Maharashtra discontinues stamp duty rebate; developers disappointed

Mumbai Metropolitan Region developers expressed their disappointment after Maharashtra government refused to extend the ongoing 2 per cent stamp duty rebate on property registrations valid till March 31, 2021

Chief Minister Uddhav Thackeray, Deputy Chief Minister Ajit Pawar, and Revenue Minister Balasaheb Thorat met on Wednesday to review the decision. CREDAI MCHI, which represents over 1,800 developers from MMR, had submitted a memorandum to Thorat last week seeking an extension of the 2 per cent stamp duty cut by another 12 months as it would help not only the real estate sector, but provide impetus to the economic recovery since more than 250 allied industries are linked with the construction sector.

Though the government refused to extend the stamp duty rebate, it agreed to the developer’s demand to keep the Ready Reckoner rates unchanged for 2021-22. It also decided to continue to the 1 per cent stamp duty rebate for women property owners aimed at encouraging women to be co-owners in family property assets. The government resolution issued by the government laid down a condition that women who take the benefit of the stamp duty rebate cannot transfer the property to male co-owners for 15 years.   

Commenting on Maharashtra goverment's decision about non extension of reduced stamp duty and unchanged ready reckoner rates, Dr Niranjan Hiranandani - MD- Hiranandani Group and National President- National Real Estate Development Council (NAREDCO) said, "Maharashtra government has played a leadership role in rolling out revolutionary measures like stamp duty reduction to augment sluggish real estate market post-Covid pandemic crisis. The extension of this benefit would have played a catalytic role in keeping up the pace of sales and property registration momentum across the micro markets and different housing segments in the state.”

Hiranandani pointed out that the stamp duty rebate had also resulted in increased revenues for the government. “The proven data clearly reflected uptick in volume leading to increased state revenue in second half of FY20-21 and multiplier effect it draws on employment and GDP. Unchanged ready reckoner rates is good, but Industry expected reduction in ready reckoner rates to foster real estate transactions. Hence, NAREDCO requests the state government to kindly reconsider the decision, proving it to be a win-win situation for all." Last year, the Maha Vikas Aghadi government had reduced the ready reckoner rates marginally for Mumbai with little impact on market rates.

Reacting to the developments, Deepak Goradia, President, CREDAI MCHI said, “We are disappointed with the Maharashtra Government’s decision to not extend the stamp duty rebate beyond March 31. Given the current economic climate, the reduction in stamp duty charges not just galvanized homebuyer sentiments, but also enabled the industry to spearhead the state’s economic revival in the post-covid era as well. An extension would have ensured the sustenance of the sales momentum while providing the necessary support to one of the strongest economic pillars and employment generators in the country.”

Goradia said the industry would continue to look forward in continuing the dialogue with the government and make representations to convince the government to to resume the reduced 3 per cent stamp duty rates in the near future

“We are glad that the State Government decided on keeping the ready reckoner unchanged which reflects the market conditions more precisely. The move to provide a 1% stamp duty rebate to women homebuyers is also noteworthy and honours the crucial role and contribution of women towards homebuying,” he said.

The bold step by the Maharashtra government to cut stamp duty rates by 3 per cent till December 31, 2020, and by 2 per cent till March 31, 2021 had reignited the demand for homes that had touch its lowest point in April at the peak of the COVID-19 national lockdown. Maharashtra’s policy initiative was followed by neighbouring Karnataka too. Most developers were in favour of the government continuing with the stamp duty rebate.

Rohit Poddar, Managing Director, Poddar Housing and Development Ltd said “The stamp duty reduction has spurred the sales and registration in Maharashtra to an all-time high, assisting the government in generating more revenue than the actual rates would have yielded. To sustain the momentum, it is essential for the government to extend the stamp duty reduction till March 2022 which in turn would help in generating even more revenue while de-stressing the real estate sector, thereby bringing the economy back on the growth track at high pace.”

Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty and Secretary, CREDAI MCHI said "The State Government's decision to discontinue the stamp duty benefit will be a huge distress for the homebuyers who would have decided to buy their dream home but couldn't do so because of the severe impact of the pandemic. We had requested the Government to extend the stamp duty benefit for atleast a year so that more and more buyers could fulfill their wish of buying their home. We will continue to urge the Government to reconsider their decision and extend the stamp duty benefit further in interest of the homebuyers."

According to international property consultants Knight Frank India, after the stamp duty rebate was announced on August 26, the property registrations have grown incrementally month on month with a staggering 75,688 units registered between September 1, 2020 and March 24, 2021. Home sales achieved its highest ever mark in December 2020 with 19,581 units registered, and a 111 per cent increase over December 2019 registrations. In the run-up to March 31 deadline, the Inspector General of Registrations had clocked nearly 17,000 registrations in March, an increase of 234 per cent over March 2020.  

The Knight Frank India report also pointed out that from September 1, 2020 till March last week, the city exchequer had collected Rs 2578 crore in revenue from apartment sales which was a substantial increase over Rs 1756 crore worth revenue collected between January to August 2020 period.  

Shishir Baijal, Chairman & Managing Director, Knight Frank India said, “The reduction in stamp duty rate has helped mitigate the pain in the long-beleaguered real estate sector of Mumbai. As expected, with the revival of the economy, the sales momentum grew stronger in Q1 2021 and the euphoria amongst homebuyers continued despite the 100-bps increase in stamp duty rates. A combination of lowest home loan rates, reduced house prices along with rebates and payment flexibility offered by developers, as well as increased household saving rates, have provided the right growth environment for the residential segment to grow.” 

MMR developers want stamp duty rebate to continue for one year

Mumbai developers, who tasted the impetus their home sales received after the 3 per cent stamp duty cut, have demanded that Maharashtra government extend the rebate ending on March 31, 2021 by another 12 months.

CREDAI-MCHI, which represents over 1,800 developers in Mumbai Metropolitan Region, made this demand in a letter handed to Maharashtra revenue minister and Congress leader Balasaheb Thorat recently.

The letter pointed out that the stamp duty rebate had not only substantially improved home buyer sentiments and property registrations since August 2020, but also increased the tax collections for the state due to high volume of home sales and contributed to job creation. The stamp duty was cut from 5 per cent to 2 per cent from Sept 1 till December 31, 2020, and then increased to 3 per cent from January 1 to March 31, 2021. The rebate has created positive cascading effect enabling the real estate industry to led the revival of the COVID-19 pandemic impacted economy, the letter said.

Acknowledging the support of the government in this recovery, CREDAI-MCHI said extension of the rebate till March 31, 2022 will further help sustain sales momentum that has led to record breaking property registrations and help the recovery.

Deepak Goradia, President, CREDAI MCHI, lauded the decisive and forward looking approach taken by the revenue minister. “We have requested the Maharashtra government to grant an extension of the stamp duty rebate for another 12 months to sustain the momentum and continuing the positive cycle of investment.” He said over 250 ancillary industries are directly and indirectly dependent on the industry and such a rebate would lead to further job creation and overall economic revival.

After the 3 per cent stamp duty cut was implemented, the property registrations shot up gradually to record breaking levels.   September 2020 witnessed registration of 5,597 properties, followed by 7,929 registrations in October, 9,301 registrations in November, and 19,584 registrations in December. While stamp duty increased by 1 per cent from January 1, the sales momentum continued with January logging 10,412 registration and February clocking 10,170 registations, according to the Inspector Generation of Registrations data.

The total value of properties sold also increased to never-before levels with September (Rs 9,025 crore), October (Rs 11,640 crore), November (Rs 14,395 crore) December (Rs 34,025 crore), January (Rs 10,170 crore) and February (Rs 11,745 crore), according to a Propstack report. Multiple factors including pent-up demand, lowest home loan rates, substantial savings in stamp duty for higher priced inventory, and discounts offered by developers contributed to the sales momentum.

 

MMR housing sales grow 33 per cent year on year in Jan 2021: Report

 The Mumbai Metropolitan Region (MMR) has witnessed 33 per cent year-on-year growth in housing sales in January 2021, with all micro-markets in the region continuing the sales momentum despite a 1 per cent increase in stamp duty, indicated a joint report by CREDAI MCHI and CRE Matrix released today.

