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RBI’s constant rates further instigates Demonetisation effect.

The entire nation is perplexed with the mystery of old and new currency and RBI still, decides to keep the rates undeterred in its fifth bi-monthly policy review for the year. This comes as a big blow for the real estate market which is in a desperate need of a rate cut as the market has taken a steep fall. This was the last policy review for the current calendar year, the first one took place before demonetisation era and the second review was presented by Dr. Urjit Patel. Real estate had high hopes with this policy review session as a repo rate deduction was witnessed last time, but the hopes got shattered with the RBI’s verdict. The secondary real estate market has taken a hard hit and the entire responsibility to keep the realty sector alive is on the primary market. A rate cut at this scenario would have been a great asset for the market to revive. The last ray of hope is the parcel of benefits of previous rate cuts to the consumers which is yet to be delivered by the banks.

With the recent announcement in the monetary policy review, the Repo Rate remains unchanged at 6.25 percent, Reverse Repo Rate under the LAF at 5.75 percent, Statutory Liquidity Ratio (SLR) at 21.5 percent, and Cash Reserve Ratio (CRR) at 4 percent and Marginal Standing Facility (MSF) at 6.75 percent respectively. With no change in the monetary policy review, the realty experts are predicting the graph to stay uniform while giving the real power in the hands of end users. Investors markets stand midway with no return guarantee. With the present situation of prices being at their very least, country going cashless on high value currency, there are not many signs of appreciation in the upcoming 6-9 months.

Here is what Avneesh Sood, Director, Eros Group would like to say about this subject:

Since demonetisation, it was quite evident that real buyers will become prominent in the market and end users will be in majority. Banks had already reduced their interest rates, post the previous policy review; and a rate cut in today’s policy review would have further motivated these potential primary buyers to make full use of the reduced EMIs. With ready to move in properties high in demand, property prices already at its lowest, a rate cut at this point of time could have pushed the sales further; either for long term retention or end use.

 

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Real Estate Expectation from Budget 2018

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Budget 2018 is about to come and everyone is looking forward towards some positive changes. Real estate sector is highly hopeful for some concrete and fruitful updates. The two main pre-budget expectations in the real estate market are one the Affordable Housing category is presently limited to 6- sqm area only, the area is expected to increase for the MIG category to come under the Affordable Housing segment. The second main pre-budget expectation is that the current GST of 12% should be lowered to at least 6 to 8%.

Talking about the first expectation from Budget 2018, the recent policy reform which is in the reckoning is that under the PMAY (Prime Minister Awas Yojana), the MIG – 1 carpet area has been increased from 90 sqm to 120 sqm. Also, MIG – 2 carpet area has been increased from 110 sqm to 150 sqm. If the housing under the above categories becomes a part of Affordable Housing, then it is liable to avail the benefits and subsidies of the Affordable Housing segment, which will boost the real estate market in times to come.

The following amendments will draft the way ahead for availing the loans and to avail the advantages of the Affordable Housing category as Affordable Housing has been designated with the ‘infrastructure Status’.

The second major expectation from Budget 2018 is that the current GST which is of 12% should be lowered to at least 6 to 8%. If both these above-mentioned measures are executed and implemented in Budget 2018 then for sure real estate market will witness a major boost. This will be a great step towards meeting Government’s mission of ‘Housing for All by 2022’ as post such measures masses will be in a much better position to afford homes and invest in housing.

Real estate sector is looking forward to Budget 2018 to create a better market, happy developers and satisfies customers.

Possessions: The new driving force of Indian realty

Eros blogThe year 2017 turned out to be one where the Indian realty witnessed a lot of facelift and a major part of it being in the form of possessions. This year has witnessed the trend of real estate shifting from project launches to possessions and to such an extent that the total project launches in the year fell by almost 40% which is a big number. The current trend of the market is such where the success of any real estate developer is measured in the terms of the possessions they have offered to their buyers till date. The year also saw the concentrated efforts of the various state governments and concerned development authorities towards enabling developers to deliver projects to their rightful owners.

