Pune growing on all sides

As per Times of India, all periphery areas are growing by leaps and bounds. The builder lobby is heavily advertising their wares in their weekend supplement. Hiring fesh graduates to cook up fancy stories is a good way to monetize their paper while charging exhorbiant rates.


The coming of the Information Technology culture has been high-octane fuel to the speed of property development in Pune. More and more land was required to accommodate the various national and international IT companies that finally led to the formation of such landmarks as the Hinjewadi IT and Software Park. Once this process was begun, there was no stopping it. Tempted by the sudden prosperity and opening up of the job market, job seekers from other cities made Pune their final destination of ambition's pilgrimage - the new Entrepreneurial Promised Land. The development is spreading to many different areas in Pune, giving rise to potential real estate hotspots.
Since the demand for commercial and residential space was growing hand in hand, many outlying villages along the major expressways and highways were officially added to Pune's geographical territory. Areas like Baner, Pimple Saudagar, Wakad, Kharadi, Warje and others emerged as undisguised gold mines on the realty scene. The above-mentioned areas, along with more centralised locations such as Solapur-Nagar Road Bypass, have witnessed an upsurge in property development.
Mohammed Aslam from Jones Lang Lasalle Meghraj says, "On the property market, the phenomenon of expansion and development is known to be a self-perpetuating one - prosperity is never confined to a single locality. It positively affects its immediate surroundings. A special case in point would be Koregaon Park. Th e presence of the Osho Commune has given rise to a level of exclusivity that is still hard to match in the rest of the city. The number of Category A residential developments is now spilling over into its surrounding areas, as well. This has been eminently true in Pune's overall property boom, as well. Using the central part of residential and commercial Pune as a reference point, development is distinctly visible on all four sides of the compass."
He adds, "Beginning at Aundh, we have the more suburban areas of Baner, Thergaon, Pimple Nilakh/Pimple Saudagar, Wakad and Aundh displaying accelerated rates of development to one side. From the perspective of Kalyani Nagar and Koregaon Park, the areas of Vadgaon Sheri, Mundhwa and Kharadi are receiving increasing favor from property buyers. Laterally, Wanowrie and Kondhwa have spawned minor property booms at Hadapsar and Undri. Diametrically opposite, the development of Bibwewadi and Dhankawadi has led to greater attention being focused on Katraj and properties along Lullanagar Road and Kondhwa-Katraj Road."
Yogendra Chordiya of Prithvi Estates, a local property dealer says, "Areas like Kondhwa, Pashan, Hadapsar, Talegaon, Chakan Mundhwa, Wagholi have developed a lot. Talegaon is good for second homes or weekend homes. But other areas have been for permanent buyers. Malls have come up in Kondhwa. The residential rates have increased from 2000 to 4500 sqft in Kondhwa. Pashan is developing, as it is close to Hinjewadi IT Park. In Hadapsar, Amanora Township is coming. Chakan is also getting revamped due to the upcoming airport. Areas like Mundhwa, which is near Koregaon IT Park has also developed."
Milind Sant, an estate agent from Pune says, "Pashan is a good area, which is near Hinjewadi IT park. Talegaon is viewed as a second home or weekend home destination. But I think in the next five years, it can be a hot destination for permanent buyers, as the industry is developing there. As for Chakan, it is a potential option for investing, as the new airport is coming in Chakan.
“I think the Pune market is now stable, but it will increase further. So investing in Pune today will give good returns in the years to come," he adds.

BMC plans ot hike property taxes

Finally property dealers are acknowledging that property prices are beyond reach in Mumbai along with the fact that there are too many apartments for sale with no buyers at these prices.

The BMC’s proposal on property tax would be detrimental to the market, says Sandeep Sadh

