with these jobs comes a constant demand for housing.

Pune’s manufacturing sector is a national and international industry legend. Almost every global industrial company has operations here, from pharmaceuticals to automobile manufacturing.

These industries are attracted by Pune’s highly trained workforce, the cheaper real estate costs involved in setting up and running operations here, and the reduced commuting times – which translate into lower attrition and better housing options for employees. Again, the implications on Pune’s housing market are obvious.

In terms of Information Technology, Pune is running neck-to-neck with Bangalore and Hyderabad. The city has an incredible saturation of IT parks within a relatively small geographic area. This sector is once again driven by an highly trained workforce and lower real estate costs to both the company and its employees.

The employees from these three industries – from the blue collar cadre right up to senior management – are all on the market for homes in varying price brackets within the city. The transient component of these employees (employees that are not from Pune and will not opt to take up permanent residence here) are a constant source of rental income for investors with properties in the right locations of the city.

With all these factors working in favour of Pune’s property market, the justified clamour for a price correction in Mumbai has nevertheless sent its echoes into the Pune market.

Paradoxically, it is largely buyers and investors from Mumbai who have contributed to the fast rise in property prices in this city. Accustomed as they are to the sky-high rates in their parent city, they do not tend to hesitate to pay a premium for the larger, better appointed homes in tempting locations available in Pune.

By the same coin, Mumbai provides a clear contrast against which to weight the property investment options in Pune. For this reason, there will always be enough buyers for residential property in this city. Certain areas have certainly reached saturation point, but many of Pune’s growth areas are showing steady appreciation in property rates. Moreover, the city offers housing options in all budget categories in almost all locations.

In such a scenario, it is fairly certain that residential property in Pune will continue to be one of the safest and most rewarding investment avenues for a long time to come. It is certainly a mistake to view it from the same perspective as Mumbai. This market has stood the test of time and is growing rationally into a brilliant future.

With such a constant and steadily increasing demand for residential property in Pune, there is no likelihood of a property market correction. In fact, as indicated by the trends over the past years, property prices will continue to increase every year at a minimum of 7-8% in every location.

In plainer terms, this means that the housing options available today will not cost less but more in the next year. This is the main reason why Pune has such a large complement of active property investors – and a clear clue for end users.

Image courtesy of FreeDigitalPhotos.net

Tips On Searching For Pune Properties Online

Kishor PateKishor Pate, CMD – Amit Enterprises Housing Ltd.

The days when the only approach for prospective homebuyers to find a suitable property in Pune was to contact a broker are long over. Of course, personal inspection of a property is still necessary before the final purchase. However, the Internet has made the actual process of short-listing the best options very easy.

Today, more and more people looking for flats in Pune actually begin their hunt online. Pune has a very high penetration of broadband Internet usage, and this fact has worked very well for prospective home buyers.

The many property portals operating today are replete with options of properties in Pune, including in newly constructed and under construction projects as well as in the resale properties segment.

There are definitely advantages to using the online approach in the initial stages of a home search. The Internet allows a prospective homebuyer to analyze the ‘vital statistics’ of a large number of properties within one’s budget in a very short time.

Many online listings by developers and resale property owners feature photographs, as well. This helps in the visual aspect of a property search, which is a very important factor.

The various property portals that have proliferated on the Internet are helpful in knowing more about the available options in a certain location, the USPs of the area and the property pricing trends. However, relying solely on property marketing portals is a mistake. The information they provide can be incomplete and sometimes even misleading.

For instance, most home seekers scanning the Internet are often looking for the cost advantage of investing in an under-construction project. Naturally, the primary search parameter tends to be the price. However, Internet searches based solely on price, city and location can generate insufficient and skewed results.

pune properties search

Intending property buyers should be aware that while buying a flat in an under-construction project by a reputed and well-funded developer in Pune is safe, an incomplete project by an unknown builder does not offer such assurance. Also, a well-known developer’s reputation is a safety stamp for construction quality and quality internal fittings.

Property listings posted by individual brokers dealing in all sorts of properties usually do not provide this vital information. After all, disclosing details such as name of the project and its developer would kill their marketing advantage. However, it is necessary to know these details before one can make a short-list of options based on quality, investment safety as well as price.

