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For home buyers waiting for a great deal, now’s the time. For the first time in seven years, the real estate industry is witnessing a price correction with a substantial drop in actual purchase price courtesy discounts from developers.
“After refusing to budge for years, developers in Kolkata have finally blinked. The weighted average price that the developers used to quote would remain constant, even in adverse conditions. But around 50% developers used to offer discounts on the effective price that is arrived on negotiation across the table. Now, more than 80% developers are offering discounts. This, with the constant price despite the 4.5% inflation and actual rise in construction costs, takes the effective discount to 12% and makes homes in Kolkata the most affordable in years,” said Samantak Das, chief economist and national director (research) at Knight Frank, an international residential and commercial property consultant.

Tollygunge, where prices range between Rs 5,500 and Rs 13,500 per sqft, depending on the development, has witnessed the biggest price dip of 17%. This is followed by 12% correction in Rajarhat-New Town where prices range between Rs 4,000 and Rs 6,000. Prices in Ballygunge, Park Street and Rawdon Street have remained static while Salt Lake, Behala, BT Road, Jessore Road, Madhyamgram and Narendrapur have witnessed a lower price correction in the 2%-4% range.


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New home sales in the country’s top eight property markets increased 5% on year in the quarter ended September, powered by a 24% surge in affordable housing uptake in a boost to the government’s ‘Housing for All by 2022’ scheme, latest data shows.

Home sales in key markets including Mumbai, National Capital Region, Bangalore, Pune, Chennai and Hyderabad totalled 64,781 units during the quarter, data from Liases Foras Real Estate Rating & Research shows.

This is marginally lower than 64,881 units sold in the previous quarter.

“We have seen a healthy growth in residential sales during September quarter, led by affordable housing,” said Keki Mistry, CEO at HDFC, the country’s largest mortgage lender. “It has a lot to do with the government’s focus on this segment and the fact that it has become more affordable by virtue of growth in income levels and no rise in property price. This growth should continue hereon,” he said.

This is the second straight quarter when home sales increased, coming after 5% decline in January-March quarter and 15% drop in October-December, marked by the government’s demonetisation move.

Mumbai Metropolitan Region topped the list in September quarter with 19% increase in sales year on year.

Property markets in National Capital Region, Hyderabad and Pune followed the financial capital with 15%, 13% and 10% growth, respectively. However, Chennai and Bangalore witnessed a steep decline of 23% and 21%, respectively.

Sales in affordable segment with prices less than Rs 25 lakh increased by 11% on a sequential basis to 12,136 units.

Sales in the cost bracket of Rs 50 lakh to Rs 1 crore increased 7% from a year ago and Rs 1 crore to Rs 2 crore increased 9%. Sales in ultra-luxury segment with prices above Rs 2 crore, however, declined by 6%, the data showed.

“Sales in affordable housing segment is going up as we are seeing more supply from developers who have realized that this is where the demand is as well as financial and fiscal benefits through infrastructure status to affordable housing project and benefit from PMAY (Pradhan Mantri Awas Yojana, the Housing for All by 2022 scheme) subsidy,” said Anuj Puri, chairman at Anarock Property Consultants.

Puri expects the affordable housing segment to continue driving the sales momentum in key markets.

According to realty developers, the sentiment has started to improve with recently implemented Real Estate (Regulation & Development) Act, 2016 and setting up state-wise authorities under the same.

“Homebuyers’ concern over delays in delivery has been waning with RERA being in place,” said Subodh Runwal, director at Mumbai-based real estate developer Runwal Group. “The confidence is showing in their action as enquiries and sales have started to improve since last three-four months,” he said.

Runwal Group sold 400 units at their Mulund and Kanjurmarg during the September quarter.

The top eight cities cumulatively sold highest number of apartments in cost range of Rs 25-50 lakh, with 36% of total sales, followed by cost range of Rs 50 lakh to Rs 1 crore at 29% of total sales. The contribution of affordable segment to the overall sales in these eight cities stood at 19% with MMR contributing the highest with 28%, followed by Ahmedabad with 24% of total sales.

During the quarter, the weighted average price level in these eight markets increased 2% from a year ago. Prices in Ahmedabad and Bengaluru rose the highest by 2%, while Kolkata and Pune witnessed a decline in price by 2%. Prices in Mumbai and Chennai remained stagnant.

