Shares of real estate companies with significant exposure in Mumbai slumped in a weak market today after media reports surfaced that the Maharashtra government proposes to hike stamp duty for properties.
Shares of realty players like India Bulls, Oberoi and HDIL today slumped as much as 6 per cent after reports that the state government is planning to hike stamp duty by as much as 160 times.
India bulls Real Estate slumped 4.53 per cent to a low of Rs 65.25, Oberoi Realty tanked 2.32 per cent over its previous close to Rs 250 and Housing Development and Infrastructure Ltd was down by 6.64 per cent to Rs 89.15 on the BSE.
If the hike comes into effect, it will increase prices of both residential and commercial leave-and-licence properties, by a huge margin, market analysts said, adding that it will affect the already-sluggish Mumbai real estate demand.
“This news is going to be negative and stock prices of realty companies who have exposure in Mumbai took a hit. The cost of property in Mumbai will move up it will worsen the situation as there are already very few takers at the present interest rate regime,” Ashika Stock Brokers Research Head Paras Bothra said.
Moreover, weakness in the broader market also battered these stocks to some extent, market analysts said. The 30- share benchmark index Sensex was trading at 17,113.62, down 248.12 points at 1321 hours.
According to media reports, Maharashtra government proposed to hike stamp duty on leave-licence to 0.1 per cent on market value or 1 per cent of the average annual rent or deposit paid, whichever is higher, for residential properties.
For commercial properties, the duty for lease agreements over 60 months is 0.4 per cent.
This is a whopping hike from the previous fixed amount of Rs 25,000 for residential and Rs 50,000 for commercial properties for 60 months.