Home buying now seen as a stable investment proposition: Manoj Gaur, Chairman, CREDAI

Home buying now seen as a stable investment proposition: Manoj Gaur, Chairman, CREDAI


India’s real estate market continues to witness an upswing as unsold inventory levels go down and people upgrade to larger homes, says Manoj Gaur, Chairman, CREDAI (Confederation of Real Estate Developers’ Associations of India), and Chairman & Managing Director of the Gaurs Group.

The positive buying sentiment has also reflected in a 10 per cent-odd increase in prices on a year-on-year basis.

In an interview to buisnessline, Gaur talks about the market outlook, unsold inventory position and restarting work on stalled projects, including ongoing GST issues in the sector. Excerpts:

How has the year shaped up so far in terms of demand?

The year continues to be positive for real estate demand, upswing continues and people are moving to larger homes. Upgrading to premium offerings continue and the sentiments remain positive despite housing prices across the top eight cities in India increasing by 10 per cent YoY during Q3(July – Sept).

The market is likely to firm up further driven by likely strong momentum during the festive season, positive market synergies in the form of attractive incentives and lucrative schemes for the homebuyers, and new launches.

Unsold inventories are down, new projects are back in focus.

Is the growth sustainable?

Real estate as you know is a cyclic business, and till Covid we had seen a downturn. But since then, demand went-up. People realised real estate, particularly, home buying is a stable asset class, and investments began coming back. Switch over (in investments) is happening from other asset classes / categories to real estate

But companies despite having money are unable to start projects due to land unavailability. Litigation continues to be a factor. So, we now have a situation where demand for homes outstrips supply.

I believe the upswing will last for some more quarters, since the investment into real estate is now a permanent way of thinking. 

Talking of litigation, there are a lot of stalled projects in the NCR. Your comments.

Yes there have been issues specially in the Noida, Greater Noida region (of Uttar Pradesh) and it includes across reputed developers. However, the situation there is changing. We, from CREDAI, have met the UP Government, spoken about stalled projects and the interest shown by some developers in taking over and re-starting work.

The UP government is working on a relief or amnesty scheme to ensure work restarts and genuine buyers get possession of their homes. In another 2 – 3 months, issues of some of the legacy projects will be resolved.

For instance, there are some court monitored projects where buyers will soon get possession; in select cases, the government is speeding up clearances to ensure project work restart, and so on. The market there is improving both in terms of stability in offerings and demand.

The SWAMIH fund has also helped resolve stuck realty projects.

Even as we speak, how is demand for affordable housing? 

The issue continues to be as to what constitutes affordable housing. If we go by the fact that affordable housing are those that are priced at or below ₹45 lakh, then there is a definite slowdown because developers are not taking up such low priced, low margin projects. Construction cost is up, so is raw material cost. Land costs have shot through the roof in some markets. Hence, developers get no benefit from such projects and are clearly staying away.

The average unit price of homes where demand is strong is in the ₹70 lakh price bracket, depending on city, micro-market and land price, the definition of an affordable home should vary. There cannot be a one-size fits all definition. In the Mumbai metropolitan area, a ₹ 1 crore -1.5 crore home is seen as affordable housing, which is high by another city standards.

The sector is asking for GST benefits. Will it benefit the home buyer? 

Real estate is the only sector where you do not GST benefits or input tax credit (ITC).

In case of projects commencing after April 2019, the promoter should pay GST at 18 per cent on a reverse charge basis. Users buying a single residential house before obtaining the completion certificate from the competent authority, has to pay GST. However, if the seller received the completion certificate before the agreement, buyers don’t have to pay GST.

What this has done is developers are passing on a part of the tax burden to buyers, to the extent of 12 per cent or so.

If input tax credit benefits are passed on to developer and subsequently to the buyers, then there could be a 7-8 per cent decline in home prices, at least that’s what our estimates show.

We have been pushing this with the Centre, and continue to do so. 


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