REAL ESTATE PATNA

Mr. Bihari is a proud Father. His only son is in USA; the land of prosperity; and is very prosperous there. He is working for one of the best consulting firms of the world and after 15 years is on a senior position. The son is well settled NRI or we should say NRB (Non Resident Bihari) drawing five figure monthly salary. The son’s only son goes to a Private school; he has bought a KOTHI in USA spread in half acres or in Bihari terms 16 katthas. (1 kattha=1361 sq.ft in Patna). Additionally Mr. Bihari and Mrs. Bihari frequently visit their son. The son too flies to Patna once in two years for a month or so.

There are only two scenarios where Bihari middle class parents are really proud of their son. If they are settled in a job outside Bihar, the greater the distance of settlement from Bihar the better or the son has a Government Job. For daughters the Bihari parents in addition to these two criteria for sons have another criterion. The daughters married to these worthy types of NRBs or Government officials.

Mr. Bihari is well past 65. He is retired. In the last decade or so he has travelled to USA many a times. If you ask him to compare Chicago. where his son lives, with Patna; as a gentleman he smiles and replies, “Let us not do it.” In Patna Mr. Bihari spends most of his time at home, reading. He is a vivid reader. Apart from reading one more regular feature of his everyday living in Patna is the morning walk at Botanical Garden and evening walk at Children’s Park Shrikrishnapuri. He has a gang of friends at both these places. They walk for hours. They walk and they talk and they talk and they walk in the morning and evening. This part of Patna routine is what Mr. Bihari misses when he is with his son in USA. He admits that he also misses the food and a number of relatives and functions.

Mr. Bihari is in mid 60s but his ambitions are still soaring. He with his retirement funds and with the help of his ABLE son wants to get a KOTHI in Shrikrishnapuri area. We call him ambitious because prices in Shrikrishnapuri are about a Crore for a Kattha of land. Secondly the inventories are rare and the demand is more. The property rates reflect the same. And it is not Mr. Bihari alone but few colonies of Patna like Shrikrishnapuri, Patliputra and Rajendra Nagar are still the STAR property sites for possessing in Patna. Why not. They are few better places of living in Patna.

On Patna ka Apna Property Portal, www.buysellrentpatna.in. Mr. Bihari’s son sitting in USA found a property in Srikrishnapuri to his and his father’s liking. The property was spread in 3.5 katthas of land with a beautiful garden and an old Bungalow. They saw the Pictures and then the site visit was conducted. They liked it. Now, the game began….NEGOTIATIONS. It took three months to reach the final price of 4 Crores and ten Lakhs. Paperwork was readied by BuySellRentPatna.in. Shrikrishnapuri is housing society so a bit more of paper works. Then both the parties came to Patna at the fixed time and the property exchanged hands.

Source: RBI, Ministry of Roads, JLL REIS

The correlation between building road infrastructure and restricting house prices to moderate levels in Indian metros is shown in the above graph.

Length of road construction is known to have a direct bearing on real estate anywhere in the world and our Patna is no exception. But what is the correlation of Roads and prices in Patna real estate market? Does road building check property prices in Patna or they help them to rise?

As road lengths increase and there quality improves. connectivity improves across a wider geography – thereby attracting new project launches at lower price points away from the centre of Patna. An example is the connectivity of Bihta with Patna through the road. Another example is the flyover built above the Raza Bazaar area; it has made western Patna, Danapur, Khagaul, and Shaguna Mode more accessible as residential property market option. This has reduced or better say checked prices in central Patna. This would also help increase affordable housing projects near Patna in areas like Sampatchak. Bihta and Phulwarisharif.

This holds for intra city connectivity but what about roads built to connect Patna with other areas of Bihar?

If more roads are constructed to connect the state capital, Patna, with other parts of Bihar, property prices rise in Patna as the demand for property in Patna increases from people all over Bihar. The very best example has been the construction of Gandhi Setu in 1980s. It led to introduction of APARTMENT culture in Patna.

Currently, the only solution to the problem of urban housing shortage in Patna is building new infrastructure to connect more outer areas to the city centre. We at BuySellRentPatna.in feel that when new roads are constructed across rural and urban areas in Patna, the spread of development happens over a wider geography. These potentially bring down the premium that certain urban centres in Patna command for having better connectivity. This is particularly true for our infrastructure-starved city, Patna.