There are, of course, exceptions to this information gap. For instance, many large real estate brokerages have exclusive project marketing mandates with reputable real estate developers in Pune. Property listings by such brokerages do tend provide all the necessary details.

Real estate marketing portal listings are usually the first search results to show up during an online property search. This is because these platforms invest heavily in search engine optimization (SEO) to attract Internet traffic.

However, no online search for an under-construction property in Pune is complete on the basis of just these results. Aspiring buyers also need to visit the websites of reputed developers in Pune to check what projects they have in the pipeline.

This route has two huge advantages. In the first place, doubts about the developer’s financial ability to complete a project and also construction quality are eliminated. Secondly, buying an under-construction property directly from a developer eliminates brokerage.

In short, make sure your online search for a property in Pune includes the websites of reputed developers.

Pune Real Estate – A Brave New World

Kishor PateKishor Pate, CMD – Amit Enterprises Housing Ltd.

Pune is growing – literally every single day. It is home to some of the biggest names in manufacturing, IT, services, retail outlets and more. A steady growth of IT and ITES segments has set off the demand for quality residential projects in new areas of Pune.

In fact, the residential requirements of ITES companies will continue to be the primary demand drivers on the Pune residential property market in the future, as well. Today Pune is ranked best for its quality of living and space, educational institutions, climate and affordable cost, compared to other major metros.

In previous times, property buyers in Pune showed a marked predilection for low-rise structures like row houses, twin bungalows and independent bungalows.

Today, this trend has given way to a preference for apartments in multi-storeyed residential projects, thanks to the increasing space crunch in the more preferred areas and the overall economies of scale. It is a simple fact of life that flats in multi-storeyed projects can be mass-produced and therefore come at a lower cost than stand-alone or semi-exclusive homes.

Nevertheless, with a definite crystallization of income segments that has emerged on the simultanous growth of Pune’s industrial sector, the IT/ITES segment and the services industry, there is a more or less balanced demand for all kinds of homes today.

Interestingly, Pune’s developer community has been able to cater to all demand segments throughout, though rates for stand-alone and semi-exclusive units have certainly risen in tandem with the aspiration and purchasing power of the targeted buyers.

With the rapid saturation of Magarpatta, Hadapsar and Aundh, the walk-to-work theory has now been almost fully exploited. The next step on the evolutionary ladder of Pune’s residential property market is the short-drive-to-work concept, which is gaining popularity.

With the emergence of more and more projects that offer this facility in key locations, Pune properties are set to become even more attractive investment opportunities. Many developers are actively facilitating this concept in areas such as Baner, Undri and Ambegaon.

AEHL Project

Meanwhile, there are definite danger signals ahead. If not kept in check by a more rational supply pipeline, the ever-increasing property prices in Pune could eventually rob the city of its competitive edge as an investment destination in the face of stiff competition in the IT/ITES race from cities like Chennai and Hyderabad.

Inadequate infrastructure is another key issue. The city’s planning authorities should observe and learn from the steadily declining state of affairs in the larger cities and take steps to ensure proper planning of infrastructure to match the growth.

As the Pune property market in set to grow further in the times ahead, it looks forward to more proactive support from the state government and local municipal authorities in terms of taking the necessary steps. With a conducive environment for growth, Pune is all ready to be a mega city of the future.

The IT Effect On Pune Real Estate

Kishor PateKishor Pate, CMD – Amit Enterprises Housing Ltd.

Pune real estate and information technology are inseparable concepts today, and it is interesting to reflect on how this came about.

To understand the ‘IT Effect’ on residential real estate in Pune, one needs to understand how Indian real estate has been changing over the years.

Every year, we hear of new property investment destinations coming up. Some work out well for property investors, and some do not. Whether or not a property investment destination in India lives up to its initial potential or not depends on a number of factors.

One of the main factors is employment. An area in which a number of companies are opening up job opportunities for the local population becomes of interest to residential property developers, because they know that people want homes near to their places of work.

Developers do a lot of research before they decide to launch a residential project in or around an area with a lot of existing or emerging job opportunities. It is important for them to know what kinds of companies are offering jobs, because the nature of these jobs indicates the employees’ salary range.

