Ravi Karandeekar's Pune Real Estate Market News Blog: November 2016

Saturday, November 26, 2016

How to survive the sinking Pune real estate market

1) Property Rate Protection,
2) Third Party Construction Quality Audit Reports
3) Compensation for Delayed Possession
are the 'life jackets' which may help the flat buyers
to survive the sinking ship of Pune real estate market!

After the demonetisation of 500 & 1,000 notes, most of the flat buyers who have already registered their Agreement to Sale have panicked.

"Should I cancel the agreement & jump off this sinking ship?" - some asked me.

"Am I going to go down with the sinking Pune real estate market?" - some are worried.

They have panicked because they firmly believe that demonetisation has completely disrupted the Pune real estate market. New flat buyers are going to postpone booking flats & wait for the rates to fall substantially. Slow bookings will hamper the progress of construction and possession would be delayed. Because of the delayed possession those who have booked will suffer huge financial losses.

Falling property rates will certainly reduce the builder's profit margins. To recover the losses the builders will cut corners and will offer inferior quality construction. Result is the flat buyers will not get value for their money and will suffer irrecoverable financial losses.

"Why are you thinking so negatively? Why are you ignoring the brighter side? Builders claim that because of the demonetisation not only the property rates but home loan interest rates are also going to go down and real estate is going get a big boost!" - I asked.

"My agreement is already signed & registered at a much higher rate - reduced property rates is nothing but a loss for me - banks & builders are famous for ignoring old buyers - they only care for the new bookings & the new borrowers" - some flat buyers said.

"Big boost - means big problems - these notorious builders divert money and launch new projects - means assured delayed possession & inferior quality construction" - some flat buyers said.

"Reducing property rates, delayed flat possession & inferior construction quality were serious concerns for a long time - even when you booked - demonetisation hasn't created these issues - right?" - I asked.

"Right" - most of the flat buyers agreed.

I fail to understand why did these flat buyers take the risk of booking a flat!

Unaffordable property rates was not the only reason why flat buyers were not booking.

Poor construction quality, delayed possession, unfair & exploitative terms of transactions in the flat agreement - were equally responsible for discouraging the flat buyer to book.

By publishing circular of director general of police even Maharashtra Government had accepted that builders are committing crimes against the flat buyers.

By passing RERA the central government of India also announced the need to end builders' criminal business practices.

Point is - for the last 3 years - booking a flat was as dangerous as drinking & driving at high speed on the wrong side of Mumbai Pune Expressway.

Glaciers of property price reduction, inferior construction quality & delayed possession had already damaged the ship of Pune real estate market. These guys boarded this sinking ship without wearing life jackets. And now, after the demonetisation they have panicked and trying to jump off the ship. How stupid!

Guys, come on. Real estate development is a 'collective investment scheme'.

A Collective Investment Scheme (CIS) is an investment scheme wherein several individuals come together to pool their money for investing in a particular asset(s) and for sharing the returns arising from that investment as per the agreement reached between them prior to pooling in the money.

When you book a flat - you become one of the owners of the project.

When you book a flat - you become one of the partners of the development.

When you book a flat - you become one of the stakeholders in the venture.

As the owner - partner - stakeholder - you have all the rights to protect yourself.

To protect yourself order your builder to install new policies about - 1) Property Rate Protection 2) Third Party Construction Quality Audit Reports 3) Compensation for Delayed Possession.

1) Property Rate Protection - Till the completion of construction & obtaining 'completion & occupation certificate' - if the property prices are reduced - the same reduced property rates should be applicable to you - even if your agreement is registered. You should get the credit note for the reduced price which you can redeem at the time of possession.

Pethkar Projects' Siyona at Punawale is offering Property Rate Protection Policy from the day project was launched in 2014.

Rohan Builders was the first builder in Pune who offered Price Protection Scheme in 2009.

2) Third Party Construction Quality Audit - Durocrete Construction Quality Rating Agency Pvt. Ltd. (CQRA) is offering construction quality assurance services since 2004. CQRA advises, trains, monitors, inspects, audits construction at every stage. Home Inspect - prepossession inspection of every flat covers over '75 parameters' including electrical, plumbing, waterproofing etc.

Order your builder to appoint CQRA or any other third party construction quality auditor.

3) Compensation for Delayed Possession - When possession is delayed every month you lose - 1) Pre EMI - which is nearly an EMI of your loan amount + 2) Monthly Rent 3) You suffer social insult & mental agony. Obviously, compensation for delayed possession must cover your all losses. It means that 9% interest or a rent - which some scumbags are offering - is certainly not enough.

Order your builder to rewrite the compensation clause in the agreement. If it is not there - add it.

