Tag: Chairman – Pharande Spaces

How Pune Will Gain from Model Tenancy Act

 By Anil Pharande, Chairman – Pharande Spaces

The much-needed Model Tenancy Act has finally got the Cabinet’s nod and thereby brings on a new era of regulation for rental housing. Until now, India’s housing policies have mostly been about home ownership and little attention was given to helping rental housing. But with India’s acute housing shortage, we need a sound rental policy to reduce this gap.

Though there is a big housing shortage in India, the vacancy level of homes has been going up. As per the last National Census, vacant houses comprised around 12% of the total urban housing stock.

In 2011, the year of this census, there were nearly 11.1 million homes and this has increased by 71% since the previous census in 2001. What data will the 2021 census show? We can only imagine.

The approval of the Model Tenancy Act will give a major facelift and structural boost to India’s rental housing market. The new rental laws have been simplified for accommodating the ‘fluid’ population migrating into our cities. The Central Act will be circulated to all states/union territories and they will need to adapt to it with fresh laws, or by changing their current rental laws.

The Maharashtra government recently confirmed that it will adopt policies which benefit the citizens at large. It remains to be seen how a city like Mumbai, which has a lot of informal rental housing, deals with it.

But some of the main features of the Central Act which can benefit both landlords and tenants are:

– The Act gives faster dispute resolution by creating a rent authority, a rent court, and a rent tribunal for the benefit of both landlords and tenants.
– In a big relief for tenants, the security deposit amount cannot exceed two months’ rent. Many students and young professionals that come to Pune for better opportunities will benefit greatly from this since they will no longer need to block large amounts of money with landlords here.
– The landlord or property manager cannot refuse to provide essential supply or service to the tenant in the rented premises.
– The landlord can claim compensation of twice the monthly rent and after that four times the monthly rent if a tenant does not hand over the property when the tenure is over or by order or notice.
– The tenant cannot sublet the property either in part or whole or make any structural modifications without a supplementary agreement with the landlord.

Rental Housing in Pune & PCMC Will Benefit

As per the Economic Survey 2018, Pune city alone has more than 2 lakh unoccupied homes which can easily accommodate around 8-10 lakh people. Jointly with Ahmedabad, Pune held the fourth spot in terms of vacant houses across the country – behind Mumbai, Bengaluru and Delhi.

The rising vacancies are, among other factors, caused by unclear property rights, difficulties in enforcing rental contracts, and low rental yields.

The survey also showed that at least 40-50% of the population in Pune’s urban areas stay on rent. This clearly shows that there is a huge demand for rental housing. If even a part of the unoccupied homes are released, it will not just solve the city’s housing shortage but also bring in private sector participation in rental housing.

High Rental Demand Areas

When implemented in Maharashtra, the Tenancy Act can make things much easier for tenants, landlords and property investors to deal in rental housing. There are several prominent areas in Pune and PCMC that have been seeing huge rental demand over the years.

Especially in PCMC, constant improvement of infrastructure in many areas have brought even more demand for rental homes. More affordable rental options will result in even greater demand. Areas like Wakad, Ravet, Punawale and Urse are in huge demand from people working in PCMC’s manufacturing and IT companies.

– Wakad: It has average monthly rentals of about Rs. 20,000 per month for a standard 2 BHK flat and is a very affordable option for people employed in the IT hub of Hinjewadi.

– Ravet: Monthly rent for a regular 2 BHK flat is about Rs. 17,000 in Wakad, which is very close to Pimpri-Chinchwad’s industrial belt and major IT areas. It also has many other types of commercial spaces which employ a lot of people.

– Punawale: It is very close  to Hinjewadi and PCMC’s industrial belts Chakan and Talegaon and so has a lot of rental demand. Average monthly rentals in this area which has integrated township options and a lot of scenic beauty is about Rs. 19,500 for a 2 BHK flat.

– Urse: It is close to major IT hubs, has very good road connectivity and is surrounded by industrial belts of Maval, Chakan, PCMC, and IT parks of Tathawade and Hinjewadi. Urse also has a brand-new luxury integrated township with much higher rentals, but a 2 BHK in a budget housing project has a monthly rent of around Rs. 10,000.

About the author:

Anil Pharande is CMD of Pharande Spaces, a leading real estate construction and development firm famous for its township properties in West Pune. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer of townships in West Pune. Anil Pharande is also President – CREDAI (Pune Metro) and a MahaRERA conciliation forum member

Construction Workers – Reverse Migration 2021 Vs 2020

By Anil Pharande, Chairman – Pharande Spaces

The second wave of COVID-19 is devastating – but this time, it has not caught the real estate sector completely unprepared. Developers learned many lessons from Lockdown 1.0.

