Which way will property prices swing after GST?

PUNE: The Centre's proposal of a 12% GST on sale of houses from July 1 has left both real estate players and consumers calculating amounts they have to shell out or pass on. In Maharashtra, GST will be in addition to the 6% stamp duty rate charged by the state. This will mean higher outgo on a headline basis. Experts feel the difference in final pricing will not be over 1-3%. TOI explains various scenarios under the GST regime.Existing levy and GST

In Maharashtra, customers now pay 4.5% as service tax and 1% as VAT. They also pay a 6% stamp duty on the cost of the unit. This brings the overall tax rate to 11.5%. Under the proposed GST, there will be a 12% flat tax rate on the cost of a unit, in addition to the stamp duty that remains at 6%. This brings the overall tax rate to 18%.

Will overall unit cost rise?

By the looks of it, the answer is “yes“. But theoretically , no. This is because developers are expected to bring down the cost of a unit, as they get input tax credit on raw material such as steel, cement and sand.

Example: For steel, though the tax rate is fixed at 18%, a builder will have to pay a supplier only a part of this (18%). This will depend on how much the supplier has already paid for procurement. The developer is expected to pass on this low rate and the ensuing benefit of low cost of procurement to the buyer by reducing the unit cost.

Will it work in practice?

Nobody knows. Shrikant Paranjpe, chairman, Paranjpe Schemes, says: “ All depends on how much credit vendors pass on to us. The calculation does not take into account land (outside GST ambit for now), which can have a bearing on the overall expenditure.“ So, if the cost of land is 10% of the overall project cost, there is a probability of the cost not rising too much or even coming down a bit. Where the cost of land is higher, for example 60-70% of the project cost, apartment prices will rise.

For affordable housing

“There was a 4.5% service tax exemption on affordable housing projects under 60 sq m in size. A 12% GST rate does not speak about these exemptions.So, affordable housing costs could go up due to higher tax,“ says Praveen Jain, president of the National Real Estate Development Council . “Even if the unit cost is cut, there is the Ready Reckoner rate. We cannot bring down the rates below it,“ Paranjpe says.

Incomplete projects

If a project is in the initial stage, there is a higher chance that a consumer will get the benefits of the lower-cost pass over. But if a project is 80% complete, any major benefit is unlikely . On completed projects, buyers might not get any benefit of cost reduction but will have to pay 12% GST if the property is not registered before July 1. If a consumer has registered a property , the old tax rates will apply . For those registering after July 1, the 12% GST will be applicable. For benefits of the low rates to be passed on, the consumers might have to wait for at least 3 months.

New projects

Gera Developments managing director said Rohit Gera says, "New projects will see lower input costs and will allow developers to quote lower prices. But a 12% GST will be applicable on this quoted price. The impact depends on the ratio of construction costs to selling price."

Resale projects

There is no impact of GST.

RERA-GST impact

Most developers feel prices should go up by 5-8% if supply remains muted. This is because developers are cautious because of the Real Estate Regulation Act (RERA). "RERA and GST are coming in simultaneously. It will take a few months to see how the market reacts," said Gopal Sarda, Group CEO of Kolte Patil Developers.

Courtesy: realty.economictimes.indiatimes.com

Why Ghaziabad’s successive smart city failures are not surprising ???

The overpowering stench of garbage in Pratap Vihar is most probably the answer to the question in the minds of residents Ghaziabad — why did the city fail in three attempts to be on the list of smart cities? Although the report card on the failure to make the cut is awaited, waste management — an important smart city criterion — is obviously the city’s Achilles’ heel.

Thousands of residents in the vicinity of Pratap Vihar landfill site live amid an unbearable stench and health hazard. Tonnes of garbage dumped every day has turned the site into a mountain of waste as high as a five-storey building and visible from a distance.

The only assurance the Ghaziabad Municipal Corporation (GMC), which is termed apathetic by residents facing a daily health risk from the garbage, can give is an alternative landfill site will be functional in Galand within two years.

Spread across an area of 13 acres, the Pratap Vihar landfill site came up in 2005 and currently about 1,100 metric tons of civic waste is dumped every day from all the five zones of the city.

The GMC, which is the custodian of the site, has outsourced the management of the site to a private company, which is paid Rs 35 lakh per month.

“It is such a waste of money and even after spending so much the condition of the landfill site is awful,” said Alok Kumar, resident and patron of FedAOA.

“For years now we are forced to live in a place where each morning begins with the pathetic sight of tonnes of waste, not to mention the stench it raises,” said D K Maurya, a resident of Niho Scottish Garden, a society in Indirapuram’s Ahimsa Khand 2 facing the Pratap Vihar landfill site. There are close to half a dozen societies in the area where residents get up with the same sick feeling every morning.

Adity Srivastava, a resident of Cloud 9 society, said, “The stench from the garbage compels us to shut our doors even on a pleasant day. I feel miserable every morning when I open the doors for some fresh air but only get to smell burning garbage.”

Resentment is growing among residents of societies in Ahimsa Khand 2 to the point of planning a protest to be heard. They want relocation of the dumping ground, but that is easier said than done. “With the monsoon round the corner, the growing humidity is intensifying the stench and every year it is the same old story. Now we are planning an agitation,” said Debashish Sahoo, resident of Arihant Harmony.

