Real Estate

The 2018 realty wishlist

As the realty sector continues to deal with the after-effects of reforms put into place last year — RERA, GST and demonetisation — industry experts are hopeful 2018 brings with it much-needed positive signs and market conditions. Here are the top five trends that experts are hopeful for this year:

HOUSING

With the deadline for the government’s ‘Housing for all by 2022’ scheme fast approaching, this is the year of affordable housing. Experts predict a strong demand and corresponding supply for homes in this segment. With the sector now accorded infrastructure status, developers can expect a further reduction in borrowing costs. Arun Mn, MD, Casagrand, says the Credit-Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY) for economically weaker sections and lower/mid income groups will also push the demand for affordable homes. A majority of housing demand is witnessed within a range of ₹35 lakh to ₹55 lakh, followed by the ₹25 lakh and ₹35 lakh segment.

A. Shankar, National Director, JLL, adds, “The increase in the value of carpet area (for middle income groups under PMAY) is an added advantage for buyers. It would also help developers bring the unsold inventory (large size apartments) into the CLSS.”

INFRASTRUCTURE

The city’s metro rail project is on everyone’s top five list of this year. Phase 1, expected to be opened to the public in the coming months, will positively impact the city.

Once completed, Phase 2 – which connects the city’s peripheral areas such as Taramani and Siruseri, the entire IT corridor – will be of great importance to the city’s realty market.

Arun adds,“The completion of the Outer Ring Road (ORR) will be an added advantage. Areas along ORR such as Avadi, Nazarthpet, Cholavaram, Pattabiram and Minjur will see growth in the coming months.”

TAX REFORM

Bringing the realty sector under the ambit of the Goods and Services Tax (GST) is on the list of most players too.

This will not only increase transparency but also streamline the supply chain of developers. Based on the revised order from the government, at present, under-construction properties are taxed at 18% (9% SGST + 9% CGST). The government has also allowed for a deduction of land value equivalent to one-third of the total amount charged by a developer, thus, making the effective tax rate as 12%. A majority of developers find this too high for consumers and would like it lowered by half this year.

Shankar explains how the introduction of input tax credits (ITC) will help get rid of huge cost margins and increase in profit margins. “A developer will be entitled to input credits on the sale of property under construction against taxes that are paid by the buyer. This is expected to bring down project costs for developers, who will have to pass it on to buyers,” he says.

Dr.R.Kumar, MD, Navin’s, is hopeful that the implementation of an online approval process for all planning and building permits with unified building regulations, coupled with a single window clearance system, will come into place in 2018.

POLICY

One of the biggest reforms of 2017, the Real Estate Regulation and Development Act (RERA), is expected to transform the industry in 2018.

Expected to be a game changer of sorts, experts predict smoother and transparent transactions post-RERA.

The Act requires developers to rework their business models and work towards clear deadlines and faster deliveries. “The access to funds at competitive rates, in contrast to the high-lending borrowing avenues available today, could lead to rationalisation of prices within the sector,” says Kanchana Krishnan, Director – Chennai, Knight Frank India.

LOCALITY

One of the key micro markets in Chennai that is bound to see traction in the office space segment this year is the Pallavaram Thoraipakkam (PT) zone. The area will soon be dotted with several IT developments, says Shaju Thomas, Director, Office Services (Chennai), Colliers International India. The city’s peripheral localities like Medavakkam, Porur, Chrompet in the south, Perumbur-Madhavaram in the north, and Koyembedu, Mogappair in the west will see a spurt in housing demand.

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Printable version | Aug 10, 2020 12:10:12 AM | https://www.thehindu.com/real-estate/realty-in-2018/article22374279.ece

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