The Role of Government Policies and RERA in Shaping Real Estate Investments in Pune
By Kaushal Agarwal
Pune, 5th December 2024: Once referred to as the ‘Oxford of the East,’ Pune, a vibrant city with its robust educational IT sector and a burgeoning IT sector, has experienced significant growth in its real estate market following significant infrastructural developments over the past decade. The transformation of its landscape has been triggered by regulatory government interventions, particularly the Real Estate Regulation and Development Act, 2016. It helped to iron out the challenges that historically plagued the city, which included issues of transparency, delayed projects, and disputes between buyers and developers.
The implementation of RERA across several states in India, including Pune, resulted in the streamlining of processes and regulation of the real estate sector, bringing in transparency by encouraging accountability among developers, which in turn protected the interest of the homebuyers and ensured completion of projects on time.
MahaRERA impact on Pune
The impact of this was largely felt in Pune, as strategic initiatives like RERA, along with progressive government schemes, helped to unshackle it from a history of dubious practices employed by developers, which included misrepresentation of project details, delayed possessions, and arbitrary price hikes. The uncertainty and distrust that the realty market in Pune evoked damaged its reputation, which was worsened by a lack of regulatory framework needed to ensure a smooth process and transactions.
Apart from regulating the real estate market of Pune by introducing transparency, RERA also made project registration with MahaRERA compulsory. This entailed the disclosure of project details as well as ensuring that developers deposited 70% of funds received from buyers into escrow accounts for project construction. The buyers were further protected with the inclusion of clauses like 15A that addressed broker payments and dispute resolution mechanisms.
Governmental schemes & numbers peak
With support from governmental housing schemes like The Pradhan Mantri Awas Yojana (PMAY) which encouraged construction of affordable houses, making them available to various income groups led to a surge in housing projects that catered to the low-to-middle income housing groups in Pune. It also offered attractive home loan schemes with lower interest rates and extended repayment tenures. This, along with substantial infrastructure investments such as the Metro Rail and Pune Ring Road, not only unleashed the transformation of the city but also bolstered its real estate market in the city and attracted buyers and investors in droves. Today, this confidence in the realty in Pune is not only reflected in the local buying house activity but also in the surge of foreign direct investment (FDI) inflows in it.
The residential segment of the real estate market of India has been projected to go up by USD 1 trillion in 2030, which is more than double the USD 200 billion by 2030. It is also expected to contribute 13% to the GDP by 2025.
Out of that, Pune’s residential sector alone recorded a total of 127,108 property registrations in the first eight months of 2024. It reflected a substantial 40% increase compared to the same period in 2023. Stamp duty collections also saw a rise as it crossed ₹4,736 crores during this period, representing a remarkable 47% year-on-year growth, as per the reports. This reflects the two-fold trust that the real estate market is beginning to enjoy—developers are increasingly willing to comply with regulations, and buyers are demonstrating growing investor confidence. The numbers, too, present a promising outlook.
Challenges to overcome in the future
Despite making significant progress, Pune’s real estate sector still faces challenges requiring attention. It needs to streamline project approvals to expedite the development process, which remains a key concern. There is also a need for greater clarity regarding tax incentives in order to make it affordable as well as attract further investments.
Lastly, the strengthening of the grievance redressal mechanisms under RERA is also vital for the future of Pune’s estate market. In ensuring timely and effective resolution of disputes, protecting consumer rights, and encouraging innovative development practices, it will be able to maintain investor confidence and nurture a transparent and reliable market. This not only enhances the quality of living of the people in Pune, but also makes it the swankiest address in Indian realty.
(About the author: Kaushal Agarwal, Director and Co-Founder at The Guardians Real Estate Advisory)
