Mumbai: 1% Metro Cess on Property Purchase Likely from April 1, Stamp Duty to Go Up

 Meanwhile, on March 11 the state government will table the budget for the financial year 2022-23. Therefore, the incentives for real estate stakeholders and homebuyers are being looked at.

One per cent Metro cess on property purchase is likely to be imposed from April 1. The existing Maharashtra government resolution (GR) restricts the imposition of Metro cess till March 31. The decision was taken amid the pandemic situation. Now, if no new GR is issued then the Metro cess will come into force, said Shravan Hardikar, Inspector General of Revenue (IGR), Maharashtra.

Metro cess is a transport surcharge. It is one per cent of the property value, and is intended to be used for funding transport infrastructure projects in the cities such as Metros, bridges and flyovers.

Following this additional cess, the stamp duty will increase further. Currently, the stamp duty on property purchase is five per cent, and four per cent for women homebuyers. Meaning, the Metro cess will increase stamp duty to six per cent and five per cent subsequently.

Meanwhile, on March 11 the state government will table the budget for the financial year 2022-23. Therefore, the incentives for real estate stakeholders and homebuyers are being looked at.

The Free Press Journal had reported that property registrations in Mumbai city alone bring in a huge wealth. According to the data with the IGR and Controller of Stamps, Maharashtra, in the last 20 days of February, a total of 6,741 housing conveyance sales have been registered in Mumbai. This has led to a revenue generation of Rs 372.81 crore through five per cent stamp duty charges. Similarly, across Maharashtra, around 88,630 conveyance sales were recorded and while the revenue generated stood at Rs 1,362.43 crore.

Source - www.freepressjournal.in

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Good Time to Invest in Commercial Realty as Firms Bring Employees to Office

 February 2022

Leasing of space is likely to rise as Covid-related uncertainties reduce and hybrid work model becomes the norm

With the third wave of the coronavirus (Covid-19) pandemic ebbing, the near-term prospects of commercial real estate are set to improve. The long-term prospects of this segment are tied to the pace of economic growth. Since India has among the fastest-growing economies globally, commercial real estate offers sound long-term prospects as well.

Improving outlook Work From Home (WFH) had marred the prospects of commercial real estate as companies let go of leased spaces to reduce their rental expense. “The uncertainty that office as an asset class witnessed since the start of Covid is now reducing with corporates inviting their employees back to office,” says Vishal Ahuja, head-private wealth group, India, JLL.

India’s position within the global economy is likely to strengthen in the future. “India’s value in the global market has increased steadily. From being an outsourcing destination, it has turned into a research and development hub for global companies. It is also a critical consumer market for products and services,” says Viral Desai, executive director, transactions, Knight Frank India.

According to JLL, the Indian office sector saw net absorption of 11.56 million sq. ft in October-December 2021, the highest in the last eight quarters, and up by 86 per cent quarter-on-quarter. Net absorption was up 26 per cent year-on-year for the half-yearly period of July-December 2021.

Time to enter

Experts believe this is a good time to invest in commercial real estate. “WFH had created uncertainties in investors’ minds. However, companies are now looking at a hybrid work environment which means the office is an integral part of their plans. This has led to resurgence in investor confidence,” says Ahuja.

Anuj Puri, chairman, ANAROCK Group agrees. “The market is definitely looking upbeat with leasing activity gaining momentum across the top seven cities in 2021. While many offices have already opened, many more are likely to open sooner or later. Hence, this is a good time to invest in commercial real estate,” he says.

Grade-A office space in a good location can fetch 7.5-10 per cent annual rental yield. In addition, there is scope for capital appreciation.

Returns from this asset class also tend to be stable.

Locations to bet on

Investors can look at any of the busy corporate and business centres across the country. “Bengaluru continues to see high demand from not just the IT/ITeS sector but also from start-ups. Outer Ring Road, Electronic City and Whitefield are some of the favoured locations in this city. In Hyderabad, HITECH city and Gachibowli are top favourites. In Gurugram it is MG Road, Sohna Road and the DLF IT parks. In Chennai, it is mostly OMR. In the Mumbai Metropolitan Region (MMR), the BKC area and Worli are favoured destinations,” says Puri.

Adds Ahuja: “Besides Mumbai and Pune in the West, Bengaluru and Hyderabad in the south, and NCR in the north, Kolkata and Chennai are also gaining momentum with investors examining opportunities in these cities.” He adds that micro markets that are witnessing strong infrastructure development in the vicinity have attractive prospects.