CREDAI MCHI, which represents over 1,800 developers in MMR region, has now tied up with analytics firm CRE Matrix to publish monthly research reports tracking property sales in MMR. CREDAI MCHI President Deepak Goradia released the first edition of “MMR Property Tracker” which analysed the trends in eight key housing micro markets in MMR.

Giving in to the persistent demand of Mumbai developers, Maharashtra government had on August 26, 2020 announced a 3 per cent cut in stamp duty on property sales till December 31, 2020, and a 2 per cent cut in duty between January 1 and March 31, 2021. Driven by the substantial 3 per cent cut, December 2020 had registered record property sales in MMR realty market.

MMR Property Tracker said a total of 1,38,728 housing units valued at Rs 96,956 crore were registered in MMR from September 2020 to January 2021. The property sale registrations bottomed out from the peak of 48,624 registrations in December 2020 to 28,366 units registered in January 2021, but they were higher than 25,640 units registered in November. Compared to average 12,000 units sold in pre-COVID era in January each year, January 2021 witnessed sales of 18,839 units  

The effect of year-end discounts in December 2020 was carried forward to January 2021 as well as the month witnessed sales better than the months of Sep, Oct and Nov’20. The value of registrations in December 2020 stood at INR 36,772 Cr, which is 162% more than the average of previous three  months.  The value of registrations in January 2021 stood at Rs  19,099 Cr, which is 36% higher than the average registration value for Sept-Nov 2020 period,” the report said.

Key findings of MMR Property Tracker:

- Central Business District (CBD) Mumbai, one of the most expensive housing markets in India which has been struggling since almost half a decade, witnessed renewed enthusiasm from the HNI’s, as they opened their wallets to acquire properties, with 48% y-o-y growth in units sold in January 2021, with an average ticket size of Rs. 1.6 crore

- In Central Mumbai, the period from September 2020 to December 2020 showed a hockey-stick like increase in value of units registered, which truly captures the positive effect of stamp duty reduction taken by the state govt. Also, the value of sales in January 2021 which stood at Rs 2,173 Cr. was almost twice the monthly average of value of units sold in previous 3 years.

- In Central Suburbs, the value of sales in January 2021 which stood at ₹ 1,069 Cr was a substantial 71% more than the monthly average of value of units sold in previous 3 years, with an average ticket size of Rs 2.1 crore

- Western Suburbs and Eastern Suburbs witnessed 58% and 71% y-o-y growth in sales with an average ticket size of Rs 1.1 crore. This sales momentum is expected to continue further as pandemic effect is slowing down and fence-sitters are now going ahead and taking the property investment plunge.

- Across Thane, 30% more units were sold as compared to January 2020, with an average ticket size of 41 lacs. Raigad, largely known to be an affordable housing market, oversaw a y-o-y growth of 23% in housing sales. 

CREDAI MCHI President, Deepak Goradia, shares his comments “The past few months have re-laid the foundation of the Real Estate sector not just in MMR but the entire state of Maharashtra, largely owing to the progressive and decisive measures taken by the State Government to galvanize the sector in the post pandemic era. This joint report with CRE Matrix is a testament to the improving homebuying sentiments in MMR with the region witnessing an overall y-o-y growth of 33% in housing sales in January. Homebuyers, at the back of Covid – 19, have also fully comprehended the importance of owning a house and have been registering interest owing to a number of favourable buying factors. We expect this strong tide to continue till March and hope to sustain this momentum beyond March as well.”

 

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RBI keeps repo rate unchanged in post-budget monetary policy

In its first monetary policy committee meeting after this week’s union budget, the Reserve Bank of India on Friday decided to keep the repo rate as well as reverse repo rate under the liquidity adjustment facility (LAF) unchanged at 4 per cent,

Repo rate is the rate at which the RBI lends funds to commercial banks while reverse repo rate is the rate at which the central bank borrows funds from commercial banks.