No doubt, in the highly affected states in Maharashtra, the second lockdown has again caused an outward migration of construction labourers. The worst COVID-19-hit cities are Mumbai and Pune, where the bulk of real estate construction is underway. Nevertheless, the situation is not as grim as it was during the first lockdown.

In the Pune Municipal Region and Pimpri-Chinchwad Municipal Corporation, a large number of the migrant workers returning to their hometowns are from the hospitality and other services sectors. This is not surprising because hospitality has been hit very hard and its workers face an uncertain future.

It is impossible to predict when hotels, restaurants and resorts will be able to recover. With no revenues being generated, owners cannot afford to pay idle workers. Real estate, on the other hand, continues to sell. Recent reports by leading real estate consultancies confirm that in cities like Mumbai and Pune, no less than 65-70% of the pre-COVID-19 demand for housing has returned.

Since developers continue to generate revenues, they can also take many measures to assist their construction workers. Before the pandemic, over 43 million unskilled labourers were working in construction or building activity in India. Of this, more than 75% were migrant labourers from small towns and villages.

During the first lockdown, the fear of getting infected coupled with lack of work and affordable accommodation caused construction workers to abandon their sites and return home by any means available to them.

It was tragic and disheartening to witness. According to the Construction Workers Federation of India, over 70% of India’s migrant population went back to their hometowns in 2020. The real estate sector was caught unawares – developers lacked any prior knowledge and expertise to handle the situation.

By the time they began to improvise and re-strategize, most migrant workers had already left the cities. Thus, the impact of the pandemic on real estate construction was massive during the first wave.

Lockdown 2.0 – Lessons Learned and Implemented

During the current second wave, even as active cases have exceeded all calculations, the situation at construction sites is not as gloomy as it was in 2020. In the first place, there is no stringent lockdown across the country as was seen last year, when all construction work came to a total halt after the intense 21-day lockdown was announced.

At that time, millions of workers were left without work or wages. This time, in Maharashtra, construction using local labourers is allowed with provisos. Meanwhile, CREDAI (Confederation of Real Estate Developers Association of India) has assured construction workers not only of accommodation but also groceries, medical assistance and enhanced hygiene and safety.

Regular COVID-19 testing is being done at sites and even medical isolation facilities are available at many of them. Workers there have the assurance of immediate medical attention and daily site sanitation. CREDAI has also announced that it would provide free vaccination to over 2.5 crore construction workers at the sites.

With over 13,000 developer members across 217 cities and towns, CREDAI had also petitioned the government to make all construction labourers over 21 years eligible for vaccination. In the most recent announcement, the government has cleared vaccinations for all aged 18 and above.

This effectively covers the entire construction sector and will be a massive relief to developers and construction workers alike.

These Days Will Also Pass

Currently, about 12-15% of the construction workers have left the sites to return home for the duration of the current lockdown. This is certainly lower than it was in 2020, and we do not expect the number to increase since the government’s support and preparedness of developers have had a positive impact.

Also, going by their own past experiences, many construction workers have realized that they are much better off in the cities than in their hometowns, where there are currently almost no employment opportunities.

In short, while it has slowed down during Lockdown 2.0 and the alarming rise of COVID-19 cases, construction continues in cities like Mumbai and Pune. Equally importantly, this construction activity is driven by actual demand since the pandemic has brought about a new awareness about the importance of housing.

Construction continues to be one of the largest employers of unskilled labour in the country. The desire to own homes has never been higher than during these pandemic times. Two positives can never result in a negative, so we expect things to normalize quickly once the current curbs are lifted.

About the author:

Anil Pharande is CMD of Pharande Spaces, a leading real estate construction and development firm famous for its township properties in West Pune. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer of townships in West Pune. Anil Pharande is also President – CREDAI (Pune Metro) and a MahaRERA conciliation forum member

PMRDA – Ensuing Planned, Sustainable Growth In and Around Pune

By Anil Pharande, Chairman – Pharande Spaces

Cities all over the world are rapidly changing and expanding, and proper urban planning is now more important than ever before. The Singapore ‘urban model’ is a classic example of highly targeted urban planning which has transformed Singapore’s entire landscape and has made it one of the best-developed and economically sound cities in the world.

