Properties, Homes & more

I have recently came across an informative post from Mohsin about Affordable Housing in and around Pune. Mohsin talks mainly about the following major areas of Pune which offer budget housing to all:

Kothrud: It is one of the fastest growing suburbs of Pune located in the south west of the city. With the rapid developments, this area has become one of the fastest growing residential localities of Pune. This place is inhabited by lots of students as many educational institutions like MIT and Cummins College of Engineering for Women are located in this area.

Aundh: Aundh is the last part of the “core city”, before going outwards towards Hinjewadi IT park. After development of Hinjewadi in last 10 years, Aundh has grown its importance and is considered to be heart of the city, especially for people working in IT sector. Availability of malls, hospitals and schools make it very attractive, but slightly expensive option.

Balawari: Balwari became known to everyone because of the stadium built for national games in 1994. After development of the Katraj bypass going to Mumbai, and Hinjewadi IT park, the entire region got a boost in terms of property prices and general economic development.

Kondhwa: It is amongst one of the oldest colonies of Pune city and lies in the south eastern part of the city. Kondhwa has the National Institute of Banking and Management (NIBM). Wanowrie area, under Kondhwa, houses huge Army medical set-ups like the Armed Forces Medical College (AFMC) and the Command Hospital and the Artificial Limb Center.

Pashan and Baner: Baner and Pashan both saw a tremendous boost in development in last few years, because of ease of commute towards city center as well as Hinjewadi IT park. Pashan’s growth in terms of new development is slightly restricted because of presence of large number govt. organizations and the resulting lack of land availability.

Kharadi: On the East side of the city, Kalyani nagar first saw a quick growth of IT and resulted into expansion of city horizons on Nagar road. Kharadi bypass, connecting the Nagar road to Hadapsar, saw real estate rates shoting up from measly 1000 Rs to around 3000 Rs. per sqft. We think there is a lot of growth potential in this region and investment can still be worthwhile.

Katraj: Another fast growing suburb of Pune is Katraj that is located in the southern part of the city. Katraj is quite well known for the campus of Bharti Vidyapeeth University, the Katraj Milk Dairy and the Katraj Snake Park. The New Katraj Tunnel here is a highway tunnel located on the NH4. The place is located at 10.2 Km from the Pune railway station.

A rental agreement is for short tenancies, usually for 30 days which automatically continues once this period is over, unless the agreement is terminated. In a rental agreement, the landlord can choose to amend the mentioned terms as long as he provides written notice to the tenant. However , the tenant has the right to occupy the property for a specified period at fixed terms, usually 11 months, in case of a written lease. However, unlike a rental agreement, a lease has to be renewed.

Please find below a list of important points that need to be thought upon, before taking a property on rent:

1. A tenant should know the prevailing rental rates in the chosen location and be aware that only an airtight rental agreement that transparently outlines his rights is acceptable. For example, it should be clearly mentioned who will pay the tax after mutual agreement between the landlord and the tenant. Also, a tenant should be aware that the landlord’s permission is required before initiating any major changes to the property.
2. The tenant should be wary of a clause allowing for automatic rent increases, arbitrary amendments to the existing terms of the agreement by the landlord, and any provision that permits the landlord to enter the property at any time.
3. The agreement or lease should be filled out by the tenant, or in the presence of the tenant.
4. There is no stipulation on the amount of security deposit to be paid by the tenant. It’s a commercial term determined between the two parties. Hence, the time to safeguard one’s safety deposit is before moving in.
   • Security deposit should ideally be paid in cheque to ensure that the same is reflected in their bank statements. Also, legal assistance should be sought to ensure that a proper clause stating that the security deposit would be refunded at repossession by the owner. There should also be a clause in the leave and license agreement of interest penalty on the outstanding security deposit amount in case the amount is not refunded. In such cases, the agreement should clearly highlight if the advance would be adjusted with the first or last few months of the lease. In case of security deposit, the amount and terms for its return should be mentioned.
5. The name of the landlord should be clearly mentioned in the property documents. The property papers, which include the occupation certificate and title deeds, should be in order.
6. The tenant can seek a copy of these papers if needed. If the landlord has carried out an illegal extension within the house, a tenant has to take a written record or have the landlord mention the same in the agreement . There is no such norm that the tenant should possess these documents. However, it’s in the best interest of the landlord and the tenant to have everything in written.
7. Similarly, if the property has any lien such as loan, then the lender should be involved in the transaction between the landlord and the tenant for the transaction.

With the culture of individual houses and palatial bungalows fast becoming thing of past, Allahabad has been rather quick in adopting the flat culture, which until now was limited to metros only. The flat system is considered to be safe, secure and useful for social activities, especially for the older generation. It is here that the role of Allahabad Development Authority (ADA) assumes great significance.

