A Review of PCMC Property Market in 2016

Anil Pharande

As the new year dawns, India's real estate market has begun navigating the potentially choppy seas of 2017 with a lot of uncertainty. When it comes to the past year, it is safe to say that nothing went as anticipated for the property market. The hoped- for recovery in the residential sector did not happen, and the Government's unexpected demonetisation move in early November put paid to any chances for a last-minute turnaround.

Robust economy: Through the entire gamut of churn and setbacks in 2016, only one city's real estate market managed to hold its own and even achieve some modest growth. West Pune, with its dominant market PCMC (Pimpri-Chinchwad Municipal Corporation), has always been a unique as it rides on an unbeatable trinity of residential demand drivers - manufacturing, Information Technology and the services sector. 

This equation has perennially acted like a healthily diversified investment portfolio, with the inherent strength of one or two of these sectors compensating for the occasional de-growth in the others. As always, this factor came to the rescue of the PCMC residential market.

Employment still drives housing demand: While the manufacturing sector in PCMC has always been robust thanks to the MIDC belt, continued growth in IT and the various services streams additionally ensured that the employment graph remained strong. With job creation continuing to drive the demand for homes, Pimpri-Chinchwad Municipal Corporation crossed the finish line of 2016 ahead of the other major cities - with room to spare. Though the demand for prime and luxury housing has remained somewhat subdued, budget and mid-income housing saved the day. If anything, 2016 amply illustrated that the middle class in Pune and PCMC has become extremely choosy about its home purchases.

Unsold inventory: Many of Pune's peripheral areas - the hot investment favourites of 2014-15 - saw a depressing build-up of unsold supply even in completed projects. The lack of support infrastructure and known deficiencies such as inadequate or non-existent water supply put paid to many a developer's hopes of selling his stock solely on the basis of enticingly low rates and freebies.

Of course, every large city in the country has its share of unsold inventory today, either because of muted market sentiment, the fact that a lot of supply is still in the early stages of construction, supply in the wrong locations, or unrealistic pricing of certain projects by developers. In the case of West Pune, most of the non-selling oversupply has been in locations lacking infrastructure. In PCMC, the supply overhang is largely from smaller developers without a good track record and credibility on the market.

Evolving buyer preferences: Diwali, the traditional period for increased home purchases in Pune, saw very few takers for inferior projects in inferior locations. Even the prospect of acquiring larger homes than their current ones did not draw mid-income buyers to lagging locations. On the other hand, there was a distinct uptick for smaller but 'high-performance' homes in properly connected areas. The accent was on a high degree of facilitation within such projects.
 
Price corrections: With 2016 bringing a slow but steady erosion of property pricing in most of its markets, some of the previously unaffordable locations in West Pune / PCMC have once again become attainable to homebuyers. If Budget 2017-18 brings the hoped-for benefits for first-time property buyers and the RBI rolls out lower interest rates, there is every reason to expect a major revival in home buying sentiment - and it is the superior locations which will see the highest demand.

Outlook for 2017

The trend of the real estate market in Pune and PCMC performing against the larger odds will definitely continue. Not only do the twin cities have all the right economic and demand drivers firmly in place, but their inclusion in the 100 Smart Cities program will only increase the interest from multinational companies to set up and expand operations here. This will, in turn, increase inward migration and fuel greater demand from investors, even as local end-user demand continues unabated.

While the bulk of demand today comes from end-users, investors are still very much a force on Pune's property market. The city offers several budget bandwidths and property typologies into which one can invest. Well-timed and properly researched real estate purchases can reap very satisfactory returns.

However, it should be borne in mind that not every kind of investment pays off equally in Pune - one needs to know precisely how each sub-market works, what it responds to and where the demand is headed. A poorly-judged property investment can be a disappointing proposition. Particularly, investors need to be wary of the cheap, potentially illegal 'gray market' residential constructions happening on the outskirts.

Content by 

Anil Pharande, 

Chairman, 

Pharande Spaces

Mamata Hands Over Keys to Refurbished Home Owners of Bonhooghly Tenement Project

The West Bengal Chief Minister, Mamata Banerjee, recently handed over keys to the owners of the 'Bonorini', apartments, the public-private partnership initiated under Bonhooghly Tenement Project amidst much fanfare at Barasat, North 24 Parganas.

The project was jointly taken by Refugee Relief & Rehabilitation Department, Siddha Group & Eden Realty Group.

All the apartments have also been upgraded by providing tiled flooring instead of cement finish. Walls are having Plaster-of-Paris (POP) finish instead of regular whitewash. The lobby and staircase have been made with Kota stone instead of regular cement finish.

All these upgrades have been provided at no extra cost as a part of the CSR initiative of Siddha Group and Eden Realty Group in order to improve the quality of life of the inhabitants. The project was completed on time.

