www.arundevelopers.com

2014/02/18

How to build new cities


http://indianexpress.com/article/opinion/columns/how-to-build-new-cities/99/

How to build new cities
Resources are not the problem. We need to change controlling mindsets.

India’s rapidly urbanising population needs space to live in, and providing that space in the form of new cities is easily within reach, provided we change our mindsets. No fresh resources are needed other than what is available within India’s Plan budget. But in order to see those resources, we should desire what Harry Potter figured out in the Room of Requirement — the object alone, and not how to do it or what can be done with it. It is the desire to control all processes and be the prime mover that renders us unable to see what should otherwise be evident. Let’s see what it would take to create 200 new cities over the next five years. Four cities in the periphery of every large one, only at a distance of, say, 50 km, so that people need not live in Delhi, Mumbai, Pune, Chennai or Hyderabad; they can merely commute and still lead a life of dignity and better in quality. It would take an average investment of Rs 2,000 crore per new city, or say Rs 400 crore every year for five years. The total bill comes to about Rs 80,000 crore per year for 200 cities.

How would we acquire the land, given its astronomical costs? You would not acquire any land at all, but merely propose a business model in which every group of landholders able to provide 500 hectares of land would be given 50 per cent equity in the venture that is a new city. The other 50 per cent would belong to the government. That way, the farmer would get a real share of the return on investment and a steady yearly income. Once it is clear to the farmer that the government is not planning to take away his land at rock-bottom prices to gift it to a real estate major for a commission, there would be a queue of farmers lining up, asking the government to develop their spaces into a liveable city. This is the kind of model used by Magarpatta City, a township next to Pune, spread over 430 acres and owned by 120 farmers, each a shareholder in proportion to his landholding. In Magarpatta City, farmers came together on their own and did everything by themselves. With some help from the government, the experiment could be widely replicated. The rub is that there is no agency that would benefit from such a proposition: only the people. Perhaps this is why no one has so far proposed what should be otherwise evident.

The next question is where the Rs 80,000 crore would come from. It would come from two sources. The first is the cost of food security for the nation and the second is the MGNREGA. Far be it from us to suggest that India does not need to feed its hungry or give them employment. It certainly does. If not for moral or ethical reasons, then for the reason that hungry and illiterate people can neither participate in nor contribute to a growing economy. But similar objectives can be achieved for one third their present cost, provided we scale down our desires somewhat and abandon age-old shibboleths. The basic proposition is that subsidies be limited to BPL families and small and marginal farmers. Here again, we repeat Harry Potter’s exercise. If we were to give the approximately six-seven crore BPL families an annual subsidy of Rs 5,000 to buy food, the bill would still be a third of the current cost of food security. What’s the balance being used for? To support organisations like the Food Corporation of India (FCI) and its operating costs.

The food subsidy bill is the operational deficit of the FCI, or the amount spent by it on market operations and buffer stocking over and above its sales realisation. This bill in the last budget was around Rs 90,000 crore. These operations serve dual objectives: to provide market support to farmers and also to subsidise consumers through the present public distribution system. If we were to provide cash subsidies for food to all BPL families, a similar objective could be achieved at Rs 35,000 crore, and if we were to further provide cash subsidies to all small farmers — even of Rs 2,000 per tonne for up to 30 million tonnes per annum as support against low market prices, it would take another Rs 6,000 crore. What you would not get would be the huge buffer stock India has been building for the last so many years.

This buffer stock, as also the FCI, is simply a relic of a time when the fear of famine dominated our mindset. The memory of PL 480 is bitter indeed, but surely we are long past that barrier now. Our cash reserves are no longer rock bottom. If needed, we can still engage in market operations to provide food. But leaving market operations to private traders does not mean abandoning all interest in the food market.

