Real estate grappling with triple whammy
The triple impact of demonetization, Real Estate and Regulation Act (RERA) and goods and services tax (GST) has created uncertainty in the real estate market across India, including Goa, say industry experts.
President of the Goa chapter of the Confederation of Real Estate Developers’ Associations of India (Credai), Jagannath Desh Prabhudesai, said the Goan real estate industry has been trying to adjust itself to the changes.
“We were going through a recession when demonetization happened, and it created a huge currency crunch in the market. The industry was trying to balance itself when GST and RERA were introduced, almost at the same time. We are trying to adjust to these changes. It will create a positive impact in the long run by removing the bad players. The sudden changes have created a temporary slowdown in the market. The situation shall improve in two-three months, but day-to-day business has been hampered,” he said, adding that the body is also working to adapt to the yet to be notified RERA rules in the state.
Concurring that the three phenomena had a strong impact on the industry, managing director of Gera developers, Rohit Gera said, “Despite uncertainty in the market there is a strong demand for housing projects. Developers are now focusing more on the affordable housing segment as there are tax benefits as well as support from the government. That section of the market is quite strong and we are expecting the premium segment to gain pace by the end of this year or the beginning of 2018.”
Builders are also going for small-sized flats to address demands, he said, adding that the inclusion of GST and RERA would have a slight effect on pricing.
“The net effect of the changes in taxation policy would be of plus minus 1-2% in overall costing for the buyer. The area of development will also play a role, as if the cost of the land is more, the consumer may be levied more tax. The project may go at a lesser price if the price at which the land is bought is comparatively low. Also, the introduction of RERA has put huge penalties for non-compliance on builders, which has shrunk the real estate market. The Act will definitely weed out builders who don’t have a customer-centric approach. The total cost of ownership will decrease for the buyer in the long run,” Gera said.