Key factors to consider

To earn attractive returns, investors must select the property carefully. “Location, occupier profile and entry and exit prices should be the key considerations. The property should be in a high-demand location and must have a stable occupier profile,” says Desai.

Proper due diligence is a must. “Ensure that the property title is clean and there are no uncertainties in the documentation process. If the project is under construction, it must be RERA-registered,” says Ahuja. He too emphasises the need to check tenant quality. “A good tenant profile ensures stable returns,” he adds.

Sometimes, exiting from an investment in commercial real estate can pose a challenge. According to Desai, “REITs are, therefore, a good option for investing in commercial real estate. All the REITs available in India belong to companies with strong portfolios,” says Desai.

Pros and cons of investing in commercial real estate

Pros

• Rental yield can range from 7.5-10 per cent in commercial realty, compared to 2-3.5 per cent in residential space


• Long-term lease agreements result in predictable cash flows

Cons

• Demand gets affected by economic downturn


• If a tenant vacates, that leads to uncertainty regarding when rental flows will commence again


• High capital outlay required


• Investing at high prices leads to poor rental yield

Source - www.business-standard.com

Thane Cluster May set Template for Maharashtra, says Guardian Minister Eknath Shinde

 THANE:

The first-ever cluster redevelopment project to be executed in Maharashtra's Thane will set a template for the state to replicate in the future, urban development department minister Eknath Shinde said on Tuesday.

Shinde was addressing the media following the groundbreaking ceremony of a transit camp to be constructed for the first phase of the project to be executed at the densely populated Kisan Nagar which is dotted with several illegal and derelict structures.

“The pilot project will be executed by Cidco that will be helpful for all future projects and will give clarity on the business model for developers who are presently shying away from the same. This is the first project to be executed in the state on a massive scale where nearly 1,500 hectares of land will be developed,” Shinde said.

Civic officials said the transit camp is being developed at an amenity plot in Vartak Nagar spread over 1,645 sq metre and will have 243 tenements of 300 sq feet each for temporary accommodation of residents. Once the building is ready, residents will be relocated and their existing structures razed to construct the highrise as per the plans.

“The construction will cost Rs 35 crore and will be expedited to ensure timely relocation and subsequent completion of the first phase of the brownfield project,” said officials.

Source - timesofindia.indiatimes.com

Property Prices in These Cities Beat the Covid Shock: Prices Rose Despite Pandemic

February 2022

Property investors should note that despite the Covid-19 shocks, property prices in cities like Ahmedabad, Hyderabad, Gandhinagar and Ranchi continued to increase. “During the first COVID-19 wave, the housing prices increased in cities such as Gandhinagar, Ahmedabad, Hyderabad, Thane, Mumbai, Kolkata, Pune and Bengaluru over the pre-pandemic level. Similar trends were also visible during the second COVID-19 wave over the pre-pandemic level. The housing prices in cities such as Ahmedabad, Hyderabad, Gandhinagar and Ranchi continued to increase despite the COVID-19 shocks,” stated the Economic Survey 2021-2022.

The Economic Survey has used the change in NHB RESIDEX price index during the first covid-19 wave and during the second covid-19 wave over the pre-pandemic level. NHB RESIDEX tracks the movement in prices of residential properties in select cities on a quarterly basis.

According to the survey, Gandhinagar saw housing prices increase by 18.3% during the first wave (April-June 2020). During the second wave (April-June 2021), housing prices in Gandhinagar rose by 25.8%. In the case of Ahmedabad, housing prices increased by 16.5% during the first covid-19 wave and further rose by 28.9% during the second wave. Hyderbad also saw a similar trend in the increase of housing prices during the first and second wave of covid-19.

In Mumbai property prices increased by 6.7% during the first covid-19 wave, and did not change during the second wave.

However, the survey did note that the impact of the COVID-19 shock on the prices of residential properties was not uniform across the cities. According to the survey, the housing prices decreased in Delhi, Noida and Ranchi. Delhi and Noida saw a decline in housing prices during both the covid waves.

In Delhi, housing prices fell by 4.2% during the first wave and by 3.1% during the second wave. In the case of Noida, the decline in housing prices was even sharper. The city saw a decline of 8.5% during the first wave and dipped a further 6% during the second wave.

Pune and Bengaluru saw small hike in the housing prices. As per the data, Pune saw a hike of 3.7% during the first wave and 5.6% during the second wave of covid-19. Bengaluru city saw the hike of 5.3% during the first wave and 2.7% in the second wave of covid-19.

