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Maharashtra Govt. Boosts Real Estate Industry With New Concessions!

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Introduction

When the Maharashtra government provided further information on the introduction of the newly approved real estate incentive. The State Urban Department legacy department clarified that premiums offered by the previous government will remain in effect until August 2021.

By this move expected to allow more developers to take advantage of the concessional premiums. And demonstrate a rise in the number of developers who want approval for construction projects in Mumbai during the first 8 months of 2021.

The above line stated that builders in the city have to settle up with a premium to the additional floor space index (FSI) and compensatory FSI. These premiums only need to be paid at approx 17%  of the appropriate ready reckoner (RR) rates. These premiums are only for residential sector projects and are valid till the date August 19, 2020. Commercial developers must have to pay premiums at 20% of the RR rate. (“RR” also known as “Circle Rate”). 

Additionally, the premiums for developers opting to obtain a concession. These concession will be calculated based on existing circle rates or previous year rates i.e, 2019-20 rates. Hence, the real estate construction projects in Mumbai will be suitable for higher concession fees in comparison to the entire Maharashtra. But this benefit is discontinued after August 19. 2021. 

Uddhav Thackeray addresses meeting with the State Cabinet Infrastructure Committee.

This was recently announced by Chief Minister Uddhav Thackeray, he announced several strategies to reduce construction costs all over Maharashtra. The government has reduced the construction premium applied to new projects in the state to 50% by December 31, 2021.

Chief Minister Uddav Thackeray also addresses a meeting with the Infrastructure Committee of the State Cabinet. He discuss a wide range of infrastructure projects in Maharashtra. With several other officials, Deputy CM Ajit Pawar and PWD Minister Ashok Chavan also attended the meeting.

Union Budget 2021-22- A Silver Lining for Real Estate Sector!

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Introduction-

Union Finance Minister Nirmala Sitharaman is preparing to present the Union budget 2021-22 on February 1, 2021. It is expected that Union Budget 2021-22 would help to revive from COVID-19 setback in a feasible manner. There is no doubt that COVID-19 has hit almost every sector therefore something needs to be done for all sectors. Also people from different sectors presented many proposals and suggestions to the Minister of Finance during preliminary budget discussions.

The same is true for the real estate sector, as they have also placed their demand, like flexible income tax norms and reforms in Good and Services Tax (GST). They consider that central government and some state governments have announced a series of measures to develop the real estate sector, which was low for the last two or three years. It has helped to stimulate demand in the third quarter of the current financial year.

Effect of COVID-19 on Real Estate- 

Corona-virus has a severe hit on all industries including real estate sector. Insecurity of jobs has led many home buyers to postpone their property purchase. Many builders have extended the possession period due to delays in supply of construction material, shortage of workers, etc. Many retail and entertainment outlets has been closed temporarily, this has put the future commercial real estate on hold. Work from home trend has reduced the utilisation of office space in Bangalore, Gurgaon, Noida, Chennai and other metropolitan cities.  

Related Article:- Impact of Coronavirus on Real Estate

Expectations from Union Budget 2021-22

Mr. Lincoln Bennet Rodrigues, Founder and Chairman of the Bennet and Bernard Group, known for its luxury vacation homes in Goa, expressed his views on upcoming Union Budget 2021-22. He said “The real estate sector is a major pillar of India’s GDP, and has undergone substantial changes over last few years. We anticipate further easing of income tax reforms in the upcoming budget.

The sector also expect the government to implement various reforms and accelerate consumption to grant bank loans to ease liquidity. A lower home loan interest rates, stamp taxes, and lower registration fees, will significantly affect the cost of the project and will definitely motivate home buyers to purchase the property. 

After this epidemic, people realised the importance of large spaces and self-sufficient communities. This will definitely increase the desire to have bigger space for the same capital. Hence, places like Goa will surely attract the investors because it offers a number of amenities”. 

In conclusion, we expect the government would realise the problems of real estate sector. And will take the necessary measures to strengthen the real estate sector and development of solid infrastructure.

Bengaluru Transit Infra Project- A Boost to Real Estate in 24 Locations!

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According to a report by Bengaluru Urban Infrastructure, “the upcoming Bengaluru Transit Infra Projects will benefit the real estate development in various metro cities”. According to a study by Knight Frank. These Infra Projects are being implemented under different models costing more than $10 billion. 24 specific locations have been identified which would be benefited from these Transit Infra Projects. More than 120 kilometers and 200 kilometers of metro and road projects are under the phase of construction in Bengaluru. 