After the inflation jumping to 7.57%, Mumbai, the financial hub and the dream city for many is in for a rude shock. The BMC plans to get stringent about collecting property tax upto 83.5% on residential properties and 112.5% on commercial properties which, after rebate of 40 to 60%, becomes nearly 30% of your rental income. As per the recent news this is payable every six months by the property owner.
The BMC has taken the twodecade-old formula of accounting for taxation this time around and the simple logic given so far is that they are going by the book, even if the book is 20 years old.
While implementing these policies the BMC must look at the general interest of the public and consult professionals in this regard.
This will add to the burden of higher taxation, inflation, crumbling infrastructure, spiralling property prices and high interest rates. There will be a lesser yield on investment and property transactions done purely from an investment perspective.
Mumbai being the financial capital of India, and the fastest growing city in Asia has an inflow of both local Indians and expatriates who typically come to work in Mumbai for a short span of two to three years.
They are looking for rented accommodation and sign up a leave and license agreement for any period between one to three years generally.
With BMC now planning to impose nearly a three-month rent as tax to the owners per year, the rents will go up by nearly 30%, which is totally absurd.
This is an excerpt of a recent article, which says, "Rentals at many places in the city have gone up by 100% to 200%, and yet we don't get our share of that profit."
Why should the BMC be given a share of profit? Firstly, it is the investors or property owners' hard-earned money and they have the right to make profit and they are paying income tax.
These are policies which are already two decades old and based on the old rent system.
Why cannot an intelligent system be brought in, which should be based on keeping taxes both the licensor and the licensee are already paying?
The BMC policies are already known to be notorious for taxing year on year even if the property is not rented. There is no rationalisation on the taxation.
I was speaking to a Consulate General and they have called off a transaction for a residential property as the owners wanted to place the onus of taxation on the Consulate.
The Consulate General said that this kind of irrational taxation will be bad for Mumbai's reputation as companies who will want to relocate their expatriates will find it difficult to pay such higher taxation.
He added, "Nowhere in the world is taking an apartment on lease such a task and with such higher prices and taxation it is a problem."
They are already thinking of shrinking the size of expatriates.
The city is anyway ill-maintained. With crumbling infrastructure and visionless policies the BMC is placing itself into a one-sided high- handed body to only collect money and have proportionately less accountability and contribution to the city's welfare.
Mumbai is already one of the most expensive cities in the world to live in and to place on record the seventh most filthy city as well, it is thanks to the BMC. How do you expect people to pay such high rentals to survive after taxing them and what do they get in return?
What happens to the tax if lease agreements are terminated mid-term? With higher taxes more and more people will opt out of Mumbai and find out ways and means to circumvent taxes and therefore increase corruption.
The BMC and the government should find out ways and means and take more and more property owners and individuals and companies renting out properties in confidence before announcing such policies.
The BMC is looking for revenue but what it does not realise is that it cannot be done at the cost of individuals who spend their hard-earned money to invest in properties only to lease out for income and they are already paying all sorts of taxes to do so.
The annual return on investment on residential properties has already gone to 4% owning to higher property prices in the city.
Not each location gets a great rental value and with extra tax liability the government is only looking at closing the doors for the investors who are looking to invest in real estate.
If there are no returns in the property market why should investors look at buying it? This will impact the sale of properties and all mutual funds, REITs and other real estate related transactions will also be impacted. This in turn will also impact the property market dramatically.
In the past three years, the rental values in Mumbai have gone drastically higher ranging from 30% to 200%.
Many people started buying their own apartments as the rental values would be nearly 50% of their EMI.
Inventories in Mumbai are already building up, there are more and more apartments vacant and a lot of property owners are willing to give 10% to 25% discount on quoted prices due to a little slow down.
The scare of huge taxation will also impact this further as none of the licensors / licensee will want to be a part of any further hike or taxation.
Earlier, the tussle used to be between the licensor and the licensee to get a deal done; now both will have to unite and find ways to fight out with the BMC.
Highlighted below are the taxes which both the licensor and the licensee pay in any case for renting out properties, besides other expenses like maintaining the properties, painting, polishing, annual maintenance contracts, furnishings, paying VAT etc on all household goods, service taxes on labour and so on.
Fringe Benefit Tax payable by the employee in case of a company lease - 20%
Service Tax - Presently only on commercial property - 12.36%
Property tax on leasing/licensing (more in commercial property)
Stamp Duty and registration fees
Income Tax
Society outgoings/non - occupancy charges paid by the owners
Municipal taxes on property in general.
This typically means, that the BMC wants to penalise the investors who invest in real estate.

The richest Karntaka political candidate

Prasad Reddy, BJP, BTM Layout constituency:
Total value: Rs 313 crore

He has cash of Rs 12,38,000 in his name. He has declared Rs 27,52,165 as his bank balance which he jointly holds with his wife. Apart from this he has deposits of Rs 36,21,730 spread over 12 different accounts.

Prasad Reddy also says in his affidavit that he has 14 cars worth Rs 1.03 crore and has jewels estimated at Rs 9 17,250. He has silver articles worth Rs 12,31,000 while his wife owns 3.1 kg of gold jewellery estimated to be worth Rs 37,91,300.