                              Courtesy: RBI

Some reactions by real estate sector leaders:

Dr Niranjan Hiranandani, National President, National Real Estate Development Council (NAREDCO) and MD, Hiranandani Group

“Under the given market scenario and circumstance , the RBI’s direction on unchanged repo rate is very much on the anticipated lines, though a rate cut would have been better to combat the negativity of pandemic-led economic crisis across the industry. As the economy is gradually opening up and getting back on track to restore the lost momentum, the regulator has indeed brought innovative liquidity injection measures to maintain the policy stability and ensured that additional liquidity is provisional. It is extremely important for the regulator to balance its borrowings from the market so that it doesn’t jeopardize the financial stability and disrupts other market players.

The new policy’s paramount objective of economic revival were addressed by announcing an innovative measures like enhancing liquidity by allowing NBFC to tap TLTRO on tap scheme, allowing additional credit for small MSME borrower’s up to Rs 25 lakh, exemption to FPI investment in defaulted corporate bonds to boost further investment in recaptured economic revival and firming up consumer protection.  The observation that sales and new launches of residential units in major metropolitan cities reflect a renewed confidence in the real estate sector’ reinforces the need for further positive booster dose to strengthen its core revival that enacts a multiplier effect on 270 allied industries.” 

Deepak Goradia, president, CREDAI MCHI

While the RBI's decision to maintain the status quo on repo rates was expected and understandable, the move to provide liquidity to NBFCs through TLTRO will provide additional access to housing finance for developers, which is bound to provide them with added stability and much needed liquidity. We hope this will enable for effective last mile implementation which will ensure a more streamlined financial eco-system

Anuj Puri, Chairman - ANAROCK Property Consultants

As expected, the repo rate and the reverse repo rates remained unchanged while maintaining an accommodative stance. With consumer inflation still trending at the upper end of the apex bank’s band, and the policy repo rate also being substantially reduced by 115 basis points since February 2020, RBI kept the rates on hold, with an eye on how the inflation and the economic recovery pans out in the coming months. Advance estimates indicate that the Indian economy may contract as much as 7.7% in FY2020-21 due to the pandemic.

In such a scenario, one would usually expect RBI to cut repo rates in order to boost consumption. Certainly, the real estate industry always aspires for reduced interest rates. Housing demand is reviving, and this demand needs to be fostered. However, the RBI's current stance is absolutely justified, given the unique circumstances.  We are certain that rates will be adjusted favourably once the pandemic exigencies ease.

 

Ramesh Nair, real estate industry veteran and former CEO of JLL India

The expectation from the real estate industry was deeper cuts in policy rates.

Given that RBI has not cut rates, they should now try and ensure that the previously announced rate cuts are fully transmitted to end users and developers and also focus on increasing the quantum of overall credit available for the real estate sector.

 

 

Shishir Baijal, Chairman & Managing Director, Knight Frank India

The decision to maintain the REPO and reverse REPO rate by the RBI is in line with expectations. While the recent moderation in headline inflation rate has lent comfort, RBI will be cautious of demand side inflation picking up as economic growth momentum picks up. Measures on enhanced bank funding window for NBFCs will also benefit the stressed sectors including real estate.

With a growth focused budget recently presented by the finance minister, that further supports the government’s aim of nurturing the economy, this status quo will further allow demand creation including for high involvement products like real estate. As most global agencies have touted, India is expected to recover faster from the COVID induced slowdown mostly based on the restoration of the domestic consumption – which has greatly benefitted from the benign interest rate regime and infusion of liquidity.

As seen in the past few months, housing markets in the country have responded well to low home loan interest rate. Given the interlinkages of the housing market with other sectors of the economy, we believe that low interest rate for a sufficiently long period of time will help build a strong and broad-based demand momentum in the Indian real estate market.”

 

Anurag Mathur, CEO, Savills India 

“The first Monetary Policy Committee meeting after the recently announced Union Budget continues to fuel growth prospects by enabling a strong borrowing ecosystem. Although there was no downward revision of benchmark lending rates, the accommodative stance should be helpful for real estate as well as infrastructure, which is one of the key focus areas in this year’s budget. Inflation being under the tolerance limit of 6%, gives the reserve bank, the ammunition of further reduction of rates and all-inclusive growth for all sectors including real estate in the upcoming fiscal year. While the consumer inflation is projected at 5.2% for the last quarter of fiscal 2021, the overall growth prospects are encouraging with a GDP growth expectation of 10.5% for fiscal 2022.”