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For investment professionals, demonetisation has thrown open the doors in terms of real estate opportunities. Demonetisation has reduced speculation around real estate assets for the time being and moving ahead given RERA regulation, this impact is here to stay. Real estate assets – not being speculative in nature and reflecting real fundamentals – are not only beneficial to the economy overall, but also create three opportunities for investors:

1) Lending Opportunity to Small to Medium-Sized Developers: While large-scale projects and developers have seen significant interest from private equity and real money investors, small to medium-sized developers have seen their traditional sources of funding dry up with demonetisation. The fact that most of these developers were struggling with high debt levels prior to demonetisation has only exacerbated the problem.

Additionally, RERA has ended the traditional practice of using home buyer’s advance payments to fund projects to a large extent. Demonetisation has reduced the access to cash. These changes are positive in the long run and have created a need to provide funding to the medium and small-sized developers. The investment opportunity specifically is in bridge loans to complete projects that are stuck at 50-80% of completion. The obvious question is that given the influx of funds into real estate in the last 3 years, why do these opportunities exist? The reasons are:

a. The relatively smaller size of the projects creates deal sizes not worth the time for some of the larger funds. Mind you, the due diligence required is the same as the larger ticket size deals.

b. Asymmetric information is another issue. However, working with local advisors to put together a portfolio of such assets to create dispersion around location of project, type of project and term structures of loans should create value.

c. Most of the focus in the last few years has been on high quality office space. However, a lot of residential projects are stuck as well. The ability to acquire these residential projects at a discount or to use structured finance transaction to get equity kickers can create significant value.

2) Sale and Leaseback Transactions: While a lot of lenders have seen a rise in NPAs in their loan books as high debt levels take a toll, foreign investors so far have been relatively reluctant to invest in distressed Indian opportunities. Demonetisation has started the process of making the real estate sector far more professional and institutionalized. Lenders should use the real estate sector with a revitalized image to shore up their balance sheets. There is tremendous demand for attractive brownfield real estate from yield hungry foreign investors.

Perhaps lenders such as banks can start monetising their real estate assets through a sale and lease back agreement with foreign investors and take advantage of the new image of a far “cleaner” real estate sector. A large bank owns significant property in prime areas of, say, Delhi, Mumbai, Kolkata and Bengaluru. The bank can work with an investor such as a pension fund or an insurance company to sell their office assets to the investor and lease it back for operations. This solves a twofold problem. The bank gets capital infusion that it so sorely requires and the investor gets access to attractive assets with a better credit borrower rather than investing in the distressed loans. The economy overall benefits tremendously since the capital infusion adds value. Demonetisation has created this opportunity with an enhanced image for the real estate sector.

3) Affordable Housing: Demonetisation has reduced the speculative nature of house buying to some extent. Hence demonetisation has made houses more affordable. This implies this is the right time to push ahead with the affordable housing scheme in full throttle. While the interest rate subsidies by the government are a step in the right direction, we feel additional regulations are required. Essentially demonetisation has provided us with a real estate sector that is ripe for new regulations such as:

a. Affordable Housing PPP – The Road project PPP model in India is a good template to learn from. The government should standardize documentation and take care of land acquisition. The government should acquire land that is relevant for affordable housing directly. This also assists distressed developers to monetize assets from their land banks.

2. Affordable Housing Authority – The government should create a central authority modelled on the lines of NHAI to take care of land acquisition, title deed issues, environmental clearances and viability analysis

3. Bidding Auction – The private sector should bid for projects all the way from grants on one end of the spectrum to revenue premium at the other, depending on the financial feasibility of the projects

Demonetisation has lent credibility to real estate. This is an opportunity to leverage the new-found credibility to provide a fillip to a core and much troubled sector of the economy to create not just economic value through the efficient use of capital, but also tremendous social capital as a nation.

(The author is CEO, Development Tracks)


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Tax burden on home buyers in under-construction projects is not expected to increase in Goods and Services Tax (GST) regime, an official from a property consulting firm said on Thursday. The general perception was that with the 12 per cent GST rate, the tax would go up from 5.5 per cent (service tax plus VAT).