He has non-agriculture land worth Rs 143.62 crore while he has a share in two commercial buildings which are estimated at Rs 142.02 crore. This includes a house which is under construction at a site in Bommanahalli which is spread over 452,094 sq ft. He also owns apartments at Koramangala worth Rs 14.77 crore while his wife has property worth Rs 54.10 crore. He also owns a farm house jointly with his wife which is estimated at Rs 60 lakh.

The candidate says he has loans in his wife's name worth Rs 18 crore in various bank

It's Raining Freebies As Builders Try To Beat Recession

* Buy a premium apartment from Kumar Builders and go on an all paid week-long trip for a family of four to Switzerland .
* Despite the hike announced by the city builders DSK has offered 55 of its apartments in the current schemes at old rates.
* Mont Vert has offer for incentive customers who bring in another buyer.
* Many builders are offering free white goods - air-conditioners, refrigerators, washing machines, modular kitchens.

Pune's developers and builders may not be willing to admit that the real estate market is in a slowdown mode. But check out some of their recent initiatives to woo customers and it becomes clear that the city builders are selling at discounted rates. Thus even as there is no dent in the price line which they continue to hold on diligently, potential clients are surely being wooed with a whole lot of freebies that have flooded the market of late.

These can be as extravagant as a trip for four to Switzerland and as unassuming as lining up the housing loans. There is an array of freebies that can be pegged somewhere in between these two instances, ranging from free white goods and stamp duty waiver to even offers to pay the first couple of EMIs on behalf of the buyer.

Naresh Malkani, CEO indiaproperties.com describes the scenario of the last few months as a "no-deals time". Cushman and Wakefield in their latest report on Pune residential scene have also noted that sale transactions are expected to see a further slowdown which "may force certain developers to offer better deals or free amenities to incentivise purchaser and ensure cash flow for their projects." The point seems to have been well taken by the builders.

"We are offering a trip to Switzerland for seven days and six nights for two adults and two children for those buying a flat in our premium projects where the cost is over Rs one crore. In projects that are lesser in price we have the same offer with Malaysia being the destination instead," says Prabha Shankar, vice president, Sales, Kumar Properties.

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Mont Vert Homes that had offered a discount of Rs 50-100 on Gudi Padwa day are now extending this scheme. " Whenever the price is needed to be hiked because of increase in prices of input materials, we offer small incentives so that the customers do not feel disheartened," says Manish Kaneria, director of Mont Vert Homes.

"We also have a scheme called `Mont Vert Customer Appreciation' in which if one of our customers gets along another potential buyer then he is offered incentives," he adds.

DSK has been advertising that it's thrown open 55 of their apartments at rates prevalent before the Promoters and Builders of Pune (PBAP) announced a price hike. Says Sudesh Kosumbkar, manager at DSK, "Rates in our projects are slated to go up significantly after the hike. We decided to keep 55 flats open at old rates for the benefit of customers."

According to S Motwani, a city real estate broker, goodies and early bird discounts are fast becoming the rule rather than the exception: "The objective is to of course pump up sales and motivate the customer to buy."

Pune shining on PBS

When Jason Maloney, freelance producer of news and documentary, started his research on the city that most aptly reflects the changing face of the country for a documentary for US-based Public Broadcast Service (PBS), he zeroed in on Pune. "We were looking for a city that was on the growth highway, but not spurred only by the IT. Also the city needed to be not as well known as Delhi, Mumbai or Bangalore since those have been done too many times for American audiences," said Maloney who arrived in Pune on Sunday night with Kira Kay, his wife and also a freelance producer and Paul Beban, Correspondent HDNet/ World Report.

According to him, Surat was in the running but it had only the diamond trade to speak of while Ahmedabad was interesting but lacked in some vital aspects. Pune, with its rich educational and cultural background and a recent survey that put the city on the 6th position in terms of per capita GDP growth fitted the bill perfectly.

The team of three will be filming Pune in its various new avatars before they fly back to New York on Saturday to put together two 30-minute documentaries on the city. With the focus being mainly on the growth of the middle and the upper class in India, the trio, that did extensive research before they arrived in the city, have already scoured Hinjewadi, traveled to a remote village near Pune tracing the roots of a budding IT professional in the city, met up with a stock broker and chatted up the members of the nascent Professionals Party of India.

On the agenda is also a visit to Magarpatta City, Bharat Forge and meeting up with more of Pune's burgeoning and aspirational middle class. "The attempt is to show a day in the life of Pune. As we talk of the city's growth we want to do it through the stories of the people who are crafting this change and then back it up with statistics and so on," said Kay.