In return for dismantling the FCI, what the government would need to do is bring about transparency in food pricing and set about eliminating the hidden costs in food prices. The way is not difficult: set up internet-enabled markets in all cities for foodgrain and for fruits and vegetables, remove inter-state restrictions on movement of farm produce, impose checks on hoarding, abolish the agricultural produce market committees that function in the interests of traders and not farmers, and keep detailed records of transactions and markets. Removing all these hidden costs would bring down food prices far more effectively than any FCI or food security bill. These are the tasks the government seems unwilling to do. Surely, it is the government’s job to keep detailed records, conduct market regulation, pre-empt artificial scarcities and remove restrictions rather than be the prime mover.

As far as the MGNREGA is concerned, the recipe is even simpler. The scheme should be restricted to only the poorest districts. That’s the only way one can prevent it from interfering with the farm economy. A recent study shows that while Bihar, Uttar Pradesh, Madhya Pradesh and West Bengal — which account for 59 per cent of the rural BPL population — accounted for only 34 per cent of total employment generated by the scheme. Andhra Pradesh and Tamil Nadu, which account for only 8 per cent of the rural BPL population, provided 23 per cent of employment generated. Such anomalies can be sorted out only by restricting the MGNREGA to districts where it’s really needed. This would halve the MGNREGA bill of Rs 33,000 crore as per the last budget and free up scarce resources.

Doing these is not so difficult. This is far more a question of mindset than anything else. The great desire to control all decisions and the sneaking desire to make a private profit are the only obstacles that prevent us from building new cities, from making the investment in infrastructure that India really needs.
Views are personal

2014/02/16

Brand vs budget: What is important while buying property?


http://www.moneycontrol.com/news/real-estate/brand-vs-budget-what-is-important-while-buying-property_1042959.html?page=1

Brand vs budget: What is important while buying property?

Arvind Jain
Pride Group

It is often assumed that Indian property buyers are more focused on budget than brand value. This is a glaring miscomprehension of the ground realities - in fact, few consumer classes are as attuned to the value of a brand than Indian homebuyers. Moreover, developers have been responding to this trend by making best practices in their offerings as well as business operations as an integral part of their manifesto.

In most Indian cities, reputed developers have maintained consistency in these aspects and are even raising the bar on best practices in construction design, quality and business transparency. This focus is a natural consequence of the need to remain relevant in a highly competitive market. Even in smaller cities such as Pune, quality developers are known for the higher grade of their deliverables on the market. This explains why certain brands command a greater degree of trust among consumers than others.

The fact is that real estate as a business, from construction to marketing of the end product, is one of the strongest contributors to the country's GDP. Real estate fulfills a very necessary need, as is evidenced by the unrelenting demand for homes all across the country.

Brand loyalty is certainly not missing in Indian realty. This is amply evidenced by the fact that certain brands command instant attention while others do not even register on buyers' radars unless questionable marketing ploys such as marked-down rates in exchange for inferior quality and location come into play. In India, home buyers are very aware of the fact that some developers can be expected to deliver on their promises, while others represent a potentially costly gamble. This is also why the more reputed developers have no problems with obtaining domestic as well as international institutional financing for their projects.

Nevertheless, the image that has been created about the real estate sector in general is a persistent one. When it comes to changing public perception, the primary instrument of change will always be the media. Unfortunately, the Indian media has made it its business to portray the entire real estate domain in a negative and mercenary light.

Indian real estate is becoming a force that even global players are beginning to take very seriously. This change will become more pronounced as more and more serious players come to the fore-front of the sector. We are already witnessing a process of consolidation wherein smaller players are merging with or selling their stakes to bigger names, since these banners of repute are able to sustain their businesses as a result of their larger market share, higher credibility quotients and their superior funding options.

Not surprisingly, many people continue choosing real estate as a career because the business is based on the strongest possible fundamentals. With the rapidly improving transparency norms and considerable success of reputed developers despite the challenging economic environment, it makes a lot of sense for qualified people to choose top-rated real estate companies as their career partners and be part of the great Indian real estate movement.