If the jobs are mainly for retail or support services, this indicates that the employees will be drawing relatively smaller salaries. In other words, budget housing will be in greatest demand in such an area. Luxury housing would not draw any interest.

On the other hand, jobs created by large corporates and multi-national companies tend to offer a much wider band of incomes. Such companies create back-office, middle management as well as ‘C Suite’ jobs.

This means that developers can launch projects that cater to a wider band of income levels – affordable housing, middle-income housing and luxury housing. Homes in all these categories will be in demand.

This would have remained a predictable formula for Indian real estate developers to follow if job creation in India would have remained at the level of manufacturing, retail and financial services. However, matters changes drastically when India launched into its Information Technology boom in the mid-1990s.

eon freezone pune
Eon IT Park, Kharadi

This was the period in which more and more companies, mainly from the United States, started outsourcing IT-related jobs to India. Even when the resulting employment was mostly limited to call centre jobs, a lot of young Indians began at salary levels which their parents had worked half their lives to reach.

Back then, home loans were quite affordable at interest rates between 7-8%. High salaries at a young age meant long repayment tenures for home loans, translating into attractively low EMIs. This, coupled with the inherent yen for every Indian to own their own home, launched the IT-linked housing boom in India.

Within a relatively short period, the jobs being created by the IT industry in India went beyond call centres and medical transcription and began involving software development.

Salaries skyrocketed, and more and more young Indians were sent for training to the US – returning with a wider world view, higher aspirations and a taste for luxury. This is when cities like Bangalore, followed by Hyderabad and Pune, became hotbeds for high-end housing.

These foreign IT companies needed large spaces to set up shop. But unlike banking and retail, they did not need to be in the city centres, so they opted to launch their campuses in areas of Indian cities where the land costs were still low.

To compensate for the distances that employees living in the city would have to travel to reach their work places, they offered them gratis shuttle services.

However, then the ‘real estate effect’ began to take hold in these areas. Developers started launching housing projects around these IT hubs, and the demand for homes close to these companies continues to be huge. This is why the profiles – and the real estate prices – in these previously unknown areas began rising.

Today, IT hubs such as Hinjewadi, Tathawade, Kharadi and Magarpatta in Pune are literally dictating the trend of residential real estate development in and around these areas.

Aundh, Baner, Ambegaon, Undri and many other locations from which these IT parks can be reached are seeing massive development. The response by property investors has been huge, because residential real estate rates in these locations are rising with every passing quarter.

Undri – The Ultimate Location

Kishor PateKishor Pate, CMD – Amit Enterprises Housing Ltd.

Undri has always been a logical residential property destination in Pune, but for many years it lacked the required infrastructure.

However, as NIBM Road became increasingly saturated, Undri started to come into focus. The revival of demand from the city’s manufacturing and IT sectors helped to encourage developers to concentrate more on this area.

Locations like Undri are ideal for offering residential options to these segments and at the same de-congesting the main city. The area, which is also temptingly close to Pune Camp, is now developing rapidly, and it is becoming a hotspot for residential property investment.

Undri has the advantage of being well connected to various key localities in Pune via various local and interstate highways and expressways while retaining its serenity. It has dense green cover protected by Government regulations.

Proximity to Wanowrie and NIBM gives ensures that residents in Undri have access to all necessities of daily living. It is an ideal residential real estate location, and one of the few in the more central part of Pune which still offer the city’s laid-back natural charm at affordable rates.

Home buyers as well as investors are very enthusiastic about this location, which offers cost-effective housing options to employees from the close-by IT/ITeS companies.

 Amit Astonia Classic 2 BHK Apartments near Bishops School in Undri Pune by Amit Enterprises

With the widening of the The Katraj-Kondhwa-Phursungi-Solapur highway, Undri’s all-round connectivity is going to increase dramatically. Moreover, it will soon be completely included within the Pune Municipal Limits, which will boost infrastructure development even further.

Amit Enterprises Housing Ltd has five major project launches lined up for 2013, and one of them will be adding to our existing presence at Undri with an affordable housing project.

2013 will also see the launch of another mid-to-high end residential project at Baner, a luxury apartments project at Aundh and a luxury homes project at Prabhadevi, Mumbai.

Pune Real Estate 2012: An Analysis

Kishor PateKishor Pate, CMD – Amit Enterprises Housing Ltd.