The Problem of builders in Pune is - they misunderstand their role & responsibilities.

"I am the promoter & developer - means the owner of this project & I will run it as I wish" is the feudalistic delusion of these scumbags. Exactly like politicians who believe that they own this country.

Obviously, initially, you will face resistance from your builder.

So, first you have tell these scumbags that you - the flat buyers - are the paymasters - owners of this collective investment scheme. Your builder is just a facilitator - a coordinator of services. If there is a deficiency in the services offered - he will be penalized.

And do your best to teach your dumbhead builder how these policies will also help him to survive the sinking Pune real estate market!

What say you?

Can you survive the sinking ship of Pune real estate market with the help of 1) Property Rate Protection, 2) Third Party Construction Quality Audit Reports 3) Compensation for Delayed Possession?

Would you like to suggest something more?

Please, share your ideas in the comments.

1) Pune property rates will keep on going down

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I enjoy talking, sharing my views and giving advice about buying property in Pune real estate market.

My email id is RaviKarandeekar@RaviKarandeekar.com Feel free to write to me. I reply as soon as i can.

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IFSC- MAHB0000001

Thursday, November 24, 2016

Pune property rates will keep on going down

What would be the effect of demonetisation of 500 & 1000 notes on Pune property rates?:

www.wpclipart.com Image

I feel pity for Pune builders.

In the last couple of years, the builders in Pune had lost respect & credibility.

Somehow, with the help of private housing finance companies these builders were managing to remain in business. They were tempting the buyers to book a flat by offering discounts & easy payment plans.

The naive flat buyers were reluctantly accepting these baits & booking flats only because they were still afraid of property price rise.

In spite of the huge inventory of unsold flats laying around, investors', bureaucrats' & politicians' black money was empowering the builders in Pune to hold on the property rates.

Instead of waiting for 50 % property price correction - it is safe to surrender and accept 15 % - 20 % discount and book a flat now - was the popular idea among these naive flat buyers.

But the demonetisation completely neutralized this fear factor. Flat buyers in Pune no more fear of property price rise. Flat buyers in Pune no more belive that of property rates will remain stagnant. Even naive flat buyers in Pune strongly believe that property rates in Pune are going to fall.

So, now, the builders in Pune have lost their most effective weapon - the fear.

But, there is no cash component in Pune - the difference in ready reckoner rate and selling property prices is not much - builders in Pune go for construction finance - if you consider the land price & construction cost, the property rates in Pune are quite reasonable and there is no scope for price reduction - some experts told me.

Booking a flat is a sentimental act - not a rational decision - dude! I told him.

But, financially price reduction is impossible - one expert said.

Financially? Whose money is this? This industry runs on the flat buyer's money - if you don't bend then they will break you - I told him.

I really feel pity for these dumb, disrespectful, unreliable, untrustworthy, powerless buggers.

You know?

In the last 15 days, since the demonetisation of 500 & 1000 notes on 8th November 2016, everybody asked me only one question - "What would be the effect of demonetisation of 500 & 1000 notes on Pune property rates?"

Eventually I realized that this was not the question. It was a firm belief. Not a wish. Not even a prediction. Everyone was very much sure that because of demonetisation property rates in Pune are going to go down.

Not only that! Everyone was ready to wait till the property rates really go down. Ready to wait to book a flat. Ready to postpone the registration of agreement to sale. Ready to renegotiate the price of the resale flat. Everyone was sure that there was no point in rushing. Better wait & watch.

What happens when the flat buyers do not book a flat?

Property rates go down. Right?

What say you?

Share your views in the comments, please.

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Tuesday, November 15, 2016

I visited Leisure Town near Amanora at Sade Satra Nali Gram Panchayat

Booby-traps on the border of Pune Municipal Corporation:

Site Sales Office of Leisure Town near Amanora at Sade Satra Nali Gram Panchayat, Pune 411028

Last 3 years I did my best to avoid visiting Leisure Town at Sade Satra Nali. But this Diwali, I had no option but to visit it. Reason was Abhimanyu Singh, one of my readers in USA.

Abhimanyu was interested in booking a 2 BHK Flat and was very excited about 2 things - 1) the location - behind Amanora 2) the property price - only 60 lakhs. Abhimanyu wanted my views about Leisure Town.

I admire the current generation of flat buyers like Abhimanyu. Like the last generation of flat buyers they give importance to the location of the project. But unlike the last generation they go beyond location and consider other aspects like trust worthiness of the builder, quality of construction, timely possession, sanctions & approvals. Some even consider the environmental clearance! When the flat buyers like Abhimanyu ask my opinion, what they really want to know is whether I have any information about these other aspects.

