Kishor 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.
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.
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. 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.