We expect there will not be any upward impact of tax burden on buyers for under-construction projects after the roll-out of GST. Apparently, with the 12 per cent GST, there is a difference of 6.5 per cent on tax rates as compared to the pre-GST rate of 5.5 per cent. But lot of efficiencies have been brought in through GST, Knight Frank India’s Chief Economist and National Director (Research) Samantak Das said here.

Developers are working on how the input tax credit in the new indirect tax regime would be passed on, he said. We have talked to developers and they were trying their level best not to pass on any extra tax burden to home buyers. It is expected there will be no adverse impact on the buyers with the implementation of GST,” he said.

Das also said developers know passing of the extra tax burden to buyers could result in a further drop in sales. For new projects, it is expected that base prices would be revised so that post GST, price value of homes remains the same as in pre-GST era, Das said on the sidelines of the launch of new report India Real Estate – Residential and Office.

According to Knight Frank India, new launches crashed by 41 per cent, lowest in seven years, in the first six months of the current calendar year in top eight cities of Mumbai, Pune, Hyderabad, Chennai, Bangalore, Kolkata, Ahmedabad and Delhi – National Capital Region (NCR). The report said sales volume was also down by 11 per cent year-on-year in the first half of 2017.


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Arvind Parashar, an engineer with an IT firm, got a rude shock a few days back when he got an email from his real estate developer. The developer in the mail asked him to either pay the outstanding amount for his three-bedroom flat in Delhi NCR immediately or get ready to pay a higher amount post implementation of goods and services tax (GST) in July.
On calling the developer, he was told by the staff that to be fully compliant, the company would enhance its “demand-cum invoices” as per rules and regulations. “We therefore would like to inform you that if you have any previous outstanding payments with regard to your booked flat in our project, kindly clear the same before 1st July 2017 to save extra burden of tax differential amount,” the email stated.
With the implementation of the new tax regime just two weeks away, some real estate developers are asking for full payments for properties, even as the government has deemed any such move illegal. Caught in the middle are hapless flat owners, who do not know if post the implementation, they would have to pay more. “The whole week I have been trying to make sense of this. I am already paying Rs 48 lakh in total, going by what the developer said I would end up paying close to Rs 5 lakh more,” said Parashar.
Industry experts categorically said that property rates would not go up due to While the service tax charged would go up from 4.5 per cent to 12 per cent, it would be off-set by “Input Tax Credit” under the law, which would help keep the final selling price neutral.
The impact of on real estate would be primarily tax neutral; the Finance Ministry has made it very clear that there should be no additional tax burden on consumers. Developers who did not get the benefit of ITC (Input Tax Credit) in the pre-era will be able to avail the same post and the ITC that will be available to developers will be extremely tax efficient. As per GST, ITC has to be fully passed on to the consumers. With at 12 per cent and the ITC, the net impact should be a tax neutral environment for the consumers,” said Samantak Das, Chief Economist & National Director — Research, Knight Frank India.
He added that in the case of under-construction projects, developers will get ITC for the yet-to-be constructed portion. Hence, even if buyers have to pay 12 per cent GST, they are entitled to get the ITC (passed on to them by the developers). For new projects, it’s very straight-jacketed, will be applicable at 12 per cent and the ITC has to be passed on fully.
The Union finance ministry, state governments and the Central Board of Excise and Customs (CBEC) have received several complaints that people who have booked flats and made part payments are being asked to make the full payment before July 1 or face higher tax.
“This is against the law,” the government said. The construction of flats, complexes, and buildings will have a lower as compared with a plethora of central and state indirect taxes under the existing regime, it added.
Industry bodies, however, claim that the confusion over the issue has been caused due to ambiguities surrounding projects that are nearing completion. “There are projects that are almost 80 per cent complete, how will the developer get ITC there. There is confusion around it and we are seeking guidance on that. However, developers cannot force people to give the balance amount,” said Manoj Gaur, Vice-president, CREDAI National.

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KOLKATA: Real estate sectoral body CREDAI has urged the state governments to do away with the stamp duty on landed property to eliminate multi-point taxation after the introduction of GST.

CREDAI welcomes introduction of Goods and Services Tax (GST) as a major reform since it integrates all central and state taxes into one comprehensive tax regime for the entire country, the body said in a statement.

