If the changing skyline is used as a yardstick for measuring change, Pune has certainly taken a quantum leap in the last 20 years. Instead of modest concrete structures, skyscrapers now dot the skyline of the city. But as far as end consumers are concerned, more and more of them are finding it difficult to own a house in Pune. However, consumers can take heart from the enactment of the Maharashtra Real Estate Regulatory Authority, which promises to usher in transparency in the sector.
In the early 1980s, most houses in Pune were modest 3-4 storied structures, concentrated around the old Pune and Pimpri-Chinchwad limits. For many, Baner was still a village with green fields and trees. In the neighbouring Pimpri-Chinchwad, Wakad, Hinjewadi, Kiwale and Thergaon were almost unchartered territory. Houses or properties were purchased as units to live in, rather than as investments. Home loans were availed mostly by bankers, while people saved up to invest in their own homes.
Speaking to Pune Newsline, realtor Rohit Gera recalled how properties in Kalyani Nagar were worth Rs 550 per sq feet in the 1990s, but are worth over Rs 10,000 per sq feet now. Liberalisation acted as the first catalyst of change for the housing industry, as the government as well as financial institutions started encouraging the process of taking loans to buy property. Another important change was the builder being mandated to provide civic amenities such as roads and gardens to their customers.
Ground Floor Up
Shrikant Paranjape, president, CREDAI Pune Metro, said that earlier, customers preferred ground-floor apartments. “Now, the customers’ sentiments are completely different, with top floors being preferred over lower floors…,” he said. The first highrise in Pune was sanctioned in 1996, with Paranjape talking about Woodlands as their first highrise project. In 2006, the height restrictions on buildings were removed, and this paved the way for skyscrapers to tower over the city’s landscape.
Tectonic change
The IT boom in the late 1990s resulted in a tectonic shift in the real estate industry, both on the supply and the demand side.
Gera and Paranjape both talked about the emergence of young customers, who were more demanding and decidedly more aware of their rights. Thanks to these customers, builders started purchasing private agricultural land to form land banks. The white collar population also stretched the limits of the city beyond the 27 fringe villages.
The real estate industry came under the ambit of environmental legislations in 2006. Ravi Karandeekar, a Pune-based real estate blogger, said these laws were introduced to contain the harmful effects of the construction industry. The year 2006 also saw the introduction of special townships, with 10 of them being set up in Pune. Gera talked about how the definition of luxury also changed, with newer and more sophisticated additions, like jacuzzi and swimming pools, becoming almost a necessity in housing projects. Another serious change was the way in which the end customer raised money to buy a house. More and more consumers started opting for a higher loan component, with some banks providing as much as 90 per cent of the price amount in a loan.
The subprime crisis in the US, which saw large-scale default by borrowers, did cast its shadow on the Indian market, but Indian financial institutions managed to avoid its devastating impact.
Loan amounts have also increased substantially. Realtors talk about how in the 1990s, a 2 BHK flat would require a loan of Rs 5-6 lakh, today, such a flat may entail a loan worth a few crores.
Unsold inventory
Studies by multiple agencies put the unsold inventory in Pune city at over 45,000 apartments by the end of 2016. “Percentage wise, the unsold inventory might not have gone up much, but number-wise, it has gone up,” said Gera. In Pimpri-Chinchwad, the issue of unauthorised constructions has assumed serious proportions. Some operators, taking advantage of the need for cheaper homes, have managed to make money, but left consumers in the lurch.
The relationship between the builder and the customer has also changed drastically. A cursory look at the websites of consumer courts reveal that more than 70 per cent of the complaints are against realtors. While industry bodies like CREDAI blame the ‘fly-by-night’ operators, Karandeekar and other activists say that by ‘cartelisation’ of the trade, builders have an upper hand in the matter.
MahaRera comes into effect
The introduction of the Maharashtra Real Estate Regulatory Authority (MahaRera) and the Goods and Services Tax (GST) are cited as the two most important pieces of legislation which, hopefully, will change the course of the trade.
The Real Estate Act came into force in May, with a promise of protecting the rights of consumers and ushering in transparency. It has been described as a consumer-centric Act and the beginning of an era when the ‘consumer will be king’. Under the Act, mandatory registration of housing projects and real estate agents is a must. Builders also have to deposit 70 per cent of the funds collected from buyers in a separate bank account for construction of the project. “This norm will ensure timely completion of the project as the builder can withdraw funds only for construction purposes and not for anything else,” said activist Deepak Vichare.
Sources in the housing and urban affairs ministry said RERA is not a law with retrospective effect since it covers all projects, which have not got completion certificate by May 1, 2017. Secondly, the penal provisions come to effect only after the law came to existence.
