Anuj Puri – Page 20

Interim Budget 2019: Affordable Housing Gains Amidst High Electoral Pitch

Anuj Puri, Chairman – ANAROCK Property Consultants

The interim budget was more or less a vote bank-facing exercise – an electoral pitch that drew attention to past achievements.

Vote-bank directed announcements included benefits to 12-crore small farmers via credit of INR 6k/year directly into their bank accounts, and also to 10 crore labourers by way of direct pension bonanza.

Direct and indirect positives for the real estate sector

Boost to Affordable Homes:

People earning up to 5 lakhs will get a full tax rebate. However, if one invests in specified Government saving schemes then the tax exemption extends to Rs. 6.5 lakhs. This can have good implications for affordable housing, but not really on the mid-income housing.

The Government also extended the benefit of tax exemption for developers by 1 more year, up to 2020 now. This, too, will give a push to the affordable housing segment.

Electricity for all by 2019 could have positive implications by making more far-flung areas liveable and therefore more viable for affordable housing.

The standard deduction for the salaried class was raised from Rs.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

Of the total current 6.73 lakh unsold units across top 7 cities, approx. 85,000 are ready-to-move-in
NCR & MMR together account for 54% total unsold RTM homes
Hyderabad has least unsold RTM stock priced below Rs. 80 Lakh with approx. 3,040 units

Indians looking to buy homes in 2019 have a very compelling rationale to opt for ready-to-move (RTM) homes, which – apart from being exempt of the 12% GST ambit – are available plentifully.

As per ANAROCK data, out of the total 6.73 lakh units of unsold housing inventory, nearly 85,000 units are currently ready-to-move-in across the top 7 cities. Interestingly, out of these total unsold ready-to-move options, nearly 60% of units are in the affordable and mid segments priced below Rs. 80 lakh.

RTM quotient of Unsold Stock

Cities	Total Unsold Units Approx.	RTM Units Approx.	RTM % of Total Unsold Units
Bangalore	73,340	12,000	16%
Chennai	30,840	8,800	29%
Pune	87,440	8,600	10%
Kolkata	49,470	5,400	11%
NCR	1,86,710	23,500	13%
MMR	2,19,490	22,300	10%
Hyderabad	25,960	4,400	17%
PAN India	6,73,210	85,000	13%

Source: ANAROCK Research (RTM= Ready-to-move-in)

Currently,

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

This is, without doubt, a very favourable market for homebuyers looking to purchase properties for their own use. One of the obvious reasons is the abundance of options in all categories of housing to pick from.

Also, property rates have reduced considerably across cities. Nevertheless, many fence-sitting buyers still hope for further corrections.

There may still be scope for some marginal rate corrections in certain depressed markets – but as we often say in the industry, timing the market is a game only investors should play. There are no guarantees for when, where and even if corrections will occur.

Certainly, a whole country’s real estate market does not witness synchronized corrections like on the stock market, where everyone is affected simultaneously and to the same extent.

For genuine homebuyers who recognize a good thing when they see it and can call it good enough, it has certainly never been a better time.

The Government has also provided several incentives for first-time homebuyers, especially in the budget homes category, and developers are rolling out year-round attractions in their keenness to close transactions.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

The interim budget may focus on wooing voters rather than boosting specific industries
PMAY and employment shortfalls must be addressed
Funding announcements without implementation guidelines will not suffice

Before every annual Budget, the real estate sector trots out a highly optimistic (and unrealistic) wish list to the Finance Ministry.

Whether the industry actually expects the upcoming Budget to cure all its woes with a wave of its magic wand is beside the point. Unrealistic expectations – many completely outside the purview of the Finance Ministry – have become the norm.

Single-window clearance, industry status and hiked tax exemptions limits which will miraculously revive demand for properties have become the usual suspects in such wish lists.

Let’s be rational in our expectations from an interim budget which is announced shortly before general elections.

Though the larger ‘acche din’ premise is debated to the present day, the first Union Budget under the Modi Government in 2014 was certainly a harbinger of change for buyers and builders.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

Benefits aside, a cut could have been a major setback to the affordable housing segment
GST rate cut, clarity on / abolition of ITC – boosted demand vs. actual sales

After much anticipation, the GST Council has failed to deliver a final verdict on GST applicable on real estate – but how much would it really have mattered?

Here’s a Utopian vision – the government would announce a GST rate cut, homebuyers would cheer up since prices would reduce marginally, and the market revives. Really?

The biggest paradox in Indian real estate is that numbers suggest a massive burden of unsold housing stock in the midst of a chronic shortage of housing. As long as prices don’t reduce significantly, the housing shortage will only widen regardless of tax sops.

What we have today is a nation of aspiring homebuyers, many of which are perpetually on the fence, waiting for a slew of minor policy windfalls to cumulatively make a home purchase feasible and attractive.

by Anuj Puri

Bengaluru, NCR and Mumbai, followed by Hyderabad and Chennai currently offer the best opportunities
India is the world’s youngest start-up nation with >70% founders less than 35 years of age

Anuj Puri, Chairman – ANAROCK Property Consultants

India has emerged as one of the world’s most-preferred investment markets, thanks to its thriving economy, burgeoning start-up ecosystem, and its ever-deepening talent pool.