Source - economictimes.indiatimes.co

Will Budget 2022 favour homebuyers?

 Homebuyers can expect more purchasing power this year. As the real estate sector is going through a rough phase, the government has been bringing in structural reforms and incentives to aid the sector and support the development firms.

Have you been scouting for an apartment of late? If the answer is yes, then now may be the right time to enter the property market. If one is to believe market indicators, favourable price points and high inventory of unsold units make it a buyer-friendly market. As the COVID-19 pandemic has hit the sector hard, the presence of large inventory across key cities of the country has increased the troubles of the sector. In such a scenario, several factors favour homebuyers. The upcoming Union Budget 2022-23 is one of the reasons that homebuyers can expect to have more money to make a purchase decision.

What should you expect?

Homebuyers can expect more purchasing power this year. As the real estate sector is going through a rough phase, the government has been bringing in structural reforms and incentives to aid the sector and support the development firms. Under the current circumstances, the government is already promoting homeownership. And subsequent lockdowns have given us enough reasons to buy spacious homes.

To boost the overall homebuying sentiment, especially in these difficult times, Finance Minister Nirmala Sitharaman may increase the interest deduction for homebuyers for tax rebate under section 24(B) in her Union Budget. Under the section, the limit on the deduction for interest payment for let out as well as self-occupied properties is Rs 2 lakh. Further, if construction is not completed within five years from the end of the financial year in which capital was borrowed, then the limit is Rs 30,000 only. The limit will likely be increased to Rs 5 lakh. It would give more interest deduction.

Moreover, first-time homebuyers were made entitled to an additional rebate of Rs 1.5 lakh over and above section 24 (B), on the interest component under section 80EEA. This provision was introduced in Union Budget 2019 for affordable homes and comes laden with many conditions. First, the loan should have been sanctioned by a bank, banking company or housing finance company between 1 April 2019 and 31 March 2022, the stamp duty value of the property should not exceed ₹45 lakh and the homebuyer should not own any residential house property on the date of sanction of loan. The government would likely extend the date, as it has done in the past.

In addition to the above, with an aim of providing ‘Housing for All’, the beneficiaries under the Pradhan Mantri Awas Yojana – Credit Linked Subsidy (EWS /LIG) Scheme would be eligible for a subsidy of up to Rs2.67 lakh on their home loan. Under CLSS – MIG, max subsidy for MIG1 – is Rs 2,35,068 and maximum subsidy for MIG2 – is Rs 2,30,156. Hence, if someone is taking a loan of Rs 10 lakh, the amount repayable for the MIG2 category would be ₹7,69,844.

Hence, first-time homebuyers will have some good savings if they invest now.

Do price points favour homebuyers?

The real estate market is already witnessing a slump. As a result of the glut, the prices have remained under check for the past two years or more. In some markets, the rates have corrected to 2013-14 levels. Greater Noida West in the NCR is one such example of an oversupplied market, where ready-to-move-in apartments are selling at price points witnessed in 2013-14.

Compared to the ready properties, new launches are coming at lower rates in some markets. It means that development firms are already under pressure to sell. Further, for homebuyers, it means that they can bargain for heavy discounts while purchasing from a developer.

Will affordability increase?

Yes, as a result of the possible measures, the country will be able to increase the supply of affordable housing in the country. Development firms have been demanding a slew of measures to make the housing segments more attractive for homebuyers. One such demand is to include all housing under the ambit of affordable housing.

The scope of affordable housing projects receiving 100% deduction of the profits and gains derived from the business of development and building housing projects u/s 80 IBA of Income Tax, 1961-2018 should be increased, developers have proposed. And there has been a change in provisions of this section with effect from September 1, 2019. Housing projects are approved between 01.06.2016 to 31.03.2022. Hence, developers have demanded to amend Section 80IBA (2)(a) to provide the benefit to all the projects registered with RERA between June 1, 2015, and March 31, 2023. Moreover, developers have demanded that to promote affordable housing, the deduction should be extended to all projects registered with RERA, provided they meet other requirements.

Currently, under section 24(b), interest on borrowed capital to acquire a house for rental purposes is allowed in full. However, in the case of self-occupied houses, interest is restricted to Rs 2 lakh. According to the developers, this limit is too low and should be increased to at least Rs 5 lakh to promote house purchase.

What does this mean?