Dr. Samantak Das, Chief Economist and Head of Research, JLL India

RBIs decision of keeping the repo rates unchanged and maintaining an accommodative stance will provide the much needed support for the nascent recovery of the economy during 2021. The initial green shoots of recovery are already visible and are expected to gain strength in the coming quarters. This decision by the Central Bank is in sync with government’s recent Union Budget which emphasised on augmenting capital expenditure while keeping the fiscal targets at bay in the short term.

The easing of retail inflation to 4.9% in December 2020 and expected benign outlook has provided the elbow room to maintain the policy rates and support a sustained recovery of the economy. RBI’s expectation of GDP growth at 10.5% during FY 2021-22 indicates growth in jobs and incomes.

The status quo on the policy rates is a welcome step for the homebuyers as they can take advantage of the prevailing lowest mortgage rates. Banks and Housing finance companies are expected to increase mortgage lending due to stable interest rates and comfortable liquidity environment. The demand for housing, which has shown initial signs of recovery in the latter part of 2020, is expected to sustain if the favourable interest rates and price incentives by real estate developers are further supported by economic recovery and improved job scenario.

Anshuman Magazine, Head of India, South East Asia, Middle East and Africa, at CBRE

The RBI’s decision of keeping the repo rate unchanged was on expected lines owing to the rise in inflation in recent months. The past couple of months have witnessed a strong uptick in domestic trading activities and therefore RBI maintaining status quo for the fourth time in a row is a positive step towards spurring consumption. The RBI also decided to continue with it’s accommodative stance as long as necessary.

The Central bank also announced certain additional measures to enhance liquidity, deepen the financial markets and ease retail investor participation; all steps undertaken with the end objective of reviving growth and mitigating the impact of COVID-19 on the economy. This in addition to the announcements made in the Union Budget, will boost economic growth. Also, the policy support provided by the government to affordable housing will continue to boost residential uptake and support construction activity in the upcoming months. 

 

Ashok Mohanani, President - NAREDCO Maharashtra

"The economic growth needs to be supported through the monetary policy and this is the foremost reason that the RBI has continued its accommodative stance. It has focused on balancing liquidity in the financial system while keeping inflation within its target. The interest rates will continue to be at a record low; however the banks should pass on the benefits to the customers which will boost real estate demand. Like the last quarter, we expect the demand to be robust in the Mumbai MMR region in this quarter. The state government's recent announcement of reduction on premiums for developers along with stamp duty reduction for buyers will have a cascading impact on project sales, which will provide an immediate boost to the ailing sector. In the recently concluded Union Budget too, the Central Government has focused and put a step in the right direction to revive the economy after the repercussion of the Covid-19 impact. It has sustained its thrust on affordable housing which will further help achieve the Prime Minister's vision of Housing for All. The real estate sector in India is expected to reach US$ 1 trillion by 2030 and it will contribute 13% to the country's GDP by 2025. The Government should keep a continuous check in the form of reforms that will give a fillip to the real estate sector and will indirectly help revive the economy."

 

Rohit Poddar, MD, Poddar Housing and Development Ltd and Joint Secretary, NAREDCO Maharashtra

“RBI has maintained its accommodative stance not only for rates but also for taking the liquidity infusion related measures. H2 of 2020 has been one of the best periods for real estate considering the growth that has been achieved, the decision to keep the rates unchanged will further help in continuing the momentum.

The GDP growth is expected at 10.5% which showcases that India is advancing towards a more normalized environment. Despite larger than anticipated deflation in vegetable prices in December, the increase in commodity prices globally is likely to keep the core inflation elevated. The rising commodity prices (like crude oil) globally is likely to influence inflation to move in high trajectory. Incentivizing new MSME loans would help banks in expanding their lending cap for the sector. The policy makers in India are taking decisions which are in the best interest of the country's economic revival.”

Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani

 

“RBI has maintained its accommodative stance not only for rates but also for taking the liquidity infusion related measures. H2 of 2020 has been one of the best periods for real estate considering the growth that has been achieved, the decision to keep the rates unchanged will further help in continuing the momentum.

The GDP growth is expected at 10.5% which showcases that India is advancing towards a more normalized environment. Despite larger than anticipated deflation in vegetable prices in December, the increase in commodity prices globally is likely to keep the core inflation elevated. The rising commodity prices (like crude oil) globally are likely to influence inflation to move in high trajectory. Incentivizing new MSME loans would help banks in expanding their lending cap for the sector. The policy makers in India are taking decisions which are in the best interest of the country's economic revival.”

 

Sarojini Ahuja, VP, Sales, Marketing & CRM, Transcon Developers

 

The RBI Governor’s announcement to hold the key interest rates was much anticipated. After the Government's growth focused budget, the status quo by RBI will create demand for the real estate sector further strengthening the economy. The stamp duty cut announced by the State Government has already given a much needed push to the real estate sector especially the luxury housing segment. We expect the demand to sustain in this quarter as well as these is still some time left to avail the stamp duty benefit. RBI's accommodative stance will help mitigate the effects of Covid-19 on businesses and will be a key to the recovery of real estate and the overall economy."

 

Rohit Gera Managing Director, Gera Developments on the latest RBI MPC announcement - 

 

''The real estate sector has finally started showing signs of recovery with sales having picked up on the back of high affordability.
This higher affordability has been created on the back of lower apartment prices, lower interest rates and increasing salaries over the last 5 to 7 years.  

The impact of this higher affordability has now percolated down to people who need homes and we are seeing this need being converted to demand.  Leaving interest rates unchanged provides a greater degree of stability for people to take this important decision.''

 

Manju Yagnik, VCP, Nahar Group and Sr Vice President, NAREDCO Maharashtra

 

“The ongoing accommodative stance by RBI keeping the repo rate unchanged at 4% was the need of the hour to back growth ensuring adequate liquidity in the system whereby keeping the inflation under check. The Indian economy had already witnessed a good bounce back the September-December 2020 quarter which has continued till January 2021. In the recently concluded budget provided the impetus to growth and push to affordable housing. As part of continuing efforts RBI’s decision to keep lending rates unchanged will see home loans at the same lowest interest rates of 6.9 %. This will further boost the sentiment in the real estate market encouraging sales pushing the sector on a complete recovery trajectory. We look forward to ongoing continuous support from the government to ensure complete recovery of the sector.”

Sanjay Dutt, MD & CEO, Tata Realty and Infrastructure Limited

“We welcome the apex bank’s decision to keep the repo rate and reverse repo unchanged at 4% and 3.35% respectively, for the fourth time in a row. Maintaining this accommodative outlook is extremely crucial, especially with the green shoots of recovery being visible now. The government has tried to uplift the sector in the in the past few months by introducing stress funds and stimulus packages that have provided some relief to the sector. We had great expectations from the Union Budget 2021 but it did not address a lot of the issues beyond affordable housing and REITS. We urge the government to consider the multiplier impact of the sector and introduce reforms that propel the growth of the sector, such as allowing FDI in ready to move in inventory to improve liquidity in the market. Granting of industry status, extending the tax benefit from affordable to mid housing, allocating additional capital for distressed funds are some of the other recommendations that are bound to benefit the homebuyers and developers. We appreciate the government’s agile response to boost recovery in the pandemic-stricken period and are truly thankful for their continued support.”

 

Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and Proptiger.com:

The decision of RBI to keep the Repo Rate unchanged along with accommodative stance is understandable at this juncture, although a further cut in the key rates would have given a boost to current demand uptick that we have seen recently. The measures announced by the RBI Governor today for liquidity enhancement in the economy is indeed a good step and was much required. Real estate has been badly hit during the pandemic and the recent Budget announcements and the RBI's decision today will help the sector to cope up with markets’ uncertainties better in the near future."

