Karnataka to witness boom in Real Estate by 2020
Real estate sector, one the largest contributor of jobs in the country, has been witnessing a steady growth over the past few years. Despite all the ups and downs, the industry has continued to sustain its credibility and has emerged as one of the leading industries in India, more so in the southern part of the country. Karnataka, one of the hotspots for real estate development, has been an increase in demand from potential home buyers and investors and is expected to witness a further boom in the sector by 2020. In a press conference addressed by CREDAI Karnataka and CREDAI Bengaluru, the recently appointed senior leaders discussed factors that contribute towards the growth of the sector as well as the demands and issues faced.
Ease of doing business:
CREDAI Karnataka wishes to bring more investors to the state along with the Government of India to bring in 100% ease of doing business.
GST and other Tax:
One of the greatest initiatives from the Government of India has been to reduce GST on affordable housing to 1% and on under construction properties to 5%. However, the GST on construction materials are yet to be reduced. GST on cement and steel is 28% respectively, which is making the construction cost increase. CREDAI has already requested the Central Government for the reduction. CREDAI is hopeful that this request will be taken into serious consideration at the earliest.
Additionally, stamp duty in Karnataka is 6.65% where in it is 1% in Telangana. The reduction in stamp duty will help in more demand and investment in the property in Bangalore. CREDAI has approached the government for the reduction on the stamp duty as well.
Conversing on the Bangalore realty market Kishore Jain, President, CREDAI Bengaluru said, “Sarjapur Road, Hoskote, Kanakapura Road, Mysore Road and Whitefield are the major markets for affordable housing in Bengaluru. We are receiving a positive response from buyers for projects which are under Rs 45 lakh category. With government’s intention of easing the policy, we want to contribute to the Housing for all by 2022 program.”
Funding has always been a critical issue faced by the realty sector in India. Due to lack of appropriate funding from banks, real estate developers are now approaching the NBFCs. This has impacted the borrowing cost and easy access to the credit availability. Lack of quality funds or cheaper fund will lead majority of projects to slow down, making the developer to depend on the market. Lack of funding will also increase the cost of the project and make the delivery schedule irregular.
Highlighting on the investment from the NRIs and HNI’s Mr. R Nagaraj, Vice President, CREDAI National said, “IT, ITeS, startup sectors are bringing in more real estate business to the state and country. In the last 3 months, approximately Rs 46,000 crore investment in stock market from foreign investors. With this, Karnataka and especially Bangalore will see more investment in the near future from NRIs.”
Plan of sanction
In Karnataka, developers are paying Rs 80 per sqft for the plan sanction and as license fee. There should be reduction in this for the affordable housing. Government should think about reducing the same for Rs. 20 per sq ft.
Even though government has introduced online plan sanction, there is no time limit for the same. In most of the developments, even with the online plan sanction it takes minimum 4 to 8 months for the approval depending on the size of the project. CREDAI has requested for the plan sanction and approvals within a specific time limit to improve the project speed.
Benefits of RERA to the developer and customer was also discussed in the press conference. Commenting on RERA, Mr. Austin Roach, President, CREDAI Karnataka said, “RERA is a positive change for the real estate industry. This has brought in more discipline in the sector thereby, increasing the investment from the home buyers”.
Bangalore is witnessing more of investment in the real estate sector by the millennials in the recent years.
Talking about the real estate trend, Mr.AdarshNarahari, Chairman, PR and Media Committee said, “Co-working, co-living and senior living are emerging as the latest trends in the real estate sector. Today, in Bangalore, we are seeing a whole new group of people interested in rental homes with services. This can only mean that the sector in bound to grow as it caters to these new and emerging needs.”