Basically, Transit Infra Projects are designed to improve the connectivity between residential and metropolitan areas. It improves the opportunity for employment, healthcare, and education. Metros, Highways, Bridges, etc. are some examples. 

Benefits of Bengaluru Transit Infra Projects

It is expected that these Bengaluru Transit Infra Projects will boost the large-scale real estate development across 24 most important locations in Bengaluru city. These projects would be beneficial for commercial sectors. Specially for those office hubs which are located in isolated locations and require connectivity primarily Public Transport facilities. It is estimated, between 2021-2025 the projects like Bengaluru metro phase 2, extensions gets completed. Other major road projects like peripheral ring road, suburban rail network, and satellite town ring road are likely to be completed after 2025. 

Whitefield, Bellandur to Marathahalli Beli, Mahadevapura To KR Puram Belt. Electronic City Phase-1, and Electronic Phase-2 are some markets that will likely to be impacted by transit-orient infrastructure projects. 

Rajani Sinha, National Director and Chief Economist- Research Knight Frank India has quoted that- Development of Bengaluru transit infra projects will not only improve connectivity. It also reduce the traveling time to major Office hubs and employment locations. These huge upcoming infra projects would also boost the real estate market.

Also Read:- Locations to buy House in Bangalore

Nitin Gadkri Expressed his Concern Over Rising Cement Price!

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“The cement factory is taking advantage of this situation. It is not in the national interest. We are planning to implement Rs 111 lakh crore on infrastructure projects in the upcoming five years. If the price of cement and steel increase like this, then it will be very difficult for us”.

On Sunday i.e, 10 Jan 2021 the Union Minister for (MSMEs) Nitin Gadkari lashed out at Cement factories and said they are worsening the present situation of the real estate market. 

Words from Developers on rising cement price

The big players in the cement and steel industry are indulging in monopolies to jack-up prices. Several developers have said the cement and steel industry are arbiritaily increasing the price. In January 2020 the price of a 50 kg cement bag was around Rs 350, but now it has increased from Rs 430 to Rs 450 which is around 23% to 28% increase. They also claimed that the rate of steel per tone was around Rs 40,000 and has now crossed Rs 54,000 which is around 35% increase.

Gadkari addresses press conference with Builders Association of India

While interacting with Builders Association of India, Western Region via video conferencing, Nitin Gadri said- “The cement factory is taking advantage of this situation. It is not in the national interest. We are planning to implement Rs 111 lakh crore on infrastructure projects in the upcoming five years. If the rates of cement and steel go like this, then execution of upcoming projects will become challenging for us.”

“It is very difficult to understand the price hike since every steel company has its own iron ore mines and there has been no increase in labor and power costs.” Further, he added. 

In conclusion, he said the government is facing maximum problems in the real estate sector. He further said that the government is locating the cause of this problem and is in process of finding out the solution. He also said he will take the suggestion from the Finance Ministry and Prime Minister Narendra Modi.

Will Real Estate Boost in 2021?- Real Estate Condition in the upcoming year.

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Introduction-

COVID-19 has affected all the business including the real estate sector, the commercial sector in particular has suffered a setback. However the situation is improving day by day and is much better than past few months. 

Due to several government policies and relief packages the Indian Economy is reviving at a fast pace. Now more and more buyers are heading towards the housing sector. 

Low interest rates and tax relief are some common initiatives taken by the Indian government. These relief packages also drive more foreign investment into the Indian Economy. 

After the despondent time of lockdown, the real estate sector is improving and has emerged as the safest investment option in comparison to other sectors. The government has narrowed down its focus on the residential sector, according to a survey the reduced home loan interest rates are around sub-7 percent hence, giving an extra benefit to the residential sector. 

RBI quotes and statements-

The RBI has predicted that in the first quarter of the next fiscal year, the growth could be 21.9 percent and overall 6.5 percent for the first half of 2021-2022. The RBI has quoted so, because of the base effect, as the economy contracted by more than 20 percent in Q1 2020-2021. They have also mentioned that it would continue to employ instruments to ensure sufficient liquidity.

Many real estate companies or developers are praising the government policies- 

Harvinder Singh Sikka, MD, Sikka Group-“Since the government has reduced the home-loan interest. We have observed an increase in inquiries and the same will continue in 2021”.

Nagaraju Routhu, CEO, Hero– “Due to the reduced home loan interest and other relief packages by the government and builder the Tier II and Tier III cities have seen an increased demand in the residential segment”. 

Hence, we can conclude that the real estate market, especially the affordable housing market will grow in the coming months, and there will be more improvement.