The trade and industry are major gainers of GST as it eliminates multiple taxation at the state and the Centre levels and the consequent cascading effects, it said.

However, where as for all other sectors GST is their total indirect tax liability, for real estate the GST rate is fixed at 12 per cent which was only a fraction of its tax burden, CREDAI said.

It said that the real estate sector is exceptional because GST regime does not eliminate multiple taxation. “Stamp duty levied by the states on all immovable property would continue to remain in force even after implementation of GST.

The additional burden on real estate on account of stamp duty averages between 5 per cent to 8 cent of the value of the immovable property.

Secondly, the duty is payable on every transaction and is levied by the state governments on circle rates or guideline values of property which are arbitrarily determined and far in excess of the value at which transactions takes place, it said.

Unless abatement for land is allowed, cost to the end consumer would go up.

CREDAI would, therefore, urge the government to minimize double taxation of real estate by treating land as zero rated under the GST regime. The positive multiplier effect of real estate on other industries would make up the revenue loss and the nation would be thankful for a tax regime consistent with the objective of Housing for All by 2022, said Mr Nandu Belani, President, CREDAI Bengal.

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More than 50% of Indians are interested in buying an apartment as compared to villas or builder floor apartments, and 2BHK housing units are the most preferred choice for more than 40% of home buyers in Delhi, Bangalore, Chennai and Kolkata, said a research report by today., part of Elara Technologies Pvt Ltd, which also owns and, today unveiled the findings of its research on top investment localities and preferred property type by Indian home buyers. Based on insights drawn from the traffic witnessed on, this research helps to understand the buying trends of Indian home buyers across top 5 cities in India – Mumbai, Delhi-NCR, Bengaluru, Chennai and Kolkata.

While looking for a property, a buyer would normally prefer a perfect mix of a great social and civic infrastructure along with proximity to key locations. This research aims to assist home buyers to identify top localities for property investment in the five regions and presents preferred property type and configuration by home buyers in those regions.

Key highlights from the research:

Top localities for investment

# Mumbai’s property market is legendary and the hottest investment destinations in the city today include Thane West, Dombivli East, Mira Road East, Andheri West and Panvel.

# Delhi and the National Capital Region (NCR) region is bustling with a range of infrastructure development and top localities to invest in the region include Rohini, Uttam Nagar, Dwarka, Sector 16/Palam Vihar and Noida Extension.

# Bengaluru, popularly known as the ‘Silicon Valley of India’, is one of the upcoming residential markets in India and top 5 investment localities in the city are Hormavu, K R Puram, Whitefield, Electronic City and J P Nagar.

# On the back of infrastructural developments, Chennai has been transforming itself into a real estate hotspot. The top localities of the city preferred for investment are Perambur, Kolathur, Ambattur, Madipakkam and Chromepet.

# The top localities in Kolkata, the capital city of West Bengal are South Dum Dum, Dum Dum, Rajarhat, New Town and Garia.

Type of Houses

# More than 50% of Indians are interested in buying an apartment as compared to villas or builder floor apartments.

# Mumbai is fast emerging as the preferred destination for home buyers as 96% of home buyers choose apartments over villas and builder floor apartments.

# Surprisingly, demand for apartments in Delhi-NCR was recorded lowest at 54%.

# The preference for builder floor apartments is 37% in Delhi and extremely low in other cities (2% in Mumbai, 1% in Bangalore, 3% in Chennai and no preference at all in Kolkata).

The overwhelming preference for apartments shows the growing acceptance of this property type amongst the urban population who prefer a standard lifestyle with various amenities at a reasonable cost.

Preferred Configuration

# 2BHK housing units are the most preferred choice for more than 40% of home buyers in Delhi, Bangalore, Chennai and Kolkata. In Mumbai, 51% home buyers prefer 1 BHK owing to escalating property rates in the city.

# 3BHK is the next most preferred configuration in Delhi-NCR, Bangalore, Chennai and Kolkata (on an average 20% home buyers prefer 3BHK in these cities) as most of the buyers look for a balance between spacious homes, amenities, luxury and affordability. However, only 6% home buyers prefer 3BHK in Mumbai, stating affordability as the major concern in the region.