Fortunately, road infrastructure has emerged as a key focus area for the current state government. The young Deputy CM of Bihar, is keen on improving connectivity in and around Patna at a greater pace. According to media reports earlier this year, he has an ambitious plan to connect Patna with the most distant part of Bihar within Five hours. This is expected to improve freight movement, ease traffic bottlenecks and improve inter-city connectivity in the state. It will be interesting to watch residential property price movements in the coming years in Patna after completion of a number of road highways and bridges in and around Patna. We say so because as soon as roads are laid the adjacent land owners start demanding prices in multiples of previous price, and real estate prices in Patna are driven therefore more so by land component than construction and other soft costs. Strict restriction in land usage in Master Plans with no change permitted later would help set right the property prices in Patna.

It all began in 2013 and then 3 more years 2014-15-16 that Patna real estate has gone down and down searching not for growth but the BOTTOM. A screener that can be used to measure the “freefall” is that a leading English Daily, Times of India . closed the publication of its monthly property supplement for Patna due to lack of interest of readers and more important revenues. We have named these down and down years the “Kuldeep Narayan Era ” of Patna real estate after the erstwhile Municipal commissioner of Patna for major part in these years.

As it seemed that the U turn for Patna real estate has arrived in the last half of 2016, the number of new real estate regulations and Demonetization by the “King of India” bombed Patna property market to take it to new lows. What is in store for Patna Realty Market in 2017 in light of introduction of regulations like RERA . Benami Transaction Prohibition, REITS, GST, lowering interest rates, lackluster interest of State government for Urbanization and industrialization, shift of focus on Affordable housing and of course the Demonetization. In one line, we are going to see PATNA REAL ESTATE decidedly demarcated into categories called GOOD, BAD and UGLY in 2017. The entry barriers will rise and the survival of the “adopter of changes” will be the story of the year.

We prefer to start with the UGLY so that we close the article on good note; Happy ending principle.

The Ugliest part of Patna real estate is Patna Nagar Nigam itself. What we mean can be realized by visiting the website of Patna Nagar Nigam, further verification can be carried by visiting its office and the last straw could be if you ask for any information regarding Patna real estate, not to speak about the experiences of the Patnaites having some or any work at Patna Nagar Nigam. The Patna Municipal Commissioner or the Mayor cannot even tell exactly that how many occupied Apartments exist under its own area. Pity. The more saddening part is that they are hell bent NOT TO IMPROVE EVEN A BIT. It is rotten to the stage that it should be dismantled at once and a NEW organization put in its place. Patna is without a TOWN PLANNER for decades, yes Patna Nagar Nigam has no Town Planner; JUMBO. Let us stop here for better and not discuss Master Plan. Smart city and many, many other issues. The cities have moved to Big Data. Predictive Analysis, AI, BOT, IoT, BlockChain but Patna Nagar Nigam has moved to medieval ages. We say medieval because in Ancient India Patna was one of the best cities of the world. (refer, Indica by Megasthenese) .

If anyone thinks that the Demonetization has dried liquidity in Patna Real Estate the most, “Rethink. ”. RERA (real estate regulation act) as a regulation; which still has not been notified by the state government of Bihar; is going to dry liquidity by about 60% in the real estate business of Patna. We do not see anybody really prepared in Patna Realty sector to be able to answer that. So we see issues coming up which will be not easy to handle once the state government notifies RERA . The biggest impact it will have will be on launch of new projects; RERA demands financial prudence and Patna property lacks it in abundance. The builders and developers in Patna will have to wake up or EXIT. To add, initially buyers will have their share of pains due to RERA. as if they did not have enough in last three years, it will invite number of new litigation and litigation means TARIK par TARIK… though with RERA unfair trade practices with be negligible and it will bring professionalism in the long run.