The Pune real estate market performed exceedingly well in 2012. Property prices appreciated between 7-9% in most areas, which is more than most other cities displayed this year.

There were some setbacks. One of these was the issue of VAT (Value Added Tax), which the Government made mandatory for all properties bought between June 2006 and March 2010.

Over 1.5 lakh flat owners in the city were affected, and there was a visible cooling of relations between them and the builders. Another dampener was the fact that the RBI did not reduce home loan rates – a move which was expected and much required.

On the up side, the Government of Maharashtra removed the NOC system. This system required residential buyers to obtain a no-objection certificate from the project’s developer before registering a sale deed was possible.

This was a very unpopular but long-standing system which involved the payment of Rs. 25000 or upward, depending on where the project was located. This cost was usually shared by the buyer and the seller, and the removal of this system has direct cost-saving implications which the market welcomed whole-heartedly.

Another positive factor was the Government’s formal notification to the fact that 28 more villages would be included under the Pune Municipal limits. While such locations are under Gram Panchayat jurisdiction, they tend to be at a disadvantage in terms of reliable water supply, electricity and public transport.

The lack of full-fledged support from the Municipal Corporation for these facilities compromised the healthy growth of the real estate market in these areas. There was a definite increase in interest in these areas when this Government notification was issued.

As already mentioned, there were ups and downs in 2012 – but throughout, Pune’s property market proved to be very resilient. Even as sales in neighbouring Mumbai plummeted, those in Pune continued to be healthy. During the festive season, no other city in Maharashtra showed as many new residential sales that Pune did.

Sereno at BanerThe demand from the NRI community was considerable in 2012. This could be gauged by the number of inquiries that came from Indians living abroad which were followed up by local relatives or representatives. During the festive period, many NRIs visited Pune personally to close the deals.

These were all positive factors, but what really pulled Pune’s property sector through was the growing number of investors on the market. In 2012, our analysis of the market showed that only about 40% of all apartments in Pune are currently being bought and used by actual end users – flat owners who are personally using their properties for occupation.

35-40% of the remaining flats are held by investors for renting out to the growing transient working population in and around the city’s IT hubs. The remaining 15-20% of the flats are standing empty. These are either bought by NRIs who intend to move back to Pune in the near future, or are being held by speculators looking for a profitable resale.

As a result of the high investor interest, areas that provide ready access to the city’s main IT hubs – such as Baner, Wakad, Undri, Wagholi and Kharadi – showed the highest demand and therefore property rate appreciation. The projects launched in these areas spanned the entire spectrum of residnetial configurations, from budget homes to luxury apartments.

While the premium category was largely patronized by NRIs and end users from the higher management business segment, investors from within and outside Pune made a beeline for the budget and middle income housing segment.

Based on the activity levels of 2012, there is every reason to believe that 2013 will be a positive year for Pune real estate. When comparing the Pune market with Mumbai, the advantages of relocating to or investing in property in this city continue to be very evident.

We expect the demand for premium homes to slow down to some extend until the middle of 2013. However, as long as developers continue to accept and factor in the pricing limitations of this unique market, affordable and middle class homes will keep generating healthy demand throughout the year.

Pune Real Estate: Fast-Track Growth

Kishor PateKishor Pate, CMD – Amit Enterprises Housing Ltd. And Hon. Secretary – CREDAI (Maharashtra)

The city of Pune is now a sparkling jewel on the crown of Indian real estate. It has undergone a constant transformation over the past few decades – from a simple, rural community to a military base, and on to one of the most sought-after cities for property.

Industrialization and Expansion

Pune was radically transformed when the effects of rapid industrialization took hold. The Maharashtra Industrial Development Corporation (MIDC) paved the way for this advancement; real estate development followed, with residential properties gaining more and more demand even as the groundwork of business offices was put in place.

A city’s progress involves ever-increasing workforce, which in turn requires housing. Residential property development brings with it the need for commercial establishments where people can buy their supplies or spend time in leisure activities. As Pune became more industrialized, the market for residential, business and retail property grew simultaneously. The die had been cast, and the city’s growth curve was ascending constantly.

Business prospects and job opportunities increasingly abounded in Pune, causing more people to move in from other cities and rural areas. It became a city where people could find work, earn their living, educate their children and retire in peace and prosperity.

