15 Jul 2017

Coming 6 months for Real Estate in Mumbai – Mr. Nayan A. Shah

The Future of Real Estate in Mumbai.

If we introspect the last year and beyond, here’s a detailed list of all the events that have taken place:

  1. There has been a slow down in the economy, hence slowing down the Real Estate industry as well.
  2. Demonetization hit the economy on the 8th of November, 2016, thereby substantially affecting everybody’s liquidity. This move affected the Real Estate industry as well.
  3. RERA has ensured that the real estate developers are likely to take at least 6 months to put their business in order.
  4. Stay of the Mumbai High Court on the new construction (Dumping Ground Order) has delayed hundreds of projects from their commencement date.
  5. A number of new policies were announced by MCGM and the Urban Development Department for which quite a few projects had to go back to the drawing board or had to be delayed or stopped.
  6. A number of projects are waiting to commence because the DCR/DP 2034 has yet to be sanctioned. Hence, people are in wait and watch mode.
  7. For rest of the MMR, the Common DC Rules are also being finalized. Hence, the developers have kept their projects on hold due to the sanction of Common DCR 2017.
  8. In the last three years, due to the dramatic rise in the cost of approvals, a situation has come where the cost of production of a home has increased dramatically.
  9. There is no way a real estate developer can reduce the prices any further. In fact, in the last 4 to 5 years, there has been no increase in price. This means that the prices has come down by 30% or even more.
  10. GST has also got the developer calculating its impact. The developers will take time to be GST ready.
  11. Actual GST is 18% on Real Estate. However, there is an abetment of 33% towards land cost. Hence, the net effect is 12%. Some experts say that GST could even be 18% and no abetment of land would be permitted.
  12. New launches are 38% of what they were in the year 2015. Whatever was announced was for the Affordable Housing segment; there has hardly been any project that has been launched in the Mid Luxury Segment.
  13. There is an overall drop of 62% in the launch of new projects.
  14. So, we have a situation where there are hardly any under construction projects, especially in the Mid Luxury segment (flats costing 1.5cr and above) and there are hardly any ready to move in flats in the Mid Luxury segment.
  15. As a result of this, in the coming 6 months or in the very near future, there will be a premium for ready to move in homes due to two reasons. Firstly, there will be a shortage in Supply and an increase in Demand. Secondly, due to the fact that Ready to move in homes with OC are GST FREE, you will be able to save 12% of your capital.
  16. There is no way a developer can reduce any price of it because the price at which he is selling is now the Marginal Cost.
  17. There is a big gap between demand and supply. So, it will be a repeat of the situation in the year 2008-2009.
  18. There are three kinds of buyers;
    1. People who have to invest capital gain.
    2. People who have to buy a home because of the expanding family.
    3. People who have the liquidity and may need the home 2 or 3 years from now.

All these categories are one way or the other postponing the purchase because of the feeling that the rates will come down. The moment they realize the shortage, they will run to buy whatever is available.

To Summaries;

  1. Demonetization
  2. RERA
  3. GST
  4. Rise in the cost of approvals
  5. Slow-down in the economy: Slow-down in Real Estate.
  6. 62% drop in new launches, hardly any new launch in the Mid Luxury Segment (1.5cr and above)
  7. Hence, very few under construction projects available and hardly any ready to move in flats with OC are available.
  8. Developers are not launching new projects due to the pressure of RERA, GST, Demonetization and Liquidity; they are also waiting for the DCR/DP 2034 and Common DCR to be sanctioned.
  9. They are waiting for the stay to be relaxed (Dumping Ground Order).
  10. As a result of all of the above, there is a significant drop in supply.
  11. 9 meter road width policy and other MOEF and UDD notifications have resulted in some of the projects getting delayed or stopped or got back to the drawing board to be re-planned and re-approved.
  12. Over the last 4 years, a substantial portion of people have postponed the demand. Hence, there is a huge pent up demand and hardly any supply.
  13. I see prices of flats in real estate to rise in the coming six months or even before that, especially the prices of ready to move in flats which are in the Mid Luxury segment.
  14. Even in the Affordable Housing category, the projects that are rightly priced for the right location at the right size and at the right ticket price are also likely to see an appreciation.
14 Jul 2017
Impact of GST on underconstruction homes and ready-to-move-in properties

Impact of GST on underconstruction homes and ready-to-move-in properties

After RERA Act, it is the GST that promises to standardize the real estate sector. At present a home buyer has to several indirect taxes to buy a home like excise duty, value-added tax and service tax. All this amounts to 11% and does not include stamp duty.