Eros Group is synonymous with real estate and hospitality across the span of NCR. The Group had offered possession of 1768 units for the phase – 1 & 2 of its project Eros Sampoornam in Greater Noida West after the OC was received for the 21 towers housing the aforementioned units. Work on another 432 units in the project is taking place at a rapid pace, and the possession for the same will be announced soon too.

Possession has been the driving force for 2017 and it will be the same for 2018 as well. With better possession rate 2018 will bring joy and cheers to all the home buyers.

Fifth Monetary Policy Review of the Financial Year & the Last for this Calendar Year.

Police officer stands guard in front of the RBI head office in Mumbai

In the bi-monthly policy review, The Reserve Bank of India has decided to maintain the status quo by making no changes in the key rates. Statuary Liquidity Ratio (SLR) and Cash Reserve Ratio are left unchanged by Dr. Urjit Patel, RBI Governor, in the fifth monetary policy review of the financial year and the last for the calendar year 2017. By this it is clear that RePo rate is same as before i.e. 6%, Reverse RePo rate is 5.75%, Marginal Standing Facility (MSF) IS 6.25%, CRR is 4% and SLR is 20%.

Looking at the market dynamics, we were projecting the RBI to maintain the status quo. Any reduction in lending rate allows the sentiments in real estate to improve as the net cost on the buyer for the housing unit gets decreased but with the market inflation touching its projected limit for the financial year already, it is appreciative on part of the apex bank to keep the rates on hold as it will give the market more time to stabilise and allow inflation rates to come down in eventually.

NHAI’s twin projects to boost Gurugram’s realty market

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In a move that is expected to decongest the National Capital and give a much-needed impetus to the housing demand of Gurugram’s realty market, the National Highways Authority of India (NHAI) has decided to work on two major infrastructure projects involving the National Highway 8.

Under its first assignment, a 79-km-long Urban Extension Road (UER) – 2 is planned to connect NH 8 near Mahipalpur in South Delhi with NH 1 near Narela in Northwest Delhi. Also, construction of Delhi-Panipat and Delhi-Alwar Regional Rapid Transit Systems (RRTS) along NH 1 and NH 8 has received the approval of NHAI.

For the second infrastructure project on NH 8, NHAI has planned to build a trumpet junction between Dwarka Expressway and NH 8, which is projected to pave way for the heavy traffic flow between Gurugram and Delhi. This proposed junction will be linked with a cloverleaf coming up from the NH 8, connecting it with the Southern Peripheral Road (SPR). The two interchanges are estimated to be built around 2 km before the Kherki Daula or the Manesar toll on NH 8. With this roadway, commuters will gain access between SPR and Dwarka Expressway without intersecting the NH 8. With the implementation of these two projects, this belt will become one of the busiest belts in the near future.

These infrastructural projects will greatly help decongest the National Capital and add value to the properties falling across NH 8 and Dwarka Expressway. Once these projects are operational, NH 8 will observe a higher footfall which will pave way for better housing demand in the regions. Avenues for investment will open up as the development of such scale will promote capital appreciation in the long run.

These two projects by NHAI, however, will act as a catalyst for the upcoming housing demand along NH 8 and Dwarka Expressway!

RBI Rate Cut To Boost Affordable Housing Demand

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There is a reduction in the lending rate by the Reserve Bank of India (RBI) just ahead of the festive season which will help in boosting housing demand, especially in the affordable housing segment. A good monsoon in progress, low inflation numbers, favourable global environment and an overall uptick in industry sentiments seem to be the catalyst for this rate cut, according to them. RBI reduced the short-term lending rate, or repo rate, by 25 basis points to 6% at its third bi-monthly policy review.

Implementation of GST has completed its very first month and a great response can be already observed as the buyers’ queries are increasing day by day. A rate cut at this moment will boost these sentiments further where footfalls and conversions are bound to increase. Final festive season of this calendar year is nearing and this rate cut can allow the banks to cut down on their lending rates further. The economy is shaping up well with a growth trajectory becoming visible for the real estate sector as well.