With businesses big and small continuing to grow and broaden their horizons, expensive real estate coupled with new-age professional’s desire to work in an aesthetically appealing environment has spurred demand for collaborative workspaces in India.

In fact, the new millennial workforce will accelerate this changing office dynamic further in the years to come.

As per statistics, millennials are set to form 50% of the global workforce by 2020 – and India is the youngest start-up nation in the world, with a rapidly-increasing millennial workforce.

This generation is ready to ditch conventional workspaces for more swanky, flexible and cost-effective office spaces that effortlessly embrace the latest technologies into their system. To meet this growing demand,

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

A possible GST rate cut at the very beginning of 2019 could bring in the much-needed respite for the Indian residential sector, which is still reeling from reformatory changes.

Though ANAROCK data indicates that sales numbers picked up by nearly 16% in 2018, sales are still far from their peak levels.

The ongoing 12% GST rate levied on under-construction properties has proved to be a major deterrent for homebuyers, who understandably shied away from this added burden on their finances.

ANAROCK’s consumer sentiment survey also confirms that the prevailing GST rate has prevented as many as 49% of property seekers from buying under-construction homes liable for GST. They preferred ready-to-move-in homes that were exempt from this tax.

To attract home buyers and kick-start a more convincing revival of the residential sector, the GST Council is now considering reducing the GST rate for under-construction homes during its next meet in January 2019.

In fact, this move was expected in December 2018; nevertheless implemented, it will be a perfect New Year bonanza for millions of aspiring homebuyers looking to buy under-construction homes in the coming year.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

If you are looking to buy a property or have already invested in one, you will know that there are tax implications involved. Let’s first examine the tax on property purchase and then elaborate on how one can save on it via tax exemptions and deductions.

To begin with, the taxation on property purchase has become much simpler than it was before. With the roll-out of GST, all taxes previously applicable on real estate purchase (VAT, Service Tax etc.) have been subsumed under this single unified tax system.

The overall costs involved in buying a property are broadly divided into two components – the first being the one paid to the builder/seller and other – the statutory and legal costs – to the government.

While the former roughly comprises 80-85% of the overall property cost, the remaining 15-20% goes as taxes to the government coffers.

So, are the taxes same for both under construction and ready-to-move-in properties? The answer is ‘No.’

Taxes for Under-Construction Properties

Statutory and legal costs for under-construction properties vary between 15-20%,

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

The applicability of GST in the Indian taxation system was a move aimed towards ‘one nation, one tax’.

Post land abetment, the applicable GST for under-construction properties was 12% while ready-to-move-in flats were kept out of the GST ambit.

Even for under-construction properties, there was a ruling of Input Tax Credit (ITC) pass-over to the buyer to ensure that it becomes a tax neutral proposition.

While calculations and ITC pass-over still remain a challenge after 1.5 years of GST regime, a recent announcement stated that there is no GST applicable only on ready-to-move-in flats wherein sales took place after the issue of completion certificate.

This is likely to add woes to buyers as well as developers.

Impact on Buyers

Until now, all properties that were treated as ready-to-move-in were out of GST ambit, so buyers had significant choices.

As per ANAROCK data, more than 90,000 units out of total unsold inventory of 6.87 lakh units (as of Q3 2018) across the top 7 cities were ready-to-move-in – a massive 14% of the overall unsold stock.

by Anuj Puri

New housing supply estimated at 1,93,600 units by 2018 end; an annual increase of 32%
Housing sales in 2018 estimated at 2,45,500 units; an annual increase of 16%
NBFC crisis holds sector at gunpoint as 2019 begins

Anuj Puri, Chairman – ANAROCK Property Consultants

The year 2018 was a veritable roller-coaster ride for Indian real estate. Despite signs of recovery across segments, the liquidity crunch – further exacerbated by the NBFC crisis – put all industry stakeholders on tenterhooks.

Consolidation via mergers and acquisitions was rife in all sectors, completely redefining the concept of ‘financial health’ among players and drawing clear lines on who will survive the heat. This process will continue throughout 2019, as well.

Despite all odds, economic indicators remained positive with India’s GDP growth rate pegged at 7.3% in 2018. CPI inflation, a major concern in the past, remained reined in at a manageable 4.8%.

GDP growth and contained inflation are generally considered panacea for most real estate woes. However, it took a lot more than that for real estate to retain even a semblance of an even keel in 2018.

Interim Budget 2019: Affordable Housing Gains Amidst High Electoral Pitch

Unsold Inventory: 60% Ready-To-Move Homes Priced Below Rs 80 Lakh

Is It The Right Time To Buy A Home In India?

Interim Budget 2019 – Let’s Not Get Too Excited

GST on Real Estate Maintains Status Quo

Coworking: Workspaces for Indian Millennials

GST Rate Cut in 2019 – A New Year Gift for Homebuyers?

Taxes on Property Purchase – And How to Save On Them

New Blow: GST On RTM Projects Without Completion Certificate

The Highs And Lows Of Indian Real Estate In 2018