Piyush Bothra, CFO, Square Yards

The RBI’s India’s decision to maintain the repo rate status quo is a positive decision and will make sure that home loan interest rates will not harden soon in the coming days. The low-interest rates have started impacting the property markets in a positive way. Maintaining low home loan rates was critical for a sustainable recovery in the real estate sector. After the announcement of tax holiday for the primary affordable and rental housing segments in the recent budget, this news will enhance confidence in homebuyers and nudge them towards making good purchase decisions.

 

Prasoon Chauhan, Founder & CEO, BlackOpal

"While the RBI has kept the repo rate unchanged, we feel that real estate will benefit from the position of the Apex bank that the NBFCs will have access to the targeted long-term repo activity (TLTRO). With this decision, we hope the liquidity situation will improve and the NBFCs will extend financial support to the real estate sector. The demand for real estate assets is already strong and we are seeing increased sales in the coming quarter due to multiple factors including low home loan interest rates."

Himanshu Jain, VP - Sales, Marketing & CRM, Satellite Developers Private Limited (SDPL)

 

"On an expected line, the monetary policy committee (MPC) has kept the repo rate unchanged at 4% with an extended accommodative stance that will still continue to serve the markets well. Some strong liquidity measures were announced and are expected to continue which was one of the worries of the market before policy. The earlier announcements by the state government of stamp duty reduction along with reduction on premiums for developers will surely give a boost to the ailing sector and create demand among the homebuyers. The Union Budget 2021-22 also has provided a strong impetus in favour of the Affordable Housing segment. With the interest rates at a record low, the Government will continue taking affirmative measures as long as it is necessary to revive the economy and mitigate Covid-19 impact."

 

Krish Raveshia, CEO, Azlo Realty

 

“As expected the MPC has kept rates unchanged for the fourth consecutive time after it cut rates in May 2020 and unleashed liquidity in the system to help growth. The accommodative policy stance is also unchanged to act on rates going forward if the need arises. RBI Governor projecting GDP growth over 10% for next year and easing CPI inflation is a big positive.

 RBI's resolve to keep easy system liquidity and low interest is key to the recovery of the real estate industry and the overall economy. The real estate sector is showing signs of recovery and needs government hand-holding. RBI's announcement on LRS will help boost remittance, NRIs have been huge investors in Indian real estate.”

 

 

Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory

 

"After a budget that had limited announcements for real estate, the sector was hoping against hope for a further reduction in the repo rates. The reduction would have helped spurred growth in demand for real estate assets, that has been severely hit as a result of the pandemic and subsequent lockdowns. Currently apart from the reduction in stamp duty charges in some parts of the country, the all time low housing loan rates have given the much required fillip to sales activity in the last quarter. The reduced repo has the potential to boost consumption in the economy and help reduce dependence on government spending."

 

 

Nish Bhatt, Founder & CEO of investment consulting firm Millwood Kane International

 

“MPC keeping key rates unchanged for the fourth consecutive time was on expected lines. The central bank keeping the policy stance accommodative indicates its intention to act on rates if the need arises. After the FM, RBI Governor has projected above 10% GDP growth for next year. CPI inflation trajectory by RBI indicates supply situation issues normalizing.

 

A gradual two-step CRR normalization is a step in the right direction. RBI allowing resident individuals to make remittances to IFSCs for NRIs will help boost sentiment and inflows under LRS.”

 

Ravindra Sudhalkar, CEO at Reliance Home Finance 

"The RBI’s stance to retain the repo and reverse repo rates at 4% and 3.35%, respectively and decision to maintain the accommodative stance for “as long as required” will provide comfort to the markets. Passing on the benefit of on-Tap TLTRO to NBFCs will allow stressed sectors to borrow more, including the real estate and housing finance. The revolutionary announcements on retail investors to provide direct access to G-Sec market and allowing residents to make direct remittances to IFCS for NRIs, along with  the plans of integrated ombudsman scheme, indications of normalcy returning in growth and the CRR normalisation roadmap, are among other important measures announced today that will encourage investments in the coming months.”

