Tuesday, March 27, 2012

WHY ARE PROPERTY RATES SO HIGH IN WAKAD PUNE


WHY ARE PROPERTY RATES SO HIGH IN WAKAD PUNE
MUSINGS OF A NOVICE SELF-STYLED PROPERTY GURU Part 1
By
VIKRAM KARVE

I live in a place called Wakad in Pune. Luckily, my house is in the better part of Wakad, serene relatively green unpolluted South Wakad, and not in the grimy congested noisy polluted concrete jungle of North Wakad.

I’ve lived here for quite sometime now (almost two years) but nothing has changed for the better. Even now (as was two years ago), there is Zero Quality of Life in Wakad since there has been no improvement in the amenities and infrastructure.

In Wakad, the roads are perpetually dug up and there are no footpaths to walk on and nowhere to go for healthy walk, except the verdant Mhatoba Temple Park on the banks of the Mula River where you can stroll on the expansive grassy green lawns and enjoy the fresh unpolluted air and noise-free atmosphere.

Public Transport is pathetic and you must have your own vehicle (and you must know how to drive) if you want to live in Wakad.

Even for your basic needs and requirements you have to go towards Aundh or Baner in Pune, be it food, shopping, banking, school, doctor or dentist – you name it and it is not there in Wakad.

If you want to go to the Post Office the nearest one is in the Rajiv Gandhi InfoTech Park at Hinjewadi almost 5 kilometres away.

And if you want to see a movie, you better forget about it, for the nearest Multiplex called E-Square is more than 10 Kilometres away.

So the best way to live in Wakad is to stay inside your home and develop hobbies like reading books, watching TV, hearing music or indulging in meditation and cultivate what is known as a “retiring nature”.

That is why I wonder as to why property rates are so high in Wakad, despite the woeful lack of amenities and zero quality of life. When I ask someone they say it is all because of these overpaid young IT Nerds (“Techies”) working at the InfoTech Park at Hinjewadi, who at a very young age have plenty of disposable income, and most of these Techie Couples are desperate to buy houses . It seems that the priorities of these IT Nerds, Geeks and Dorks are all mixed up – you won’t believe it, but I recently met a newly married Techie DINK Couple who were more worried about buying their own house rather than having their own baby.
(Yes, Investment in Property takes Priority over Investment in Family)

Is this the reason why property rates are high?

One thing is sure. In the case of other products prices primarily depend on input costs, production costs and brand value (due to guarantee of quality). Real Estate Prices depend purely on Supply and Demand. That is why whereas the same specification product (Car, TV, Washing Machine etc) will cost roughly the same all over India, the cost of a same specification house will be wildly variable depending on the location. Real Estate Prices are sometimes 10 times more (or even 20 times more) in some cities compared to other cities and property rates vary a great deal even at different locations within the same city.

Therefore, in order to get a proper estimate of the property price at a particular place you must have a “quantitative” measure of the Supply versus Demand Equation. A few days ago, I learnt that there is indeed such a measure and it is called INVENTORY OVERHANG.

What exactly is Inventory Overhang? Is there a relation between real estate prices and inventory overhang? I’ll discuss this with you about it in my next post.

Meanwhile, I’ll walk around Wakad and try to estimate the Inventory Overhang out here and try to explore how this may impact property rates in Wakad Pune.

Till then, happy house-hunting and have a good day.

And, by the way, if you know why property prices are so high (or low) in your city, do comment and tell us…

To be Continued in Part 2…

VIKRAM KARVE
Copyright © Vikram Karve 2012
Vikram Karve has asserted his right under the Copyright, Designs and Patents Act 1988 to be identified as the author of this work.
© vikram karve., all rights reserved.

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About Vikram Karve

A creative person with a zest for life, Vikram Karve is a retired Naval Officer turned full time writer. Educated at IIT Delhi, ITBHU Varanasi, The Lawrence School Lovedale and Bishops School Pune, Vikram has published two books: COCKTAIL a collection of fiction short stories about relationships (2011) and APPETITE FOR A STROLL a book of Foodie Adventures (2008) and he is currently working on his novel. An avid blogger, he has written a number of fiction short stories and creative non-fiction articles in magazines and journals for many years before the advent of blogging. Vikram has taught at a University as a Professor for almost 15 years and now teaches as a visiting faculty and devotes most of his time to creative writing. Vikram lives in Pune India with his family and muse - his pet dog Sherry with whom he takes long walks thinking creative thoughts. 

Vikram Karve Academic and Creative Writing Journal: http://karvediat.blogspot.com
Professional Profile Vikram Karve: http://www.linkedin.com/in/karve
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Email: vikramkarve@sify.com        

© vikram karve., all rights reserved.