If the government increases the scope of the definition to include all other kinds of housing, developers will then be able to reduce the rates further. That said, it is only one of the recommendations from the real estate sector. Hence, do not bank your purchase decision merely on this. Go for real gains. Hopefully, the tide will turn in favour of homebuyers this year!

Source - www.moneycontrol.com

Hurdles for Wadala to Thane Metro Line 4 Cleared; Survey of Car Shed Land Begins

 The Wadala to Thane Metro Line 4 project is set to progress as one of the hurdles for the project has been cleared; after the Thane District Collector finally agreed to the demands of the local farmers, the survey of the car shed land at Mogharpada, Ghodbunder, Thane, that was stuck for over three years finally started on Friday

The Wadala to Thane Metro Line 4 project is set to progress as one of the hurdles for the project has been cleared. After the Thane District Collector finally agreed to the demands of the local farmers, the survey of the car shed land at Mogharpada, Ghodbunder in Thane that was stuck for over three years finally started on Friday. The Collector claimed that the survey would be over in eight days, after which the process of land acquisition would begin.

The Mumbai Metropolitan Region Development Authority (MMRDA) claimed that around 40% to 50% work of the Metro line has been completed and once the work on the car shed starts, the project would get a major boost.

The Wadala to Kasarvadavali Metro Line 4 is a 32km route out of which 10.87KM is in Thane. Thane city will have 11 out of the 32 stations. The MMRDA had earlier reserved a plot in Owala for the car shed. However, as it was commercially unviable, the plot in Mogharpada was chosen in September 2019.

The Mogharpada plot is government land and also has no CRZ limitations. Mogharpada has a population of 4,000 people and 1,200 families. Around 200 farmers claim that though the land is government land, it was leased to them by the government in 1960 for cultivation. They placed certain demands before the authorities to acquire the plot. The dispute was resolved after the Collector met the farmers on January 19. However, the surveyors were again stopped on Thursday.

A local resident said, “We are not against the project. However, we wanted the surveyors to first demarcate and measure each of the individual lands of the farmers and give us panchanama in our name for our piece of land. We told them to begin the survey after measuring the individual land. On Friday, they agreed to do so. So, we allowed them to start the survey.”

The Collector’s office had called the farmers to the plot on Friday and asked them to show their land records to measure the land.

Thane Collector, Rajesh Narvekar, said, “The survey of Mogharpada plot has finally begun and will be over in eight days. The survey was stopped yesterday (Thursday) by the locals who had certain issues. We sorted those issues. Their demand was that we measure and demarcate their individual land and give them a panchanama for the same. We have agreed to demarcate the land after which the survey started today.”

After the survey is completed, the land would be acquired by the Collector and handed over to the MMRDA.

Pramod Ahuja, director (works), of Mumbai Metro Project, said, “We have completed 40% to 50% of the work on Metro Line 4. The land acquisition will take a few months. Once we get the car shed land and start the car shed work, the project will move ahead quickly.”

Source - www.hindustantimes.com

Realty Developers Expect Measures to Improve Ease of Doing Business, Says CREDAI

 January 2022

Real estate developers across the country are hoping to see an improvement in ease of doing business through measures in the upcoming Union Budget 2022 that would lead to positive sentiment in the sector.

Around 92% of developers surveyed by the property developers’ body CREDAI are looking to launch new projects this year if ease of doing business improves. Around 74% of surveyed developers are expecting the ease of doing business to improve.

“With the onset of the new third wave, we are expecting the government to look at additional measures for preparedness and controlling any further impact of Covid19. The survey report underlines top concerns of the developer community including controlling the input cost, introducing credit input on GST, increasing availability for funding, streamlining and faster approvals for projects which require urgent interventions to keep up the upbeat sentiment and encourage them to invest more in business,” said Harsh Vardhan Patodia, President, CREDAI National.

The survey was conducted amongst 1,322 developers from 21 states including 8 tier-1 cities in India including Mumbai Metropolitan Region (MMR), Delhi, Bengaluru, Pune, Ahmedabad, Chennai, Hyderabad, and Kolkata. CREDAI represents over 13,000 developers across 221 city chapters.

According to the survey, around 60% developers foresee a 20% price rise this year due to increase in prices of building materials.

Around 55% of surveyed developers would be adopting Virtual Reality (VR) in their business this year. According to 39% developers, online sales is contributing up to 25% to their business. Around 65% developers are willing to explore new business models including coworking and co-living this year, the survey showed.