With GST, all these taxes have been subsumed and the buyer will now have to pay 12% tax for purchase of any property, excluding stamp duty. However this only stands true for underconstruction properties and not on completed ready-to-move-in apartments homes. While the entire input credit — excise duty and Central sales tax on construction materials that are paid by developers — will also be allowed unlike earlier.

The government made a statement, “The builders are expected to pass on the benefits of lower tax burden under the GST regime to the buyers of property by way of reduced prices/installments … It is advised to all builders/construction companies that in the flats under construction, they should not ask customers to pay a higher tax rate on installments to be received after imposition of GST.”  

According to E&Y report from 2015, the real estate sector accounts for 5% India’s GDP, making it the second largest employer in India. However the industry faces many issues like macro-economy conditions and fiscal policies. One such challenge was the multiple indirect taxes levied by each state such as VAT, Stamp duty, Service tax, registration fees and so on.

GST simplifies tax compliance and eliminates the chances of double taxation. Thus giving home buyers a candid reason to cheer up even though the standard GST tax rate is slightly higher. Since with GST it is expected that cost of projects will fall for developers, it would mean cheaper homes for consumers too. For builders the actual tax effect will lower due to the input tax credit on raw materials than the present taxes.

Builders at present are scaring customers of the price hike since they can’t claim any tax credit for taxes paid before July 1. The amount of tax that a property buyer will have to bear depends on his property. If you are moving in a ready home or if your under construction property is almost ready and have paid 90 to 95% price, you will have to pay flat 12% tax on the remaining amount. However if you have just bought an under-construction unit that costs 1 crore and just paid 20 lakhs of it then the remaining 80 lakhs will invite 12% GST tax.

Hence given the current scenario it makes perfect sense to invest in a ready-to-move RERA compliant home which is 12% GST free and you can save up to 39 lakhs with Mayfair Housing

14 Jul 2017
Mayfair Housing brings you Monsoon ready homes

Mayfair Housing brings you Monsoon ready homes

Mayfair Housing has made its presence felt in the real estate sector for more than 5 decades now. Committed, transparent and passionate are three terms that define their work. They have given Mumbai some of the best projects in the city. This monsoon they bring you some of their monsoon-special homes that will surely sweep you off your feet.

Here is a look at Mayfair Housing ready-to-move homes:

Mayfair Hillcrest – If hill stations are your favourite destination then head to Vikhroli West. Hillcrest is an 18 floors iconic tower located on a hill top with three levels of parking and podium. The Hillcrest homes are located on a small hill and offer you a 360 degree view of the city. Take the pleasure of a Lonavala trip right in your own home.

Mayfair Hillcrest is the closest you can come to a hill station in Mumbai. It offers you the best seats to indulge in this rainy season.

Mayfair Page 3 – This one is for those who believe in sophistication and class. Mayfair welcomes you to the superstar status. Page 3, located in Lokhandwala, offers you the best in modern amenities and vastu compliant layouts along with dedicated parking slots. Mayfair suggests its penthouse for the best view in the city. You can live the monsoon here. 18th floor is all about fresh air and new perspective on life.

Mayfair Greens – Located between Kandivali and Borivali Station, Greens stands tallest in the vicinity. The first residential floor begins at a height of 55ft. The spirit of nature and well planned homes is conveyed in the name itself. You will find the calm and peace you were looking for. All you need to do is close your eyes and listen to the soothing sound of the rain falling and don’t be surprised if you find a cloud passing you by.

Mayfair Vishwaraja – Vishwaraja is your destination for serenity. Located in Titwala near the bank of Kalu river, it brings the nature into your homes. Fresh air and free from the hustle and bustle of the city this can be your own space where you rejuvenate each day. Visit today to live this experience.

Mayfair Virar Gardens – Virar Gardens bring you a healthy and peaceful lifestyle. Located in suburban pocket of Virar, these homes give you a breathtaking view of the rains. You will find everything here for a comfortable and convenient life. What’s more this is an award winning township. It won the ‘Best Integrated Township’ by the Accommodation Times Awards, Virar Gardens can be the home that you have been looking for.