New Beginnings for Indian Real-estate
Real-estate sector by far was not regulated by one appellate authority. Now, RERA regulatory body will help bring accountability and allow only transparent and capable developers to operate. While RERA is set to bring in transparency in the real-estate segment, the introduction of GST is expected to reduce the burden of multiple taxes, computations and dealing with multiple authorities. Implementation of GST is not going to be smooth and there is bound to be some inflation with increased tax rates. The dual central and state government compliance is another issue that could turn out as a huge challenge for exports to different states. But, both, RERA and GST, will hopefully streamline the real-estate sector in the long run. In the short term, there would be slowdown as well as increase in prices.
Similarly, the land pooling policy will help government to reduce the impediments for the development of infrastructure as well as and housing stock. This will be much more effective if the valuations are done properly, benefitting both land owners and government. Also this needs to be performed within strict timelines so that the land owners don’t lose on time value. Likewise, if the laws against Benami transactions are implemented properly, the registration of property will be flawless and in the name of the actual owner. There can be control on the maximum number of property registrations under one name and land inventory can also be managed.
Also, given the government impetus on affordable housing, developers are inclined towards affordable housing. The Pradhan Mantri Awas Yojana (PMAY) along with benefits of tax exemption will allow developers to develop such projects and at the same time earn good margins. This would bring in more localized approach towards initiatives like smart cities and affordable housing. Such public private partnership will make sure that these initiatives are backed up by enough of resources.
The Union Budget has offered colossal benefits to the first time and low-ticket size home-buyers in the affordable segment of the sector. A 100% deduction for profits of undertakings from housing projects of 30sqm and 60sqm in cities during Jun 2016 – Mar 2019 except MAT will encourage mass housing projects. On the other hand, scrapping of dividend distribution tax on REITs would help developers to raise funds, as this makes investments attractive for investors.
In a region like Mumbai, affordable housing at strategic locations shall always witness a very high volume and momentum of sales. Paradigm Realty is currently developing 1.5 millions square feet and plans to focus on affordable housing going forward. We are coming with almost two million square feet. of development across Chembur, Goregaon and Malad locations. Tickets prices would be around 65-75 Lakh for 1-BHK and 90- 99 Lakh for 2-BHK. These locations have shown high absorption of the affordable premium housing.
In Mumbai, location likes Dahisar and Borivali are currently undervalued. These locations will see good appreciation in prices, once the metro rail and the six-lane Borivali-Thane tunnel come up. “Strategic Business Districts are likely to evolve beyond Mumbai with concentrated business units and industries. With the plan for 100 Smart Cities, we are likely to see a lot of new, high-potential markets emerging.