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With the announcement of the rates for taxation under the Goods and Services Tax (GST) for various goods, India is now one step closer to becoming a unified tax market. However, while the impact of GST on various sectors and goods is now known, industry experts are still divided over how GST will impact real estate going ahead as clarity on the tax slabs for services is still awaited.

According to industry experts, prima facie it looks like that there will be a neutral impact from cost perspective. Although the work contracts will attract around 12% and most of the construction material is under the 18% and 28% slab, the availability of input tax credit should neutralize the overall impact. A lot, therefore, will depend on the proper implementation and a proper system of claiming tax credits.

With the Real Estate Development and Regulation Act (RERA) also under implementation, developers may need to focus much more on streamlining their processes. We may expect initial teething issues, but implementation of GST should further enhance India’s attraction as an investment destination by encouraging greater transparency and ease of operation in all property deals, says Surabhi Arora, Senior Associate Director, Research, Colliers International India.

However, it is too early to say whether the implementation of GST will actually cool down the prices in the commercial and residential segments. “More clarity will come in the coming days as it is still not clear what would be the abatement available for land cost for calculating service tax on under-construction projects,” she says.

Anshuman Magazine, Chairman, India and South East Asia, CBRE, also says that several goods connected to the real estate industry are falling under the 18% and 28% slab. However, clarity on the tax slabs for services is still awaited. “In the long term, however, the successful implementation of GST in the country will be a game-changer for the market. The removal of various federal tax barriers and creation of a common market will improve supply chain efficiency and attract more FDI into the country,” he says.

Apart from attracting more FDI into the country, GST will also impart more transparency to the sector which currently faces a perception issue. “It will provide a thread for audit and checks for better control and monitoring of the sector. As a result, the home buyer will be empowered towards informed decision-making,” informs Amit Agarwal, co-founder, NoBroker.

GST will free end-consumers from the hassle of paying several state taxes at different levels, therefore removing the double taxation impact. Also, the implementation of GST will hugely benefit the NRI community towards investment in real estate through the formation of a seamless all-inclusive channel. The existing channels include issues of multiple taxation, amounting to indirect taxes and no uniformity.

In totality, “GST will add up as another factor among the government’s other schemes towards affordable housing, which is beneficial to the growth of the sector. Buying a home will now be easier as benefits will now be extended to both the developers and the end-consumers, says Agarwal.



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Planning to buy a property in Kolkata. The good news is that property prices are comparatively lower than in the rest of the metro cities of India. The ‘city of joy’ is a good ground for making a purchase without making much dent in the markets. Magicbricks brings some key pointers which will help you in making a correct investment decision.

The year started with a marginal rise (0.56%) in property prices. The top localities registering highest average price per sq ft are Ballygunje Circular Road (Rs 14,752); followed by Keyatala Road (Rs 10,263) and Ultadanga (Rs 7,829)

Capsuling Kolkata real estate market

The year 2016 ended with a marginal 0.2 per cent increment. In the previous quarter (Jul-Sep 2016) the recorded gain was 0.57 per cent
East Kolkata should be surveyed as many upcoming projects are present here. Properties in this region start at Rs 2,000 per sq ft and reach Rs 6,000 per sq ft. The region accounts for almost half the city’s residential supply and grew by 0.5% over the previous quarter

North Kolkata caters to the budget segments with prices between Rs 2,000-4,000 per sq ft. Average prices here declined by a significant 3.4 per cent this quarter. Choose this region only if you have a long horizon

West Kolkata is the least significant residential destination of the city. This region provides properties in the range of Rs 3,000-4,000 per sq ft. It climbed by a significant 3.9% over the last quarter. Don’t miss this portion of the city!

South Kolkata, starting from the south of AC Bose Road, provides the widest range of options. Properties here start at Rs 2,000 per sq ft and go upto Rs 8,000 per sq ft. This region grew by just 0.1 per cent in the quarter. It provides the costliest properties of all regions in Kolkata, where properties costlier than Rs 6,000 per sq ft are almost exclusively found here

If you are facing trouble choosing between ready possession and Under Construction (UC) properties, then you should know that the former were 3.8 per cent more expensive than UC properties. The average percentage price difference in the UC versus Ready-to-Move-in (RM) properties remained more or less stagnant over the last quarter..