- Increasing tax burden, but increasing demand
Mumbai: In spite of the unexpected rise in all commodity prices including crude oil and rising inflation, as the Indian economy and stock market continue to rise, in the same way increasing construction cost and increasing tax burden. Despite the Tax Burden, the real estate industry, especially the housing sector, is booming and this new era of boom has started after 6 years. By the way, always after a boom in the stock market, there is a boom in real estate too. All construction materials including steel, cement, aluminum, copper and petrol-diesel are becoming more expensive and the cost of construction is increasing. Nevertheless, after huge sales in 2021, in the first quarter of 2022 (January-March), there has been a strong jump of 71% in home sales in 7 major cities of the country including Mumbai, Pune.
According to data from property consultant firm ‘Anarock’, 99,950 homes were sold in the first quarter, the highest since 2015. In the Mumbai Metropolitan Region (MMR), 27,680 houses were sold, registering a 43% increase. Whereas, according to the report of ‘Knight Frank’, in March 2022 itself, about 16,000 properties (residential and commercial) were registered in Mumbai and due to this the Maharashtra government got revenue of more than 1100 crores (stamp duty and registration fees). ), which is the highest monthly tax collection in the last 10 years. Now the state government has increased the ready reckoner rates in Maharashtra by an average of 8.8%. That is, the property prices will directly increase by 8.8%. Stamp duty has also been reduced to 6% by imposing 1% metro cess. There are many challenges like this. enavabharat.com inquired about the opinion of the stalwarts of the housing sector. They say that there is no scope for reduction in the prices of houses, as all the construction materials are expensive, the cost of construction has increased significantly and the inventory with the realty companies has decreased due to increase in sales. New supply is short. Due to the boom in the economy, the demand is continuously increasing. Therefore, further sales and prices may increase further.
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Most in demand in affordable housing: Ashok Chhajed
Arihant Superstructures Ltd. (Arihant Superstructures Ltd.) Chairman and Managing Director Ashok Chhajed said that due to rising cost, realty companies are having to increase the prices of houses. Prices have increased by an average of 20% in the financial year 2021-22, but this is not having an adverse effect on the sale of houses as people’s income is increasing due to the boom in the economy. Secondly, in a growing market, customers make a buying decision quickly. It is the nature of the customers that in a downturn they wait for the price to fall further while in a bullish buy immediately so that the price should not increase further. Apart from this, home loan rates also remain at the lowest levels. This is a huge support for demand. This is the reason why there are record sales of homes. Affordable housing is in high demand.
target of selling 3,000 homes
Ashok Chhajed said that now the New Financial Year has started all over India. Almost all industry sectors are getting an average salary increase of 10%. At the same time, due to the rapid growth of India Growth Story, there is a good growth in the employment market as well. Wage increase and new employment opportunities will increase the purchasing power of the people by 15%. Due to which the demand for houses will increase further. Arihant Superstructures has set a record sale of 2,000 homes in FY 2021-22 and is targeting 3,000 homes in the new year. Arihant is launching 4 mega projects of affordable housing this year in Navi Mumbai, Kalyan, Dombivli and Badlapur to build 5,000 houses with modern amenities.
Prices may increase by 20%: Amit Jain
Arkade Group Chairman and Managing Director Amit Jain said that apart from land, labor and construction material cost the most in any real estate project. Labor cost is increasing continuously due to Corona pandemic and rising inflation. There has been a huge jump in the prices of all basic raw materials including steel. A year ago, steel was 55 thousand rupees per ton, which after selling 90 thousand in high is now 82 thousand rupees per ton. Same is the case with other materials. Also, due to the cost of fuel, the transportation cost has also increased significantly. Overall, the cost of building construction has increased by 15 to 20% in the last 6 months. Now the state government has increased the ready reckoner rates in Maharashtra by 8.8%. All premium charges and TDR of Municipal Corporation are linked to reckoner rate. Hence the premium charges will also increase. BMC has increased the CFO scrutiny fee by nearly 300% from April 1. That is, the construction cost will increase by 10 to 20%. Which will have a direct impact on property prices. We estimate that the house prices will increase further by 15 to 20% in the coming months.
21 lakh square feet construction plan
Amit Jain said that despite the rise in prices, the demand for homes remains as the economy is picking up which is giving a boost to the demand. Home loans are also available at historically low rates. With Affordable, the sales in the mid housing sector are increasing continuously. Sales of realty companies that deliver homes on time are increasing. Mumbai continues to be the most valuable realty market. Arcade Group plans to build 21 lakh sq ft in Mumbai over the next 3 years, which will be valued at around Rs 2,000 crore. These housing projects with modern lifestyle will be built in Borivali, Goregaon, Vileparle, Santacruz, Andheri, Malad and Mulund.
‘Single window clearance’ necessary to reduce cost: Sandeep Maheshwari
Sandeep Maheshwari, Chief Operating Officer, Raymond Realty said that every construction material including steel, cement, aluminium, sand, stone, pipe fittings, tiles has become costlier by 50 to 100% in the last one year. Due to which the cost of construction per square feet has increased by Rs 500 to 600 square feet. Apart from this, the government has increased the royalty rates to 100%. Now in addition to 1% metro cess, the government has increased the ready reckoner rates from 8 to 9%. Which will have a direct impact on the premiums and TDR rates of the municipal corporations. Labor cost has also increased by 10%. In this way the construction cost has increased by 8 to 10% and is expected to increase further. Whereas in the realty business, there is a margin of about 20%. In such a situation, it has become necessary for every developer to increase the prices. At least 8 to 10% increase has to be done. The State Government should introduce Single Window Clearance System to reduce the cost, as delay in clearances adds to the cost.
build ahead of time
Sandeep Maheshwari said that even though there is an upward trend in the prices, the housing demand is increasing continuously due to the rapid growth in the economy. Second, demand is high and supply is low. Being the financial capital of the country, Mumbai metropolitan area is witnessing maximum sales. With good infrastructure and environment as well as good connectivity across the MMR, Thane has also become a major housing market. Hence, Raymond Group has launched a premium housing project of 3,000 houses in Thane, with an aim to complete 900 flats ahead of schedule by December 2022 in the first phase. Whereas the target set in ‘RERA’ is 2024. In this project Raymond Group is building 5 star facilities at 3 star price.