ADA, originated in 1974, was formed under the provision laid by the Uttar Pradesh Urban Planning & Development Act of 1973. ADA development projects began with smaller projects & constructions but soon progressed and changed the city’s look with its magnificent works. Uttar Pradesh is one of the most politically important states of India, and Allahabad is indeed an important city of that state with long historical and cultural background. It attracts a lot of people and tourists from all over the world and hence the need for establishment of development authority to overlook planned development of the city.

ADA plans to construct state-of-the-art infrastructure for its residential and commercial projects in a well planned manner by adhering to the master plan laid out by the authorities. It also started many housing schemes like Avantika, Kalindipuram, Juhi, Badri, Parivartan, Shantipuram, Agnipath, and IDH Compound Housing Scheme. In order to give a progressive direction to the development process of real estate in Allahabad, it has started working in conjunction with private builders and developers.

The latest real estate developments in city primarily focus on building hotels, guest houses, dharmashalas, restaurants, retail shops and other tourists’ spots. The real estate property prices in city are also mounting as more and more people are heading towards the efficient business opportunities the city offers. The property dealers are, surprisingly, fully supportive in the sale or renting of any property in Allahabad.

<< Jerry Rao’s interview on creating low cost housing the professional way

Jerry Rao, founder of IT firm Mphasis, wants to deliver low-cost good-quality homes to buyers like drivers, housemaids, plumbers and electricians. Jerry Rao’s new venture, Value and Budget Housing Development Corporation, is targeting building a million homes in 10 years in 17 cities. Excerpts of an exclusive interview with ET, Jerry Rao (JR) defends his new mantra…

Interviewer (I): How will you address the backend challenges? Your buyers constitute the unbanked part of the population!!

JR: There are two big demand-side challenges. One, unlike in Manila and Sao Paolo, where poor and rich neighbourhoods are far away, in Indian cities, the poor live inside the city. Now, we are giving them housing far away. So, there is a commute cost and a commute time. That is a demand-side dampener.

The second is they may want to buy but how many of them will qualify for a loan. That certainly reduces the size of the market. But, believe me, these people have the ability to downpay Rs. 50,000 to Rs. 1.5 lakh. These people live frugally and save a lot. Over time, we believe the system will be in a position to offer 15-year mortgages in the Rs 2-8 lakh range.

I: What is your assessment of the buyer profile?

JR: They may be poor but they are upwardly mobile - these are NOT the absolute destitutes or the pavement dwellers. What they want is to get out of their present shanty / to a more secure place. They want compound walls, security, indoor toilet and privacy. Most want their children to go to English medium schools. The target buyer is someone, who has an income and also high labour mobility so that even if he moves to the city outskirts, he would get a replacement job pretty quickly. Like a driver or high-skilled construction worker.

--- As told to the Economic Times ---

Jerry Rao, founder of IT firm Mphasis, is completely immersed into his next business innings: Nano housing. Just like the Nano car, he wants to deliver homes to buyers looking for affordable homes: including drivers, housemaids, plumbers and electricians. Jerry Rao’s new venture, Value and Budget Housing Development Corporation, is targeting building a million homes in 10 years in 17 cities.

In an exclusive interview to Economic Times, Jerry Rao said, unlike conventional developers, his business model would treat land as an inventory and not a capital asset. If he is able to roll out his project and deliver in 12-18 months, the returns would be in the region of 30-40% almost similar to what the IT industry enjoyed in its dream run. Excerpts from the interview:

Interviewer (I): After IT, banking and angel investing, what made you think of housing?

Jerry Rao (JR): I could retire and do nothing. At 57, I have got at least another 5 to 10 years to do something else. I did want to stay away from IT and banking and wanted to do something of scale. I looked at agribusiness, education, health care and it seemed to me that I could leverage my IT and project management skills in housing. And, there was no paucity of demand. So, you could scale this business and create a big impact.

I: What is the difference between your business model and how conventional realty operates?

JR: Unlike conventional realty, we want to think of land as inventory and want to sell it as soon as we can. That is the basic difference that sets us apart. I thought it would be a high risk model. But, the downside here is very low. We are using equity to buy land. We will have access to construction finance and then we also get 25% down payments from buyers. So, even if the project goes bust, we can still repay all the loans and also repay equity. But, if we get it right and build and sell the project in 12-18 months, then the return on equity will be in the 30-40% range. It is actually quite an attractive place to be in.

I: Then, how come nobody else has entered the space?

JR: Why did nobody create a low-cost detergent before Nirma? The high-cost market was profitable enough. One, it is partly a supply side problem that people do not re-engineer. Two, the middle-class and upper-class segment, Rs 0.50-1 crore, has been very profitable. Three, if you are looking at land as a capital asset, you would not do it. This model requires a mindset shift.

Do not forget to read PART 2 of the interview…