In case of Leisure Town, Abhimanyu was the first flat buyer who had asked my opinion. Otherwise, in the last 3 years whoever called me was interested in discussing about the payment plan at Leisure Town - own a home without a bank loan - instead of taking a home loan & paying huge interest to the bank - pay property price to the builder in installments - pay 30 per cent down payment + 84 monthly installments + 3 bullet payments. Yes! Like Guardian Developers' 100 per cent interest free homes offer!! That's why I didn't visit Leisure Town in the last 3 years.

When a builder tries to get the bookings by offering some tempting discount offer or an easy payment plan, he is trying to force you to take an uninformed decision. Blind decision. Refusing this tempting offer is like missing an opportunity to own a home. This is pure emotional manipulation of the flat buyers. An unfair business practice. This is not a sale. This is a trap. (Of course, in the last couple of years we have seen that majority of flat buyers became aware about the trap and eventually cancel their bookings!) That's why I am completely against these types of offers & events. Including Leisure Towns' installment offer and upcoming Paranjape Schemes' Options Unlimited on 18th - 20th November 2016.

When it was launched, Leisure Town was a joint venture of 3 builders - 1) Well Wisher Group and 2) Sai Proviso Developers from Navi Mumbai and Tupe Developer of Sade Satra Nali. Then Well Wisher Group retired from the partnership and now only Proviso & Tupe Developers are left. Obviously, the separation had affected the flat buyers.

When a property buyer books a flat - for him getting possession of that flat is a question of life & death. I expect same level of commitment from the builder. Completing the project & giving possession to the flat buyers must be a question of life & death for that builder too. That's why I am against booking a flat at the under construction stage in the project which is a joint venture of 2 - 3 builders and in a project by some so called big brand builder who has multiple on going projects. The fight between the joint venture partners hampers the project badly. There are a lot of projects lying incomplete for years because of this reason. Similarly, the big brand builders with multiple projects are always casual about completion & possession.

Since Abhimanyu didn't mention about 'own a home without a bank loan' offer, I assumed that now Leisure Town may be trying to get the bookings on the merits of the project. On planning, progress of the construction, terms of transaction like property rate protection & compensation for delayed possession, basic urban infrastructure services - water supply - purification - recycling, sewage & garbage treatment provided in the project,environmental clearance, sanctions & approvals etc. I was visiting Leisure Town to get these details from the salesperson and express my views based on that information.

Guess! What would have happened at the sales office of Leisure Town? Did I succeed in getting the complete info?

The lady asked me the usual opening question - What is your requirement? I said - 3 BHK. She opened the presentation. Told me about the D P Roads which offer great connectivity, talked about advantages of being near Amanora, showed the layout plan and the particular building which had 3 & 2 bhk flats, showed the floor plan of a 3 bhk & 2 bhk flat and gave possession dates. When I complimented for her presentation skills, the lady told me that though she had joined Leisure Town only 3 months ago - but she is working in real estate for years.

Now, it was my turn to ask the questions. I asked her about the environmental clearance. She left the cabin and returned with some papers. "It's N A Order - not EC!," I said. "Don't worry. After the booking - I will give you a file containing all papers," the lady said. I realized that the lady is truly experienced real estate salesperson.

"What about 84 installments offer?," I asked.

"That is over. Now we have a new offer. Since we launched this offer - in the last 2 months we have received 33 bookings!," pointing at the property price list the lady said.

"We are giving nearly 7 - 10 lakh rupees discount! No government charges - No stamp duty - no registration charges - no service tax - no VAT - instead of 97,76,100 - you have to pay only 88,20,00 for a 3 BHK!," the lady said.

"WoW! And how much for a 2 bhk?," I asked.

"Instead of 67,59,450 - only 60,90,000 and instead of 66,60,000 - only 60 Lakhs!," the lady said and added - "Not only that! We have 10 - 70 - 10 - 10 offer!," the lady said.

"What's that?," I asked.

"You pay 10 % at the time of agreement - then HDFC pays 70% - then you pay 10% and at the time of possession HDFC pays last 10%!," the lady said.

"WoW!," I said.

"What is the rate?," I asked.

"Only 6,000! You know what is the rate at Amanora? 8,000! You won't get a 3 BHK in 88 lakhs in Amanora - though it is just behind our compound wall!," the lady said.

The property price list said that the basic rate was Rs. 5,300 + 700 per sq ft for Infrastructure, Development, Clubhouse Etc.!

"What are these 700 rupees per sq ft for?," I asked.

"Look - it's written here - for - Infrastructure, Development, Clubhouse etc," the lady said.