© vikram karve., all rights reserved.


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33 comments:

  1. AnonymousMarch 27, 2012 at 4:54 PM

    Hi,

    Property rates are high because there is demand for them, either actual or perceived.

    IT Nerds, Geeks and Dorks are certainly attributed for this as also for growth of malls and other expensive outlets.

    But this reasoning looks quite simplistic, is it possible that these Dorks are simply the fruits of the trees sown by the previous generation. Of course not, we all know that old songs are better that new songs but are all old songs better than all new songs ;-)

    I do follow many of your writings, thanks for writing and sharing.

    -Bala

    ReplyDelete
  2. Vikram Waman KarveMarch 27, 2012 at 6:05 PM

    @ Bala - You've hit the nail on the head - maybe it is PERCEIVED DEMAND that is driving the property prices upwards. But then who is creating this perception?

    ReplyDelete
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    ReplyDelete
  4. UnknownMarch 28, 2012 at 6:16 PM

    Thanks for giving latest information. we do bookmark this blog for future info. Property in Pune

    ReplyDelete
  5. AnonymousMarch 30, 2012 at 7:53 AM

    Hi,

    Well from what I see, some of the reasons for this perception is when people say "I brought the property for 1X and now in just 5 years it is 1.5X". Advertisements of "your own sweet home". Easy loan availability. Unprofessional house renting practices (at least in our neighbourhood :) ).

    I guess ultimately it boils down to people not doing enough paper calculations on cost and benefit and taking the option which is initially easy and go with what society thinks is the correct way.


    By the way looks like there is no easy way to get notified of comments like it happens in facebook.

    Thanks,
    -Bala

    ReplyDelete
  6. Vikram Waman KarveMarch 31, 2012 at 12:54 AM

    @ Bala - You are right about all the points, especially unprofessional rental practices.
    Yes, about automatic comment notification, I think wordpress has it, not blogger

    ReplyDelete
  7. i-thinkApril 4, 2012 at 12:06 AM

    Hi Vikram,

    The upsurge in property prices has to be seen in the context of a) 'sizeable chunk of population with high investible corpus / income b) easier credit norms and low interest rates.

    The two decades of unfettered growth post economic liberalisation carried out in the 90s has left a sizeable population with huge corpus of money. Now you can do the maths yourself. Land bank (in cities) being limited/fixed a higher %age of population with more income translates into higher demand and since in Real Estate there is a time lag involved between demand of units and supply of residential units prices can at times see a very sharp up or down trend (no wonder it is considered a high risk sector).

    It will be wrong thing to question the priorities of the young IT nerds for they are just responding to a market condition - they have income, they are getting credit at affordable rates, their investment will CERTAINLY bear fruits if the growth momentum continues (maintaining current levels) in atleast the next 5 years or so (which is likely); so it makes sufficient sense for them to invest.

    I am sure you will be glad of your investment within the next 5 years as Pune attracts more corporate investment bringing more people in which will not only prompt civic authorities to provide better amenities but will also attract private businesmen/retailers.

    Praveen K Rai

    P.S. Real Estate prices are also affected to a very large extent by 'Speculative Demand' which I have not touched upon.

    ReplyDelete
  8. Vikram Waman KarveApril 4, 2012 at 11:32 AM

    @ ithink
    Hi Praveen,
    Thanks for your detailed analysis. The reasons you have given for the enormous rise in property rates are quite apt. I must address some issues you have raised like the time-lag between demand and supply soon in my blog.
    You are quite right about speculative demand too.
    Thanks for your comments which have enhanced the value of my blog.
    Regards
    Vikram

    ReplyDelete
  9. UnknownApril 9, 2012 at 5:51 PM

    Thanks For Providing the Information..I do bookmarked it for further info. Property in Pune

    ReplyDelete
  10. property sitesJune 8, 2012 at 12:30 PM

    Vikram you maintain too many blogs! You update us with interesting latest real estate trends!

    ReplyDelete
  11. Vikram Waman KarveJune 12, 2012 at 3:29 PM

    Will Property rates fall in Wakad? I am going to write something soon.

    ReplyDelete
  12. Vikram Waman KarveJuly 24, 2012 at 12:55 AM

    Wakad - Property Rates are too high considering amenities and quality of life

    ReplyDelete
  13. AmitSeptember 2, 2012 at 10:19 AM

    The new generation is not interested in the center parts of the city (as the buildings and living style are old fashioned). Wakad is a good option for modern generation.

    It is close to: offices, good schools, main city, food mall, restaurants, aditya birla hospital, and to Lonavala and Mumbai. Also in future, wakad will have metro. The roads are quite broad.