The Role of the IT Industry

Property development in Pune quickly increased with the increasing presnece of IT/ITES busineses. There was an upsurge in the demand for commercial real estate, since IT companies needed places of business. As this industry was established in Pune, economic advancement came rapidly.Various IT companies – both from the country and from around the globe – began to set up their offices in the city.

Prominent IT-related commercial projects and catchments  soon became part of the cityscape, with some of the most prominent being the Hinjewadi IT and Software Park, Magarpatta CyberCity and the EON IT Park in Kharadi. This evolution also brought with it  an evolution in the demographics of property buyers in Pune.

The Information Technology industry attracts and grooms ambitious, technologically-inclined young adults who invariably end up drawing sizeable salaries. More and more NextGen people could afford better housing options, leading to increased demand for upscale residences in Pune.

Astonia RoyaleBurgeoning Residential Development

Pune’s territory expanded in order to deal with the rising demand for more residential areas and commercial centers. A number of the adjacent towns and settlements such as Baner, Kharadi, Wakad, Warje and others were included within its city limits and became legitimate parts of the city.

These previously insignificant parcels of land, particularly in sites along the Solapur-Nagar Road Bypass, soon turned into real estate goldmines to which property development made a beeline.

Today, Pune’s progress has made it an ideal location for local property developers and construction companies. HOwever, it has also attracted national and international builders who are keen on catering to the ever-growing demand for quality housing in Pune.

Housing Trends in Pune

Pune was once a city in which most of the demand was for single-family detached houses. As the city’s population expanded, apartments and duplexes became increasingly common. With the proliferation of the nuclear family concept, two, three four bedroom apartments are now extremely popular.

The city has come a long way from its traditional residential configuration – the multi-family ‘wada’ (several individual residential units built around a common courtyard.) Today, most of these have been replaced by apartment blocks – though many of Pune’s more traditional area still have’wadas’.

Today, Pune’s citizens have greater purchasing power than ever before, and their requirements and demands have risen proportionately. Also, the easy availability of home loans has made the goal of buying property much more accessible.

There is definitely a growing market for affordable apartments as well as upscale residences. An increasing number of people aspire to own their own homes these days rather than taking the rental housing option.

Amit Astonia Royale AmbegaonResidential Property Markets

Today, Pune’s major residential property markets include Kalyani Nagar, Viman Nagar, Kharadi, Wanowrie, Baner and Undri. While Kalyani Nagar and Viman Nagar are quickly reaching saturation point, areas like Wanowrie, Baner and Undri still have a lot of development potential.

Baner has quickly become one of the primary hotspots for growth, since it offers several location benefits. It has a perfect blend of residential demand influencers. In the first place, it is close to the IT Park at Hinjewadi, which generates a lot of demand for quality housing from IT/ITES professionals.

Baner’s proximity to the Mumbai-Pune Expressway as well as the Mumbai-Bangalore highway is very significant. Aundh, University Road and Deccan Gymkhana are within easy commuting distance, which ensures that buyers into this project have easy access to entertainment, healthcare and shopping facilities.

Upscale residences can be primarily found in Koregaon Park, Boat Club Road, Kalyani Nagar, BT Kawade Road and Sopan Baug. Homes located in Kothrud, Warje, Undri, Wanowrie, Mundhwa, Baner and Hadapsar are the preferred destinations for middle-income home seekers. However, many of these areas now also have premium housing options available.

Investor Profile

Pune’s investor market for residential property is steady and growing constantly. Compared to Mumbai, demand for residential property in Pune has remained quite robust. In fact, property prices in the city have risen by at least 12% in most locations with good infrastructure over the last six months.

There is a lot of investor activity, but Pune’s residential property market is still riding primarily on genuine homebuyer demand, with sales in this segment amounting for almost 62% of the overall sales. The rest comes from investor sales.

The investor profile is quite interesting because of how it changes according to location. In areas like Baner, Wakad and Hinjewadi, most of the investor enquiries come from Mumbai.

However, we noted that in the case of Astonia Royale and Bloomfield – our projects in Ambegaon – the highest investor demand comes from cities like Satara, Sangli, Kolhapur and Shirval.