The third most populous state and the highest density population wise among states (when not considering UTs and Delhi) of India, Bihar had an impressive growth rate in last decade, more due to low base rate effect though. The urbanization of the state is only 11% and there are no signs that the state government has any intentions to focus on this parameter, we have been sleeping and we will keep doing so. Patna is yet not in the Smart city list. Not only URBANIZATION but our state Bihar has failed to attract industries too in the last decade. Even the service sector too seems to be stagnating in the recent years. But natural the employment rates are falling in one the youngest areas of the world. With it will falter the domestic consumption story of Patna and the bad news in Gulf will pound it further. On the other hand, a bit by the government can turn the story around. The fast growing young population of Patna has very little household debt and the finance industry is maturing day by day in Patna that will suit the borrowing needs of Patnaites. Added to this will be the repeated rate cuts by the RBI in 2017 and we have perfect conditions for Home purchases. Additionally investors all over the world and India are desperately chasing yields and Patna could be that speculative play. INVESTORS in BIHAR, are we kidding, Not at all, 2017 is the right time for Bihar to woo INVESTORS from CHINA and JAPAN. Bihar needs to fully focus on these two countries and the ball will start rolling. They need us as much as we need them. All this will lead Patna’s middle class to come to its own and sure to demand housing to suit their tastes.

An IT park has been announced (only announced) for Patna recently, at last. Though the IT sector has peaked a bit all around world. We are preparing for the second round of IT boom. The important thing is at least we now recognize that IT is required in Bihar. Similarly if the government realizes that there is boom in business Park development all around India BUT Patna, it will be better. Patna sorely needs Business Parks due to the poor infrastructure in our venerable city and suburban development is creating entirely new business and residential neighbourhoods.

REIT s are still to see the light of the day in India and India is struggling to create REIT market for years. Therefore we do not foresee any REIT getting involved in the next two years in Patna real estate. Hopefully in 2017 REIT gets a start in India. Once it takes off on national level Patna can after a year or too can attract Chinese conglomerates to enter through this route too. That is why we are saying to start wooing them from this year only. Because in corporate investment, it appears that China’s most forward-thinking companies would see the similarities with their own nation and Bihar – and want to profit from them.

After a long haul of policy paralysis, Patna real estate is set to transform from a HUS -HUS market( no body shares information) to transparent one. The sector had perception failure till now, but the new regulations with a bit of support from the government will be instrumental in instilling more transparency in the sector and confidence among the home buyers in Patna. 2017 will be the year of implementation and digitization for the realty sector. The realty market of Patna will witness Digitization not only for payments but for whole processes involved, marketing, sales, office automation, vendor management etc. The re-sale market will subside in the background by the end of 2017 and the primary market will start dominating by the year end and more so by next year. These new regulations and decreasing interest rates have considerable potential to change the way Patna real estate sector works. The reforms are set to bring transparency and build a robust ecosystem. There will be a definite advantage to responsible developers in Patna and a game changer for others. Besides these, a couple of announcements seemed to be made in the passing but is extremely crucial to this sector. These were the intent to digitize land records at a greater pace in Bihar, change in arbitration norms for construction industry and setting up of a government committee to look into the strategic sale of government assets that include land and manufacturing units. All these changes too, we perceive to be the game changers for the industry in coming years.

Not long ago, Patna real estate was a seller’s market. Developers and Builders in Patna, even the ones with a terrible reputation owing to delays and quality of construction, were never short of eager home buyers in Patna. Patnaites embody the ‘roof over our heads’ aspiration like few others. That meant developers in Patna decided what the market wanted. They set the size of apartments in Patna, the price of property in Patna and the designs, quality. The customer’s choice was smothered by demand frenzy.

The three year “legal battles” all around the Patna property market has over hauled the scenario. As our founder calls it. the KULDEEP NARAYAN ERA of Patna property market, where any and everything in Patna property market was under the lens of municipal commissioner Kuldeep Narayan. He and his team brought Patna reality to a standstill. It was a nightmare for the industry along with the slowdown in economy. Just imagine that an individual in Patna could not have his map for his house passed and start construction for the whole period of this bizarre commissioner and his more bizarre ways. The notification of master plan and sensible people in control of things are bringing back normalcy to Patna real estate but it will take time. Hopefully the nightmarish, Kuldeep Narayan era never returns again.