    Banks and malls are however missing but I am sure they will surely come up as there are large vacant spots available for grab and that are so many residential projects are ongoing. I could imagine a 7 floor multiplex.

    ReplyDelete
  14. Wllknown of wakad areaSeptember 21, 2012 at 4:18 PM

    total of bullshit.. in 2 years u never came out of the lane you live and hence you need to go 5 kms to post a letter and more than 10 kms for a movie.
    A kid from wakad can direct you to finest restaurants, bars, hospitals in the range of 5 kms max (and I mean it max to max 5 km, I can get you everything includig a pub in the range of 3-4km).

    ReplyDelete
  15. Vikram Waman KarveSeptember 23, 2012 at 1:35 AM

    Dear Wllknown of wakad area:
    Do tell us whether there is a Multiplex in Wakad?
    The nearest ones are ESquare near Ganeshkhind (12 Kms away) and BIG Cinema in Chinchwad (8 kms away)
    And I was talking of family social infrastructure, not about puns and bars. There is no Mall or decent family restaurant in Wakad, you have to go to Aundh or Baner.
    Just look at the roads in Wakad which are constantly dug up.
    The poor infrastructure in Wakad certainly does not justify the exorbitantly high property prices in Wakad which are mainly propped up due to hype and high rentals due the cash rich IT Techies from Hinjewadi.

    ReplyDelete
  16. AmitOctober 7, 2012 at 11:38 AM

    Hi,

    Imagine the rates when the infrastructure improves (which will as it is a developing area), malls come etc..

    See other cities of India and then you will realize the strengths of Pune is and the importance of closeness to Mumbai and one of the largest IT park.

    Best,
    Amit

    ReplyDelete
  17. AmitOctober 7, 2012 at 2:08 PM

    Can somebody comment on Tip top mall on the Mumbai Pune bypass road. And also the stop 18 multiplex.

    ReplyDelete
  18. Vikram Waman KarveOctober 7, 2012 at 6:07 PM

    Hi Amit:
    Please tell us where the Multiplex and Mall are coming up in Wakad.
    If this is true it will certainly be welcome since now the nearest Multiplex is ESquare more than 10 Kms away (or BIG Cinema in Chinchwad) and the Malls are in faraway Aundh.
    Are you talking about the building on the Bypass opposite Sayaji Hotel? Well, it seems to have come to a standstill.
    Yes, as you say, compared to some other cities in the upcountry, Pune may be better, so people from there are migrating here.
    Let's hope for the best.
    Regards
    Vikram

    ReplyDelete
  19. AmitOctober 10, 2012 at 12:52 PM

    Spot 18 Mall & Multiplex, Rahatani Road (www.5starconstructions.com/index.php/projects/ongoing-project/spot-18)

    ReplyDelete
  20. SyedOctober 14, 2012 at 11:57 AM

    There is another mall/multiplex coming up... Xion mall by Paranjape on Wakad/Hinjewadi road...
    Spot18 is coming up near pimple saudagar.

    ReplyDelete
  21. AjayNovember 7, 2012 at 7:21 PM

    1) Baner and Aundh price are already higher side and so alternative is either Wakad, Warje or Hinjewadi , if you looking in Pune-West
    2) Sooner Wakad area will have big Malls one near Blue Ridge , other in Life Republic, People of wakad will get east access to these malls compare to people of Baner and Aundh as they are towards city.
    3) Connectivity of Wakad will improve with the completion of DP Road
    4) Metro plan will pass through Wakad.

    Regarding Govt amenties like transport, school , post office, etc all will be at door step of Wakad , lets the civilzation settle down in Wakad and slowly things will arrive. :)

    So you see atleast next 5 year we have good development in Wakad.

    I hope these are enough reason for a rising price.

    Sir, people dont want walking and running path , then need good connectivity , good road, and water and electricity . Flat price depends on in.

    ReplyDelete
  22. AnonymousNovember 11, 2012 at 5:28 AM

    Hi,

    I bought a row house in (vishal nagar)wakad when the property rates were around the INR1500/sq ft mark. Today my property has almost tripled in price if not more. I think with the way malls/garden/shops/restaurants are being developed in wakad and with proximity to bombay-pune expressway and IT park, prices in this area will continue to grow.

    ReplyDelete
  23. Vikram Waman KarveNovember 11, 2012 at 9:42 AM

    If you go to Nagar Road Side (Kalyaninagar, Vimannagar,Kharadi) there are a number of malls and multiplexes and restaurants whereas there is no multiplex, mall or good eating joints around Wakad. You have to go all the way 12 kilometers to ESquare to see a movie or another 10 kilometers to Aundh for shopping and restaurants.
    The inadequate facilities and poor quality social infrastructure does not justify the high property prices in Wakad so I feel that unless amenities come up fast, the property prices will not go up much in Wakad as compared to other places in Pune where the quality of life is much better than Wakad.