"In short - you are giving discount of government charges by one hand recovering that amount by the other hand as infrastructure, development, clubhouse charges," I said to myself. It means that the property rates at Leisure Town have not changed much in the last 3 years - according to Indian Real Estate Forum - in December 2014 rate was Rs. 5,500 and after 3 years, in November 2016, it is 5,300 per sq.ft..

Even after the 3 years - the USP is - near or behind Amanora is the attraction & only available information about Leisure Town!

'Bank on the location & compare the price difference' - is the strategy applied by the all projects on the border of PMC. Western Hills - Bella Casa - Ganga Acropolis on the border of Baner & Sus, Ganga Legend on the border of Bavdhan Khurd & Budruk, Pura Silversands & Godrej Infinity on the border of Mundhwa & Keshav Nagar - all 'bank on the location & compare their prices with the prime projects in the PMC limits'. Naive flat buyers forget that you have to compare apples to apples. Not oranges to apples! Unfortunately only after flat possession when lack of basic urban infrastructure services become a pain in the ass - these naive flat buyers realize that the difference between apples & oranges!

But how can I explain all this to Abhimanyu?

How can I say - "Abhimanyu, it's a booby trap!"

How can I tell him - "Abhimanyu - Don't lit this cigarette - there is a firecracker in it - you may burn your face. Don't sit on that chair - you may fell down - someone has loosened the screws!"

Who knows? Abhimanyu may feel that I let him down by not giving informed unbiased view. He may get upset for expressing my hunch - feelings - guess - suspicion - as an expert opinion.

Was it a right decision to visit Leisure Town?

What say you? Please, share your views in the comments.

Leisure Town near Amanora at Sade Satra Nali Gram Panchayat, Pune 411028 - Photowalk:

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Tuesday, November 8, 2016

The best way to buy a flat in Pune real estate market

Buying a Ready Possession 2 BHK Flat in Westend Village at Bhusari Colony, on Paud Road, near Chandani Chowk, Kothrud, Pune 411 038 by The Construction Group:

This Diwali, from 22nd to 28th October, The Construction Group released ready possession 2 BHK Terrace Flats with one Car Park in G & H buildings in Westend Village for sale. The 6 story G & H buildings have total 72 units - 6 units per floor. On an average - the carpet area is around 800 sq.ft. and the saleable areas are between 1035 & 1065 sq.ft.

Every flat has an entrance lobby. The terrace is attached to living ( on odd floors) and to dining (on even floors). Approximate room sizes of these 2 BHK Flats are - Living 15'9" x 10'6". Kitchen with Dining 15'9" x 7'10" / 13'9" x 7'10". Common WC & Bath. Master Bedroom with Attached Toilet - 14'5" x 10'6" + 7'1" x 4'7". Second Bedroom - 12' x 10'6".

All inclusive property prices of these 2 BHK Terrace Flats with 1 Car Park are around Rs. 1.05 - 1.10 crores. Obviously, Westend Village received very good response.

WYSIWYG - What You See is What You Get:

The event was organized in the parking of G & H Buildings. Both the buildings were ready for possession with completion & occupancy certificate. You can inspect the building. Visit the flats of your choice. Confirm the light & ventilation in every room of your flat. Check the fittings & fixtures. Have a look at the view from your terrace and windows. See the car parking arrangement.

Besides your flat, you can have a look at nearly 10 year old township. You can see who would be your neighbours. You can visit the recreation center and see what kind of community activities are organized by the residents. You can visit the playground for the children.

Along with your flat in G & H Building, you are going to get one year membership of well maintained private Westend Club. You can visit it and check the Gym, Swimming Pool, Party decks.

In short, this is the best way to buy a flat - what you see is what you get when you buy a 2 BHK Flat in G & H Buildings of Westend Village!

What is the right age to buy a home?

I visited Westend Village on 26th, 27th evenings & on 28th morning. After Sakal Big 3 Home Utsav on 20th to 23rd & one day search at Pirangut on 19th, visiting Westend Village was an eye opening experience for me.

Looking at the families inspecting the flats & buildings and having one on one chat with the builder - Mr. Vinayak Keshav Bapat - who was always present at the venue, I realized that middle age is the right time to buy a home!

When you are middle aged, you have enough experience, money & maturity to make the right decision. Home ownership becomes a reward for leading a happy family life, a successful career & a meticulous money management.

In your 20s & 30s, you are not fully prepared to take the most important decision in your life. Your limited budget forces you to choose pigeon hole size flat build by some unscrupulous builder in some undeveloped location which has no basic urban infrastructure. You take a big home loan & lose your financial freedom. And your property becomes punishment.

What say you? What is the right age to buy a home?