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.



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


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


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.

GST to increase Apartment’s maintenance charges

As the GST regime gets enacted from July 1, 2017 flat owners will have to pay about 2.5% additional tax on maintenance charges. Only the owners paying maintenance charge above than Rs 5,000 will have to pay the increased amount of tax excluding property tax, stamp duty, electricity and water charges. Under GST, the existing rate of 15.55% on maintenance charges will be replaced by 18%. The new rate is also applicable to housing societies that have an annual corpus or balance of more than Rs 20 lakh, again, excluding property tax, stamp duty, electricity charges, water charges, and also maintenance charges gathered from apartment owners.  There’s a sign of relief as the materials, such as cement, steel or paint, are purchased for the repair, renovation or maintenance of flats or the society’s premises, the tax paid on such material will be deducted from the overall tax paid under GST.

The housing societies will see the major impact because of the GST enactment.  Though the prime focus is on making housing more and more affordable, additional taxes like such aren’t good news for new buyers. This change is likely to apply pressure on the residents living in societies. Though GST has its numerous positive sides there is also a flip side to it. Hopefully, the overall economy grows and the impact gets reduced.

Importance of CSR activities in Indian Real Estate

Corporate social responsibility (CSR) activities are undertaken by corporate to help the underprivileged with various means. This might be through providing free or subsidised education, food, health check-ups or helping the society as a whole by organising awareness campaigns around tree plantation, traffic, safety & security etc.

At Eros Group, since our inception 70 years ago we have always stressed on helping the needy and the less privileged ones with whatever we can. In fact taking the thoughts ahead we have recently launched a series of CSR activities which includes distribution of blankets last winter at our Greater Noida project site and continuing it with tree plantation, conducting yoga camps for our buyers and recently constructed Greater Noida West’s first public drinking water system just outside our project, Eros Sampoornam. Very soon we are planning to organise Blood Donation camps as we have heard that most of the NCR based hospitals do not have sufficient blood bottles to meet the demands. We have decided to conduct such CSR activities at least once in a month.

Real estate sector suffers from trust and if all the developers who actually care for their surroundings join hands to bring a change and start doing something for others then this sector will never again become the victim of mistrust.

There are very few people who have the will & the resources too, to help others and this should be a responsibility.

Real Estate Trend in 2017

Finance Minister Arun Jaitley in the budget session 2017-18 has given the much-awaited push to the real estate sector. ‘Affordable Housing’ getting infrastructure status will change the destiny of real estate by inviting participation from many private players. This announcement will spur the objective of ‘Housing for all’ by 2022. The demand for affordable housing in our country is huge and the best part is the interest shown by a large number of corporate groups in this division. This will facilitate timely delivery of the projects which until now was a major challenge in the realty sector.

Home buyers will now get speedy deliveries of the project and will not have to wait endlessly. The credit off towards affordable segment will create supply for the first time buyer and the developers, who will now get cheaper funding. Now the affordable housing sector will be more profitable for the builders and more engaging for the buyers. The budget also comprises of tax incentives for affordable housing based on carpet area and not the built-up area, which again is an offer for the buyers to get bigger sized homes.

The development and conversion of real estate sector into real estate industry to avail the special and lower borrowing rates from the banks have been an evergreen demand. The implementation of the infrastructure status will give a major boost to the affordable housing sector in India. The government has already declared subsidy scheme for the first time home buyers, lowering the cost of borrowing for home buyers and developers, giving a yet again boost to the affordable housing segment. By the implementation of the infrastructure status, the government has indicated its importance in the economy. Developers interested in the affordable housing segment are eligible for various government incentives as well.

The sector is definitely going to benefit the infrastructure sector status, fulfilling the long time demand of the realty industry. The new measures will reduce the cost for developers and will draw more investors. It is a major boost for the ‘Housing for all’ vision and will be a great aid for first-time buyers.