2014/02/05

Pune real estate's hottest growth corridor


http://www.moneycontrol.com/news/real-estate/pune-real-estates-hottest-growth-corridor_1036478.html

Pune real estate's hottest growth corridor

Anil Pharande
Pharande Spaces

The Pune residential real estate boom, initially kick-started by the IT/ITeS industry, has brought about a lot of unregulated development. While property prices in Pune rose unrealistically, the city’s traditional ease of living and pleasant climate, which were previously its USPs, suffered. Hills and trees have been razed to accommodate the rapidly expanding concrete jungle that all but defines central Pune today. The town planning commission found itself impotent in the face of the development mania, which soon transcended all reasonable, sustainable boundaries.
Real Estate Woes In Central Pune


In Pune, infrastructure challenges have been increasing because of the ever-increasing population. This has also put escalating pressure on available land, resulting in the forced extension of the city limits.

The pattern of development has been decidedly mercenary and unplanned, with the only criteria being accessibility to existing and upcoming IT hubs. While the rise of Hinjewadi created increasing demand for homes in its immediate vicinity, places like Aundh soon witnessed a slew of projects by property developers. Similarly, property prices in Baner and Wakad rose so steeply that they finally corrected.
New Focus On Pimpri Chinchwad Municipal Corporation (PCMC)

As things stand now, central Pune no longer has an iota of its previous quality and ambience in residential property offerings. It is therefore not surprising that homebuyers are beginning to focus on the Pimpri-Chinchwad Municipal Corporation. This area has, in fact, emerged as the last outpost Pune’s previous residential property comfort levels.

The Pimpri Chinchwad Municipal Corporation first came into the limelight as an industrial area. However, it also has an advantage that central Pune does not – planned development. The growth of the real estate sector in the Pimpri Chinchwad Municipal Corporation is closely regulated by the PCNTDA, which works together with the PCMC to ensure planned and realistic growth.

Central Pune continues to suffer from pollution, depleting greenery, traffic jams, water and power scarcity, lack of proper infrastructure and unrealistic residential property rates. Meanwhile, Pradhikaran (the location that defines the PCNTDA) has been benefiting from sensible real estate development.

If one studies the demographical development of Pune real estate growth, it is evident that Pradhikaran is precisely where the city’s growth is headed in the North/North-Western direction. This is extremely significant in terms of long-term residential property investment.
The Importance Of Pradhikaran

In years gone by, the PCNTDA began to acquire land in the PCMC area so that planned development could take place in the future. This planning included the allocation of specific areas for industrial activity, residential property development, public parks, unobstructed spaces, shopping centres, office buildings, roads and utilities.

Water supply to all sectors was ensured by the construction of several mammoth water tanks, each with capacities of several million litres, before development was permitted in each sector. Once this was done, the PCNTDA made the developed land parcels available to property developers.

The PCMC master plan also provides for generous road widths, the likes of which are impossible elsewhere in Pune. This goes a long way in preserving one of Pradhikaran’s natural splendour and hygiene.


Because of these factors, and also because of the growth in the PCMC industrial belt, the last two years have witnessed a huge increase in demand for residential property in the Pradhikaran area.


The fact that a number of large international companies are operating in nearby Chakan has, in fact, been a primary criterion for the area’s development profile. These companies regularly deliver thousands of jobs at all levels, which has had a telling effect on Pradhikaran’s general economic status. Specifically, there has been a huge surge in demand for residential property there.

Pradhikaran’s expansion, which has been inspired by the Chandigarh model of controlled development, began with a few hundred acres. Today, the area speaks for about 7000 acres. Pradhikaran is continually seeing infrastructural enhancements on all fronts – including roads, water and electricity supply and digital connectivity.

Pradhikaran now boasts of massive integrated township projects that offer all the hallmarks of ambient, sustainable living. Apart from the high lifestyle quotient, the investment potential of these townships benefits from a magic mix of real estate market drivers. The presence of Tata Motors , Talawade, Hinjewadi, Chakan and the Pimpri-Chinchwad industrial belt add to the value of these townships, while the Mumbai-Pune highway and Expressway make it advantageously accessible to the financial capital of Mumbai