Predicting the Future, Union Budget 22-23 & the Real Estate! (Post Budget)

 

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“Prediction is very difficult, especially if it's about the future” … Niels Bohr.

Niels Henrik David Bohr was a Danish physicist who made foundational contributions to understanding atomic structure and quantum theory, for which he received the Nobel Prize in Physics in 1922. Bohr was also a philosopher and a promoter of scientific research. No wonder for his above quote as Niels wasn’t just a scientist that too of Physics which deals with dimensions of the world of which time (read as future) is one aspect yet he is so sceptical about predicting future because he is a philosopher too! Keeping due respect to Niels’s words, I will add that predicting something is fine but the problem is don’t go blindly by what has been predicted & be prepared if the predictions don't stand to reality! Especially when the subject is of money & I am referring to real estate which does require lots of it & obviously when we worry for the future or look for knowing the future nine out of ten times it’s about the money, we are eager to know! No wonder, of late I have been often asked by my friends from different professions as well even from real estate about the future of real estate, especially when life was just getting to real normal post third wave of Covid & the war between Russia & Ukraine broke-up! Many will say what we have to do (read as real estate) with it but the same way there were jokes being cracked when first Covid wave had hit China in Wuhan on Oct 19 & we neglected it & we witnessed what happened there after for nearly two years & more, right? Same way this war which may seem to be between the two countries which may seem far from us but is already knocking on our doors in the form of a crashed share market, increased steel & oil prices & this is just beginning, so let’s be prepared!

Coming back to the future of real estate, let me tell you, I am no fortune teller, predication, yes but do mind when you ask future of the real estate, it will be always going to be get better with every year & I am not saying it because I am a builder but that’s what history tells us! When you want to predict about the future one has to be specific while asking questions about the future then only there are chances of predications getting right or close to right! And then difference between a horoscopic fortune teller & a logical predictor of the future (which I am trying to do) is, predictions are often based on the experiences, self or others, which in a way is a history too! So, if you refer to the history, then before every war there is slowdown in the market, during war the market crashes & the post war the market rises but only the survivors can enjoy the fruits of the rise in the post war market is “Waidhanic Ishara” i.e., Statutory Warning, in normal language! Here the market is real estate & even the last two years also were of war only that war was with unseen enemy in the form of virus & this one is being fought on other country’s land but the tremors are being felt in our country’s real estate also or will be felt!

Now, if you are interested in knowing about the prices of land & homes in Pune then they will keep increasing, may be at lesser speed but then on personal note I have never favoured a fast increase in rates of real estate (read as homes or land) as that drives away the real buyers or end users is a fact. So, in my opinion, if you are looking as an investor it means buying a flat in booking & selling it after getting possession, then keep away from real estate unless the location is super special as still the L (location) factor governs many things in the real estate. Taking our Pune city in consideration, it is going to be the hottest destination for many not because I do business here but post war (both Covid & Ukraine) people will seek comfort on two fronts, career i.e., jobs & health! And Pune has got both but at the same time with Pune & PCMC Municipal Corporation’s boundaries extended, lots of lands will be available for development with huge potential of FSI, which means big supply of so-called affordable homes will be there! At the same time thanks to UDCR (Sale development control rules for the entire Maharashtra State) even with old city limits of Pune also there is a jackpot of FSI, thus more options available within the city in the form of redevelopment of the existing societies! As all this FSI if on one hand is boon for the land owners then builders must not forget that they are not going retain or stay in all the homes they are being build but they have to sell these homes & in the price which the customer is going to negotiate with Lightsaber in both the hands (Sorry common readers, it’s a Star-Wars terminology, Lightsaber is fictional Laser Sword) & profit margins are not going to be great even if the product is perfect!

And then as usual none (literally) of the real estate industry’s (read as builder’s) demands, needs, whatever you call it has been considered in the Central Budget 22 & neither it will be considered in the State Budget also. Right from GST equalization to 6% GST on both ready possession or work in progress homes, to fund for real estate construction at lower interest rates to wave out interest on project finance in lockdown period to Income tax applicable only after the sale of the units & many such, none has been taken in consideration by Hon Finance Minister. Same way the rise in Stamp Duty (don’t even think of reducing it) to Cess (extra 1% stamp duty or tax) in the Metro route cities to controlling prices of steel or cement, no such demand will be considered by the State govt is one sure future, I can predict as the govt needs funds, if the builder bleeds to deaths, that’s their concern & not the govt’s! And thus, the future for the builders is tricky even if the future for the home buyers is good! Though there are some good things such as focus on Ease of Doing Business & nearly Rs 10 lakh crore provision for infrastructure which included roads, water supply schemes & railways tracks will definitely help on two fronts, one is movement of the money in the market & second is saving of personal expenditure in the form of fuel for commuting! Though one major failure is infrastructure in & around urban settlements by the local bodies for which no specific provision like Smart City Mission is there! As well, the public health sector also has got lots of funding in the Budget 22-23 which will be a major aspect for making decisions post this Covid thing. This is one of the main reasons many youngsters are deciding to settle in Pune with their parents along with so many facilities of Public Health, they can relax on the front of healthcare of their seniors in the family!

Because the homes will be available & with lots of options to choose from the home buyers will have to be careful as all that comes cheap, may not be the best in the future & a home (even ready possession) is also not an exception to this law of commodities! Though looking at the trend in the new year 2022 post the third wave, one thing is sure & that is the need for ready possession homes & with more numbers of rooms are in demand. Most important thing for any industry is demand & for the homes it was always there but the conversion rate which was down for last few years has increased as with the uncertainty faced by all the segments of the society need of owning a home which is a best place in any crisis & in a right city, which Pune certainly is! Rather the need is more numbers of the rooms while sizes of the rooms may be small (not cramped) & location has slightly declined as more rooms means more area & bigger budget. So, the buyers are ready to move slightly away from city centres to balance the budget & need of the bigger home & ready possession is key word as it saves GST as well you don’t have to keep paying EMI & rent of existing home at a time! Here after every rupee is going to count & infrastructure costs for living which includes parking spaces as well common amenities may be looked at as spending rather than luxury or necessity!

All in all, the future of Pune real estate was, is & will always be good; just two things, one is how you define “Good” & second is what role you will be playing in the real estate while defining your “good”!  Because a home will always be a basic need for every living entity, the issue is one has to live by need & not greed, that is what will decide your future with real estate, even in the city like Pune!

Sanjay Deshpande 

Sanjeevani Dev.

Please view my sharing about real estate in Pune at You Tube link below..

 

https://www.youtube.com/watch?v=g4xX7eopH5o&t=5s

 

Please do visit my blog links below to read about real estate & home buying! 

https://visonoflife.blogspot.com/2021/09/choosing-right-home.html

http://jivnachadrushtikon.blogspot.com/2021/09/blog-post_21.html

Creating Togetherness; team Sanjeevani Way (Click link below) 

https://www.flickr.com/photos/65629150@N06/albums/72157627904681345

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