Ram Raheja - Director, S Raheja Realty 

“In line with expectations, the RBI has kept the repo rate unchanged at 4%, while continuing the basic accommodative stance of the policy in response to the objective of revival of growth. It’s a wise step taken to ensure 2021 to be a better year and to be a setting tone for the new economic era. The home loan rates will continue to be at a multi-year row, hence aiding homebuyers. The MSF and bank rates are unchanged at 4.25% and this will help in restructuring many companies which are still in distress due to the lockdown and boosting the sector at large.”

 

Riaz Maniyar, Co-founder of proptech firm YieldAsset Real Estate Tech Pvt Ltd

RBI has taken the right step in maintaining 'status quo'. There has been substantial reduction in mortgage rates in the last 2 years. This has helped companies in realty sector, especially the disciplined ones, in keeping finance costs low. The government’s ongoing policy support on rates and taxes for the real estate sector indicates that the worst is behind us. The cost of borrowing in India is also at a lifetime low currently. The Indian economy had already witnessed a good bounce back in the recent quarters. The real estate industry in particular, stands to benefit due to several measures taken by the government so far. With real estate demand gradually returning, reduced repo rates would have given an added boost to the market.

 

Lincoln Bennet Rodrigues, Founder and Chairman, Bennet & Bernard Group

 

The status quo is a positive sign for the sector which has been witnessing signs of revival in the past quarter. As the economy is recuperating at a quicker pace than anticipated is a very good sign. To add on, the decision to keep the repo rate unchanged will ensure that home loan interest rates will not harden anytime soon and will continue to remain at attractive rates. This should augur well for home buying sentiment. Going further, the real estate sector still requires further relaxation in policy rates and a cut in interest rates as these measures will reduce the overall cost of buying a property, which will be a direct stimulus for homebuyers. It is quite clear that increasing interest rates would impact overall demand at a time when the government is keen to boost consumption. We are upbeat as consumer sentiment is high, especially after they witnessed the brittle nature of other investment vehicles compared to real estate. We also hope that the government looks into specific measures to enhance ease of doing business for the developers and boost residential uptake in the upcoming months.

 

COVID, WFH reverses trend, increases average flat size

Satish Nandgaonkar

In a major trend reversal of shrinking flat sizes, the Indian housing market has seen a 10 per cent increase in flat sizes from average size of 1050 sq ft in 2019 to an average size of 1,150 sq ft across seven cities with Mumbai showing the highest increase of 21 per cent, according to a research report released by Anarock property consultants

 

Experts attribute the reversal in the trend to the impact of COVID-19 pandemic and the new Work From Home (WFH) office culture.

 

In the past four years, the average apartment sizes were shrinking year on year. In 2017 average apartment sizes reduced by 13 per cent from an average size of 1,440 sq ft in 2016 to 1,260 sq ft. With the pandemic underlining the need for a secure and larger home appears to have dictated the reversal, Anarock research said.  

 

Hyderabad continues to have the largest average apartment size of 1,750 sq ft among the top seven cities. It increased by 3 per cent from 1,700 sq ft in 2019. However, Mumbai and Pune have witnessed the highest increase in average flat size.  Anarock data showed that in Mumbai, the apartment size increased from 773 sq ft to 932 sq ft in 2020 – an increase of 21 per cent. In Pune, the average apartment size grew from 878 sq ft in 2019 to 986 sq ft in 2020, an increase of 12 per cent.

 

After Mumbai and Pune, Kolkata witnessed a growth of 10 per cent with average flat sizes increasing from 1,000 sq ft to 1,100 sq ft followed by Chennai which saw it increase from 1,100 to 1200 sq ft in 2020.

Anuj Puri, Chairman – ANAROCK Property Consultants says, “The two main reasons for apartment sizes reducing in previous years were affordability and millennials’ preference for low-maintenance homes. Keen to generate more buyer interest with smaller price-tags, developers whittled down their flat sizes. 2020 saw an almost immediate reversal of buyer preferences. With the accent suddenly being on accommodating the WFH and learn-from-home culture, flat sizes began increasing for the first time in four years.”