Maharashtra sees 375 realty projects completed since lockdown
The Mumbai Metropolitan Region (MMR) and a real estate developers’ body that consists of over 1,800 members in the city of Mumbai have stated that 374 projects have been completed since the lockdown was imposed due to the outbreak of Covid-19. Over the last year, an increase of 15-20% in sales is witnessed.
The President of CREDAI MCHI Deepak Goradia added that close to 375 projects in Mumbai, suburban regions of Mumbai, Thane and Raigad are RERA registered projects with most of them to be completed before the lockdown. Furthermore, he added, developers are looking forward to finishing the project, so they receive occupancy certificates. It will ensure buyers do not pay GST on those projects that are completed. The pace of sales is expected to only grow.
Factors contributing to this unlikely increment include the various offers such as rate cuts in stamp duty and interest rates, along with the keenness among buyers to shift from a rental lifestyle to owning their own home during the pandemic.
By December 31, the stamp duty cut will increase by 1%, so the figures for sales are likely to grow even after that time. Through different schemes, developers will be able to accommodate the additional 1% stamp duty.
The Maharashtra government has decided to reduce the stamp duty on housing units from 5% to 2% from 26 August to 31 December 2020. It will help in boosting the real estate market that has been stagnant due to Covid-19. From 1 January 2021 till 31 March 2021 stamp duty will be set at 3%.
The initial demand for properties in the mid-size and affordable segments was restricted to only ready-to-move-in properties. However, the new launches in the market have been experiencing traction in the last few months. The officials are hoping to witness the same growth in other segments of residential properties in the coming months.
The biggest challenge faced by real estate at present is the labour force. Deepak Goradia mentioned that the labour force has been trickling since July. Currently, 70-90% of construction sites have mobilised. Moreover, most construction activities have started with protocols in place.
The downside here is the labour cost which has increased by 15% due to an increase in demand from the infrastructure sector, especially from government-led projects. Due to this reason, developers spend at the rate of Rs 900 now as opposed to the earlier set rate of Rs 700. Additionally, those labourers that have returned from their villages are limited in numbers hence the increase in labour costs. There is a need to match their rates with that provided by government projects to ensure labourers are willing to work. Although, this cost has not been transferred to buyers as real estate is primarily a buyer’s market.
Goradia suggested that there still exist challenges in the industry that need to be addressed. One such is the Swamih Fund. It includes the consent of existing lenders, especially when the developer is applying for the last-minute funding. He added that it is not yet forthcoming. Additionally, several individuals from the industry have demanded a restructuring of loans and adding input tax credit as part of GST.
Image credit: Harry Strauss