"We are very happy to be a part of this unique initiative undertaken by the Government of West Bengal. We have joined hands with Eden Realty and completed the project on time," said Sanjay Jain, Managing Director, Siddha Group.

"The challenge of earning confidence of all families and exceeding their expectations by delivering homes in record time has been the proudest moment of my career. We congratulate the State Government for taking this initiative and reposing faith on us in completing the project. This is the pathfinder for all future redevelopment projects," said Sachchidanand Rai, Chairman, Eden Realty Group.

The Refugee Relief & Rehabilitation Department initiated a project in 2006 to rebuild the dilapidated structures in Bonhooghly Tenement Scheme since they had become unsafe for all families. Through a public auction, Eden Realty was appointed as the PPP promoter and was awarded the project. Sadly, for six years, the project could not take off due to opposition from majority of the inhabitants of Bonhooghly Tenement Scheme.

In 2012, the present government led by Chief Minister Mamata Banerjee floated a new scheme for rehabilitation of these inhabitants which was embraced by all of them to pave the way for development of the project.

Real estate developer Siddha Group joined hands with Eden Realty to execute the project initiated by the Refugee Relief & Rehabilitation Department to rehabilitate about 800 families living in Bonhooghly Tenement Scheme.

Around three years ago when the project was floated, the area had around 540 families living in dilapidated conditions with very poor infrastructure and no sanitization. Now the project houses modern four-storied building with 34 blocks, each apartments covering 644 sq ft area with modern infrastructure and facilities which has been long overdue to the inhabitants. 

The government has transferred these flats to the inhabitants free of cost and will not charge stamp duty fee for registration, a press release said.

Anuj Puri Leaves JLL, Ramesh Nair to Lead India Business

Anuj Puri

Mumbai  / Singapore – Anuj Puri, Chairman & Country Head of JLL India, today announced his decision to leave the Firm, simultaneously confirming that Ramesh Nair will take over as CEO and Country Head. 

Ramesh Nair will assume his new role on 1st March 2017. He will report to JLL’s Asia Pacific CEO Anthony Couse.

Anuj Puri joined JLL in 2007 when his company Trammell Crow Meghraj (TCM) merged with the Indian arm of global real estate firm JLL. This formidable partnership gave rise to the largest real estate services company on the Indian subcontinent.

“It’s been an incredible 10 years at JLL, but now is the time to step back and reflect before moving in a new direction,” says Anuj Puri. “The company has great leaders who are now at their prime, and it is to such a leader that I pass on the baton. Ramesh Nair has, over the years, taken everything he undertook from strength to strength and has earned his laurels many times over. I’ve worked closely with him for many years, and am confident that he is perfectly placed to spearhead JLL and take it to several new levels.”

Ramesh Nair

Ramesh Nair’s leadership potential and track-record for business success is well-documented at JLL India. He has a strong reputation for leading teams across the Firm’s various business lines, and for his focus on business growth and the advancement the team members that drive it. A long-term thinker, he has amply demonstrated his capabilities for talent development, strategy and amplification of the Firm’s core values. He has managed some of the largest P/Ls within JLL India, and has extensive experience in leading teams, change management and servicing domestic and multinational owners, occupiers and investors across multiple asset classes and geographies.  

“It’s an absolute honour to be taking over as head of JLL’s India business,” says Ramesh Nair. “I’ve had a fascinating journey with the Firm over the past 17 years, and would like to thank Anuj as well as the regional and India leadership teams for their support and confidence in me to lead JLL, in this exciting phase in India’s economic growth and development. Anuj is a legendary figure within Indian and global real estate, and filling his shoes will certainly be a big task. However, I look forward to working more closely with our clients and teams to produce outstanding outcomes and drive growth to the next level.”

As CEO and Country Head, Ramesh will be responsible for overall direction, strategy and growth of JLL’s India business. He joined JLL in 1999, has risen swiftly through the leadership ranks and has been a member of the India Leadership Council since its inception in 2008. In 2013, he was promoted to the role of Chief Operating Officer, India and became an International Director in 2014.

“Anuj Puri has been a great asset to JLL over the past 10 years, and has imparted a distinct identity to the Firm due to his large industry stature and contributions. On behalf of the regional and India team, I thank him sincerely for his immense contribution,” says Anthony Couse. 

“We are fortunate to have a great depth of talent among our India leadership – and an eminently qualified successor in Ramesh Nair, who has been hand-picked and endorsed by Anuj and the regional leadership. Ramesh is known for his persistence, drive, resilience, and energy which he brings to the Firm. I look forward to working with Ramesh closely – and to seeing him put into action exciting new growth plans for our India business, which is almost INR 3000 crore in size," he further adds.