There are many important lessons we can learn from Singapore, particularly its commitment to proper land use, transport and infrastructure development. These are the foundation stones on which sustainable, efficient cities are built. Much of Singapore’s success is because it has created specialised national agencies including the Housing and Development Board (HDB).

Since the 1960s, HDB’s approach to public housing has resulted in almost 80% of the country’s population now living in public housing – with over 90% citizens owning their homes.

Singapore’s development agencies have not merely focused on creating housing – they are creating high-quality living environments for its citizens. Other than physical layout and architecture of housing blocks, they have sought to provide facilities such as schools, shops, medical facilities, parks, places of worship, and offices within easy access.

They also focused on public transport and road networks. This approach has transformed Singapore in the last 60 years, and older projects and areas are constantly being revitalized to meet the growing needs of Singaporeans.

PMRDA Aids Planned Growth

In India too, we have noteworthy authorities that are focused on integrated planning to ensure sustainable development. The Pune Metropolitan Region Development Authority (PMRDA), formed in 2015, is one such authority that is tasked with the well-planned urban development of Pune Metropolitan Region (PMR) including Pune, Pimpri-Chinchwad and its surrounding areas.

The chaotic and haphazard growth of Pune city over the last two decades calls for a planned and systematic, infrastructure-based development approach for Pune, PCMC and the surrounding areas. PCMC now has extremely high-grade infrastructure which supports a broad mix of employment opportunities and modern township properties.

The new challenge before PMRDA is to extend this development approach across the Pune Municipal Corporation and thus avoid the haphazard and unserviced urban expansion that characterizes Pune city.

Like Singapore’s HDB, PMRDA was formed to create a better standard of living for citizens and also promote ease of business. Besides ensuring sustainable growth, another key objective of PMRDA is to build and develop PMR as one of the most preferred and attractive investment destinations.

After all, high quality of infrastructure and all essential utilities like public roads, running water, electricity, proper waste, telecommunications etc. help attract investments. Most importantly, PMRDA needs to address the long-pending infrastructure issues in and around Pune and see effective implementation of all proposed or ongoing development projects.

From Metro rail project to Bus Rapid Transit System (BRTS) to Pune Ring Road to township planning schemes, the PMRDA has emerged as one of the most efficient planning authorities in the country. Its contribution to various infrastructure projects is crucial for Pune and its surrounding areas. It controls all development activities following the development plan and Town Planning schemes in PMR.

Notably, PMRDA since its inception six years ago has fast-tracked the development of major infra projects like Pune Ring Road, Shivaji-Hinjewadi Metro project, Pradhan Mantri Awas Yojana and town planning schemes, among others.

The Ahmedabad Model Blueprint

Replicating the Ahmedabad model, PMRDA has already rolled out the plan to develop the first Town Planning (TP) scheme at Mhalunge-Maan. In total, PMRDA plans to develop 46 town planning schemes around the Pune Ring Road with both these projects being developed simultaneously.

In Ahmedabad, the TP scheme is a structured process wherein land-use planning is integrated with service provision in a city’s expanding peripheries. The TPS enables a more equitable allocation of urban land, under which the city can obtain land for purposes like low-income housing, open spaces, roads, underlying utility infrastructure, and social amenities.

This has had transformative outcomes as it provides a tool for better planned and serviced urban development.

If and when all the planned town planning schemes along with the proposed infrastructure projects become a reality, Pune and its surrounding areas will transform into a well-developed and structured region catering to all needs of its residents. It will not only drive economic activity but help attract investors from all over the world.

About the author:

Anil Pharande is CMD of Pharande Spaces, a leading real estate construction and development firm famous for its township properties in West Pune. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer of townships in West Pune. Anil Pharande is also President – CREDAI (Pune Metro) and a MahaRERA conciliation forum member.

Indian Real Estate – No Progress Without Collaboration

By Anil Pharande, Chairman – Pharande Spaces

The Indian real estate sector has seen a tremendous transformation over the last decade. In earlier years, it was unorganized and real estate developers used to build whatever they wanted, with no planning, quality control and accountability. We can see the evidence of such unorganized development in our cities even today. Moreover, real estate developers were not able to voice their concerns to the government if policy changes or other measures were required. With no cooperation and collaboration between builders, homebuyers suffered the most as they were offered inferior products in areas which did not have proper infrastructure.

The Beginning of Organization

The first major change in this sad situation came in the year 1999, which saw the formation of the Confederation of Real Estate Developers’ Associations of India (CREDAI). The mission of this formal association of real estate developers was – and remains – to advocate necessary policy changes, implement self-regulation among developers, and ensure that all member builders work in a cooperative and well-planned manner.