She added that the huge billboards selling apartments that greeted them as they got off the Expressway followed by the sight of the mammoth construction going on in the city further reiterated their opinion that Pune is certainly a new city in the making. "It seems busy and bustling. Back in the US it's comparable to Atlanta both in terms of size and dynamics," added Beban.

Before the Pune visit the team had been to Tamil Nadu where they met up with Gurcharan Das in Coonoor and had a two-hour discussion with him on Indian economy.

"He prepared us on what to expect. Because of that we haven't had too many surprises, certainly no unpleasant ones," added Maloney. Coincidentally, all three of them are receiving the National Headlines award this Saturday in the US for different reports that they covered recently in Philippines and Uganda.

The first documentary is expected to be aired around mid-June on `Now on PBS' while the second one will be broadcast on HDNet World Report in July.

Mysore losing its serenity to the IT culture

SC stays construction on forest land

New Delhi/Mumbai: Over one lakh flats in Mumbai which were declared illegal by the Bombay high court on the ground that they were on “forest land’’ will not face any coercive action until Augustend, the Maharashtra government promised in the Supreme Court on Monday.
But the good news ends there. Discarding the plea of a number of builders developing plots on such “forest land’’ to continue with ongoing construction activity at their own risk, the SC ordered that not a single brick be added to the unfinished structures.
“There shall not be any more construction at these sites,’’ ordered a bench comprising Chief Justice K G Balakrishnan and Justice M K Sharma. This means that as of Monday, there will be a status quo, and builders will not be allowed to add anything to their underdeveloped real estate projects.
The order will adversely affect ongoing projects on 1,000 acres of land in Kandivli, Borivli, Mulund, Bhandup and Ghatkopar. There are about 150 large projects being constructed by builders, which market sources value at Rs 25,000 crore.
The affected developers include Godrej and Boyce Manufacturing Company Ltd, Nanabhai Jeejeebhoy Private Ltd, Atithi Builders, Nirmal Lifestyle Ltd, Nirmal Developers, Nirmal Holdings Ltd, Runwal Constructions, Bitcon India Infrastructure, Hill Residents Welfare Association and Scrader Duncan Ltd. STATE’S BAILOUT PLAN
As per existing norms, if there is a violation of the Indian Forest Act, the violator has to pay a huge sum—comprising the net present value, the cost of land and the cost of compensatory afforestation—which works out to between Rs 15 lakh and Rs 20 lakh per hectare. In a move to protect the interests of innocent flat buyers, the state forest department has proposed a new scheme whereby a flat owner on private forest land will have to pay a nominal price of 70 paise per sq ft. “We will submit our scheme to the apex court and it is up to the court to take a decision,’’ a forest official said on Monday. Cannot condone illegality on time grounds, says SC New Delhi/Mumbai: The history of the forest land case dates back to 1957, when the state forest department notified about 300 plots of land as forest land. The state government enacted the Maharashtra Private Forest (Acquisition) Act which came into force from August 30, 1975. Under this law, the state was to acquire all private forest land.
More than 25 years later, an NGO, the Bombay Environment Action Group, moved the HC accusing the state of sitting on the law and taking no action to acquire the 305 plots that the state forest department had notified.
In 2006, the BMC had issued a stop-work notice to the projects on these plots but the developers had gone ahead with the construction.
The builders contended in the SC that there were errors in the HC order. They said while the forest department had declared certain lands as private forest land, no notices were served on them before issuing the notification. Secondly, they said, permissions for non-forest activities and construction of residential buildings were granted decades ago when the lands were cleared for residential use as per the development plan approved in 1967 and 1981. They said at no point did the lands under dispute enjoy the character of forest land, therefore, it was never private forest land as was claimed by the forest department.
Senior advocate Fali S Nariman argued that the state government had done nothing for 33 years after the law was passed and suddenly, it now seemed that the owners of the land would lose everything. He said the plots were allowed to be developed under town planning laws.
Solicitor general G E Vahanvati, appearing for the state, said the Maharashtra government would not take any coercive measures until August-end and said the matter required adjudication before the Forest Bench of the apex court.
Senior advocates K K Venugopal and A M Singhvi argued that the builders who had invested hundreds of crores of rupees in these projects be allowed to carry on with the construction activity at their own risk.
The bench remained firm and said, “We will allow the status quo. We will not allow any further construction to go on. Going by the definition, it’s a case pertaining to classification of forest land. If an illegality had been done 30 years ago by diverting the forest land, the court cannot condone it because of the passage of time.’’
The court, while issuing notice to the Maharashtra government, fixed the matter for further hearing on August 22.