It is a welcome move, especially to combat the odds industry was seeing in recent times. Cheaper home loan definitely will boost positive sentiments amongst the home buyers and in turn, will help the developers to gain the momentum. With RBI’s this move many home buyers will get a boost to own their dream home at the most affordable prices.

GST to provide the much needed edge to the Real Estate

The GST regime has emerged as an evolution of the real estate sector. For the last few years revamping the real estate sector remained as an uphill task. Giving a complete end to the much complicated and less transparent multi taxation system, this newly introduced regime is giving new hopes to the interested buyers and developers.  According to the sources, National Real Estate Development Council (NAREDCO) believes that the 12% GST on the projects undergoing construction will help in enhancing the sector.

“The GST is going to be the biggest breakthrough for real estate market as it is going to transform around sixteen major taxes into a single simplified one.  The GST Council has also kept the affordable housing policing in mind so it’s quite clear that the new taxation regime would be beneficial to all.  The prior multiple taxation process was complicated for both the buyers and us. Moreover, the lack of transparency related to the tax charges used to keep most of the investors unresolved. Now, after the enactment of GST, the investors and buyers don’t have to knit their brows while purchasing any land or property. It’s indeed a positive change as both the newly introduced enactments, RERA & GST are working in the same direction by assuring transparency and credibility in the real estate sector. Being a developer, I am open to all amendments that tend to make our market more productive for all. As the GST is now in action, people should try to know the ins and outs of this regime so that they stay updated with the pros of it” says  Avneesh Sood, Director, Eros Group.

Affordable housing leads to home loan growth

Gone are the days, when builders only developed apartments or luxury homes for minority section of the society like elite class or money making business tycoons.

Developers have made a move to work for mid-life people so that every person of the society can buy a house. They have made this huge transformation from luxury homes, Jacuzzis to a 1/2/3 BHK house. This move will strengthen their connection with every section of people in the society. This has been possible because house loans have become affordable and this has attracted more buyers.

This year has seen banks providing loans majorly in the housing sector. If we look into figures there has been a rise in the loan percentage every month, as January loan applications rose 21% over December, February saw a slight raise with 24% and March witnessed the maximum raise with 44% than previous months.

What has driven this tremendous growth are affordable home loans as average loan size is 25.6 Lakhs now, which has never happened in the past that loan size would drop below 26 Lakh.

Housing finance providers are now expecting the affordable homes segment to grow at 25% given the subsidy under the Pradhan Mantri Awas Yojana. The scheme provides 4% subsidy on home loans of up to Rs 9 lakh for those with an income of up to Rs 12 Lakh per year, and 3% subsidy on loans of up to Rs 12 Lakh for those earning up to Rs 18 Lakh per year. This scheme is available until December 2017.

Demonetisation played its share of the role by reporting the biggest decline in sales between October-December 2016. Real Estate went through the turmoil during the last few months of 2016. There was a slight increase in sales between January-March 2017 as the situation was slightly better in the beginning of the New Year.

Effective home loan rate in the mid-income affordable housing segment is at near-zero levels. As owning a house has become cheaper than renting a house.

The finance is becoming more available for housing units as the prices have even dipped to Rs 12 Lakh. There are people who are not getting loans, so there are many housing finance companies coming up to provide loans. These firms are able to do credit assessment using alternative methodologies or mechanisms for those in the informal segments making sure every individual of a society can avail loans.

As per PMAY (Pradhan Mantri Awas Yojana), the government is targeting economically weaker sections of the society to boost mass housing. The affordable housing segment is likely to grow at a faster pace than industry at over 25%.

The Developers have a sigh of relief, as they are exempted from paying taxes on their profits for five years starting 2016 instead of three years. This is applicable only to 300 sq ft homes in the four metro cities and 600 sq ft in non-metro areas.

There has been a move to allow 90% money of PF to purchase homes as well, just to make sure everyone can buy their house. This move to make housing affordable is going at a faster rate making sure every member of the society has their home registered on their name.