This self-governing body of builders from across the country has achieved a lot, especially in recent years. It has brought about a lot of positive changes in the industry which encouraged the government to introduce major policy reforms to further improve the industry’s overall transparency and efficiency. The most important policy change was the Real Estate (Regulation and Development) Act, 2016 (RERA).

This major reform was primarily made possible because of the active support of developers members of this association who had become organized and accountable to the government, each other – and most importantly, to their customers. Implementing RERA would have been impossible in previous years.

After RERA was announced, the Indian real estate industry has made tremendous progress and homebuyer confidence is now stronger than ever before. According to industry estimates, organized real estate demand in India was as high as 1.35 bn sq. ft. by 2020 end – and 85% of this demand was for housing.

Nevertheless, bodies like CREDAI are aware that they must remain constantly vigilant and take corrective steps if they are required. Let us try to understand how self-governance, collaboration and collective decision-making work in favour of the market.

Inexperienced Builders & Oversupply

Between 2010-2015, we began to see signs of bad demand-supply management in the Indian housing market. This largely happened because people who had some money but no experience in housing development began launching residential projects.

These unorganized builders included goldsmiths, diamond merchants and cash-rich NRIs from the Gulf who had never built anything before and had no membership in any real estate industry association. They were simply associated with the motto to make a quick buck. More than one million homes were launched in 7 largest cities between 2013 and 2014 – and 14% of these homes were in Pune. This was obviously far too much housing supply.

If there had been enough demand for this supply, India’s housing shortage would have reduced massively in those two years. Instead, there was a huge overload of homes – and many of these projects remained incomplete because the amateur ‘developers’ lacked expertise and ran out of money. It became clear that there was an urgent need for stricter regulations within the Indian housing sector.

Strong Measures Taken

When the Modi government took charge in 2014, this accredited real estate developers association took the initiative to help the new government correct the flaws in the system. The Modi government introduced RERA and made a ‘surgical strike’ on black money with DeMo in 2016.

Both these moves helped to remove unorganized builders who did not belong to any association and did whatever they wanted – with disastrous effects. CREDAI actively backed this new reform and went a step further. Its developer members collectively decided to begin curtailing housing supply so that the excess supply could decrease and the market could stabilize again.

The results of these combined efforts were impressive. By the end of 2017, for the first time, housing sales were more than new launches – according to property research firms, new housing supply in the top 7 cities had come down to 1.45 lakh units even as over 2.11 lakh homes were sold in the year. Homebuyers were encouraged by the new transparency and now knew that dealing with inexperienced, unscrupulous builders would only end in grief.

The Mission Continues

Today, India still has a lot of problems, including unsold housing supply. However, organized developers now have a plan of action which is emphasised at every meeting and conference of this association. Confidence must be restored, and this can only happen when developers and homebuyers work together as partners. Homebuyers are stakeholders in the Indian housing industry, and it is every organized developer’s responsibility to defend their rights.

At the same time, the government must be made aware of problems within the industry as soon as they emerge. Unlike in previous years, the government now listens attentively to organized builder associations and takes necessary corrective steps. In this manner, both real estate developers and homebuyers can look forward to a better tomorrow where homes are affordable, worth the money that is paid for them, and provide a lifetime of safety and security to Indian families.

A Forum for Technology Adoption

Technology is another major change factor in Indian real estate today. Here too, builder associations create awareness about the latest real estate technologies which all members can use to build better, cheaper and stronger housing projects.

This kind of knowledge exchange would not be possible without the collaborative approach which CREDAI has adopted. In the coming years, we will see the latest construction technologies being used to build better homes in shorter periods, and every developer will have access to them.

Pan-India Presence

It is important to remember that CREDAI is not just active in India’s largest cities, but across smaller cities and towns as well. In the current changes brought about by the coronavirus pandemic, these smaller cities have become very important. The work-from-home culture has resulted in more and more housing demand in these cities.

We must ensure that the progress being seen in the metropolitan cities also penetrates into every part of the country – for the betterment of the whole industry, and to benefit each and every homebuyers in India.

About the author:

Anil Pharande is CMD of Pharande Spaces, a leading real estate construction and development firm famous for its township properties in West Pune. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer of townships in West Pune. Anil Pharande is also Vice President – CREDAI (Pune Metro) and a MahaRERA conciliation forum member.