    ReplyDelete
  24. Vikram Waman KarveNovember 11, 2012 at 9:49 AM

    Is there a MULTIPLEX coming up in Wakad?

    Is there a MALL coming up in Wakad?

    ReplyDelete
  25. Vikram Waman KarveNovember 11, 2012 at 10:00 AM

    Wakad is suitable only for those working in Hinjewadi and those requiring to go to Mumbai quite often - not for anyone else

    ReplyDelete
  26. Real EstateNovember 15, 2012 at 3:25 PM

    i think it is best article post . i really like it ..

    thanks for giving latest info about real estate property

    ReplyDelete
  27. ShankarNovember 20, 2012 at 12:24 PM

    As someone already pointed out there is a 3-storey Xion mall by Paranjpe coming up near D-Mart on Wakad-Hinjewadi road which will house popular multiplex chain e-square. Also adjacent to this project is The Gateway Hotel- by Taj Group which will prove as an catalyst to the growth of Wakad in future.

    ReplyDelete
  28. Vikram Waman KarveNovember 20, 2012 at 7:22 PM

    @ Shankar - Thanks for the information regarding upcoming social infrastructure near Wakad. Once a Mall and ESquare Multiplex come up on the Wakad Hinjewadi Road it will be great. I hope they build it fast.
    I see a branch of Axis Bank also coming up on the Main Road in Wakad. I hope Wakad becomes like the Kalyaninagar Area on Nagar Road.

    ReplyDelete
  29. AnonymousMay 3, 2013 at 9:45 AM

    Its not only wakad its just that there is no place left currently in Pune where people can afford to buy flats.

    IF you see around 3 or 4 years back when there wasnt much of a demand in Wakad for flast the rates were fair enough now slowly people have started eyeing property in wakad cause across other locations the price/sq ft have risen to 6 to 7k/sq ft

    Wait for a year wakad will be equally expensive and people will start looking at talegaon for flats where rates today are reasonable and we will be speaking abt talegaon in few more years.

    Malls/Multiplexes - Well its good idea to have them a few Kms away from where you live else its a big hassle look at kothrud where we have a Mall/Multiplex adjacent to each other
    Food Joints - Hinjewadi has N no of food joints you need the thing is people dont prefer to goto Hinujewadi cause everyone staying around WAKAD is an IT Nerd and it feels you are going to office if you visit McDonalds or Mezza9 over weekends once people start flocking to these joints you will have ample options

    ReplyDelete
  30. Vikram Waman KarveMay 3, 2013 at 11:12 AM

    @ anonymous - you have indeed made some good points about the real estate scene in Pune.
    You are right about the chaos in Kothrud too due to Malls/ Multiplexes (this is happening in Kalyaninagar and Aundh too)

    ReplyDelete
  31. AnonymousJune 2, 2013 at 12:58 AM

    I know this blog is an year old. But since the points discussed hold true even today, I would like to share my thoughts - I had exact same thoughts about Wakad and surrounding areas a couple of years back. I live in Pimple Nilakh, and was in Germany for a couple of years. I can see there has been quite a change in those 2 years in Pimple Nilakh, if not huge.. But it definitely has turned from a bunch of barren pieces of land to very distinct and pleasant residential area.. The road from Wakad to Vishalnagar looks nothing like it did around 3-4 yrs ago.. Although construction is slow, I must admit it's a huge change.. I feel very positive now..
    As for the discussion on malls and multiplexes around Wakad, I can see the following upcoming projects:
    - Xion mall+multiplex on Hinjewadi-Wakad road
    - Spot18 mall+multiplex at Pimple Saudagar
    - Sai Crystal mall at Pimple Nilakh.. Upcoming DMart (as told by NSG builders)
    - Omega Paradise mall, Wakad
    All 4 are under construction.

    I'm so eagerly looking forward for all of these.. If anyone has info on opening dates of any of these, or info on more upcoming malls, request you to share..

    Best regards!!

    ReplyDelete
  32. AnonymousJune 27, 2013 at 9:21 AM

    Spot 18 in Pimple Saudagar will open around December 2013.

    ReplyDelete
  33. plots property portal in thaneAugust 26, 2013 at 2:33 PM

    The property rates are rising because there is scarcity of properties in good locality and as far you said that Wakad is the place which is away from pollution , hence people want property which is Eco-friendly where they can breath fresh air and they are ready to pay the amount for it

    ReplyDelete

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