At present time Developers in Patna are right-sizing, right-pricing, re-designing, even delivering apartments on time. Besides discounts of 8-10%, developers in Patna have taken to offering freebies such as gold coins, cars, and furniture to attract home buyers. They are also offering easy or deferred payment plans. In some cases, booking amounts have been slashed to as low as Rs 1. In other words, developers in Patna are giving unprecedented attention to customer care. Home buyers in Patna never had it so good. Demand exists in Patna realty market. But customers end up buying only when they are assured of correct pricing, product, payment plan, performance and most importantly, permissions from authorities. Building smaller homes without changing the per sq ft prices is another strategy that is gaining popularity. By reducing the size of houses, builders in Patna are trying to make the pricing attractive for buyers in Patna.

Many developers in Patna are highlighting that their residential projects in Patna are close to a major highway or expressway while marketing them. Obviously, there is a lot of notional value attached to homes which enjoy such a locational advantage. And our District Patna is getting a number of Highways built in it. The major ones are: -

5) Digha Sonepur railway cum road bridge over Ganga

However, there can be both advantages and disadvantages to buying a home in Patna which adjoins or is close to a major highway. Both should be considered before investing in a property in Patna .

In our city Patna, inter-city (ARA-PATNA, JAHANABAD-PATNA, GAYA-PATNA, HAJIPUR-PATNA) connectivity is literally a lifeline that feeds the economy. These cities-towns depend a lot on each other on various counts, not least of all being services, business exchange and manpower. As a result, being able to travel quickly either way is important for countless numbers of people living in either city-town. However, because of increasing inner-city traffic congestion, it can take an inordinately long time just to travel to the highway-bypass itself. This puts a heavy toll on both precious time and fuel expenses, so living close to the four lane - or any highway which affords quick access to key parts of the city or adjoining cities - can be a very desirable benefit for a home buyer in Patna .

One of the potential disadvantages of investing in such a property in Patna can be the higher rates which most developers in Patna will quote. Per kattha of land on these would be built highways are already priced above 10 lakhs. The asked-for premium can vary, depending on factors like the overall benefits being offered in the project. In a standalone smaller project which offers few or no additional facilities and amenities, the property price difference may not be all that much while it would certainly be higher in a full-fledged integrated township in Patna .

There is certainly no shortage of small individual housing projects in locations adjoining major highways. The developers in Patna of such projects would have purchased their plots quite a while ago in anticipation of the future demand, and therefore acquired them relatively cheaply. In Patna, many a times the plot is not out rightly purchased by the developers in Patna but an agreement to purchase within certain time period is entered into with the owner/owners. These are often anonymous or first time builders in Patna with little or no previous experience in real estate development. Their main objective is to make a quick buck on the back of the locational factor, so they keep the amenities in their projects to a minimum and will usually also cut corners on the construction quality. Obviously, buying into such a project merely to lock in the advantage of proximity to the highway or four lane can prove to be mistake. The standard of living will be quite low owing to the lack of lifestyle features and conveniences, while maintenance costs can be quite high because of the low-quality fittings and construction. There are usually issues with water and electricity supply in outlying areas, and air and noise pollution emanating from the highway can be severe. Often, there will even be problems with the land title and building permissions, since the builders concerned are not concerned with anything but constructing, selling and exiting as fast as possible. Additionally, residents of such residential projects in Patna are often far removed from conveniences like shopping, entertainment, schools and healthcare. Literally the only advantage they enjoy is proximity to the highway.

As opposed to such smaller residential projects in Patna, integrated townships in Patna offer a vastly superior investment and lifestyle proposition. Because of their massive land requirements, integrated townships will invariably be developed on the outskirts of the city. Developers in Patna will obviously seek to juxtapose their township project along one of the key highways, as this will draw a lot more end-user and investor interest. However, the very nature of an integrated township in Patna is that it provides several key advantages to its residents. Thanks to the size factor, housing projects in such a township tend to be sufficiently removed from the expressway or highway to ensure freedom from noise and air pollution. At the same time, access roads ensure that one can still reach the highway in a short time. Integrated townships in Patna also have their own independent water and power supplies, as well as shopping complexes, hospitals, schools and entertainment facilities. They also have green open spaces, jogging parks and playgrounds. Finally, only well-capitalized and highly reputed developers in Patna can venture into township development, and such players will at all times ensure that all the legalities and the overall quality of the project are beyond reproach. Naturally, the premium attached to properties in an integrated township close to an expressway or highway is higher. However, the additional investment is definitely worth it. Apart from the ease and quality of life, they also enjoy a much higher resale value on the property market.