“Kites and other birds could be seen hovering over the dumping ground all the time and it such an awful sight,” said Anil Sharma, another resident.

Bhavna Saxena of Cloud 9 said the garbage pile in the rear of her society is often burned, leading to the emission of poisonous gases.

“I am a sincere tax payer like many other fellow residents, but being forced to breathe in polluted air. The authorities concerned will perhaps wake up from their slumber only if their loved ones are put to such risk,” Saxena said.

On its part, the civic body blamed the situation on the plan for an alternative landfill site being stuck in litigation. Municipal commissioner C P Singh said, “This is a stalemate for us as the Dundehera landfill site which we had planned to develop is caught in litigation. Hence we are forced to dump civic waste at the Pratap Vihar landfill site.”

“But I assure you that it we will soon be shifting the landfill site to Galand on the outskirts of the city where we have already acquired 18 acres of land to develop a solid waste plant,” Singh said.

He added, “We have invited expression of interest and if things go according to plan, the Galand solid waste plant will be functional in two years.”

Courtesy: realty.economictimes.indiatimes.com

Construction Updates of Doyeeta, Rajarhat.

Doyeeta is an apt synthesis of peaceful living & enjoying the feel of living in the city Centre. It is a G+5 stand alone tower comprised of six well designed 2BHK & 3BHK apartments in each floor. It is exclusively equipped with all the basic amenities to serve its residents like AC Community Hall, Lifts, Power back up & 24x7 securities etc. Two automatic lifts & the efficiency of each flat are surely the main attractions of the project.  Being located at Salua behind City Center ll, it is well connected to Newtown, Rajarhat main Road & VIP Road.

USP's of the Project:

•2 automatic lifts.

•Average efficiency of each flat is 26-28%

Distance Chart:

The proposed project is located off Rajarhat road near Salua. The project is 300 meters from 211 bus route. The project is in 5 minutes walking distance from 217B Bus Stand & 10 minutes from Derozio College.

•  1.8 km from Chinar Park more.

•  2.5 km from City Center 2.

•  2.8 km from Haldirams.

•  2.6 km from Kailkhali More.

•  4 km from Airport.

•  2.5 km from the nearest Metro station.

•  2 km from Charnock Hospital - Opposite to Assam Rifle Regiment

In close proximity : Reliance Fresh Kalipark & Zora restaurant.

Amenities: Community Hall, 2 Automatic Lifts, 24x7 water supply, Power backup, CCTV surveillance, Iron Removal Plant

Possession:

Possession will be in Sep 2018

Construction Status:

Construction status of our project Purple Sunflower.

Purple Sunflower is a residential project developed by Red Ant Realty to provide the best opportunity to live into heart of Salt Lake Sec-V (Kolkata’s new CBD) at a very affordable cost. It’s a rare residential abode & perfect example of walk to walk. This project consists of two G+4 towers with well designed smart 2 & 3 BHK apartments ranging between 830 - 1146 sq ft. Purple Sunflower is well equipped with all the basic amenities & facilities to serve its residents.

Here are the construction update of the Project:

Will RERA increase the price of existing projects?

Shveta Jain, Cushman & Wakefield, India answers the real estate queries from our readers.

With the implementation of RERA, I read that buyers cannot expect any new launches. Does this mean that the prices of existing projects would escalate? Should I look at buying a house now in Mumbai or wait for a probable fall in prices? 
Prices may not have an immediate direct impact. It may increase for new launches given the stricter compliance that developers have to adhere to or it may decrease owing to the large amount of inventory overhang in the market.
What you can look forward to is transparent price quotes by developers, timely completion of projects, certified real estate brokers, flexibility of claiming a refund within 15 days of purchase of property, if you are not satisfied with it and most of all, no misuse of money by developers.

Various projects in Ulwe are priced within Rs 1 crore. As it fits very well within my budget, the location is a slight deterrent for my investment decision. Could you please advise on the growth potential of Ulwe ?
Ulwe has gained popularity due to the proposed international airport and is supported by availability of large land parcels. The railway line connecting Uran and Belapur is currently under construction and will connect Ulwe to the peripheral business district of Thane Belapur road.
However, investing in Ulwe is a long term bet as rental returns are dependent on the successful completion of infrastructure.

I currently reside in Hinjewadi Pune and I am relocating to Bengaluru. I wanted some residential options with good amenities such as nearby school, hospitals while also being close to my office location which is Whitefield. Please advise.
Since your office is in Whitefield, which is one of the most promising micro markets of Bengaluru, it is recommended you explore residential options herein. This would help beat the long commutes within the city. Whitefield has an established office, residential projects base along with great mix of social infrastructure.With upcoming Metro rail, Whitefield is self­sufficient.
It is a cluster of several sub locations like ITPL, Brookfield, Hope farm, Hoodi, Varthur, etc.Since the person works in Whitefield, we would advise him/her to choose an option within Whitefield micro market. Every sub­location has a range of options across mid and premium segments so based on your budget the right option can be chosen.

Image Courtesy : www.worldconstructionnetwork.com
Content Courtesy : www.economictimes.indiatimes.com