While the world will remember the year of 2020 for the coronavirus and the subsequent lockdowns, the real estate sector of India and especially that of MMR will remember it for the economic turnaround and demand revival in the category. While it was being extensively predicted, immediately after the announcement of the nationwide lockdown, that this year for the Indian real estate sector will be the year of it’s greatest fall, the outcome was quite the opposite with the month of November 2020 recording the highest number of residential registrations in almost a decade. The two most crucial reasons for such an unprecedented and unimaginable recovery has been the RBI’s decision to drastically reduce the repo rates that prompted the banks to reduce their lending rates for homebuyers and second was the decision of various state governments to temporarily reduce the stamp duty charges. The reduction of borrowing cost and transaction cost had the highest impact on developments that were ready-to-move-in as such homes anyways do not attract GST and the reduction in stamp duty charges ensured negligible tax cost for homebuyers.
Going forward, we have a cautious outlook. We believe post April 2021 there will be a period of slowdown, after this phase of panic buying until March 2021. We recommend the stamp duty charges be restricted to 3% for another 12 months post the date defined by the state government of Maharashtra. We would also urge states across the country to consider reducing stamp duty charges temporarily to make buying real estate lucrative. On the other hand, we sense the government at the centre is wanting to bring lending rates closer to levels at which the west lends and it is that the Modi-led government believes that the next leg of growth will emerge from. We would also like recommending the government at the centre to announce the 10% deviation in circle rates for all categories of homes and not restrict it to just homes until Rs.2 crores. The same will help further reduce the unsold inventory levels that exist in the luxury home segment till date. We expect the GDP growth to turn positive in Q4 this financial year. With steady decline in the number of COVID-19 infections across the country and the vaccine around the corner, we expect far better days for the economy going forward.
As an organisation we have been able to drive unprecedented volumes post the lockdown. We thought the lockdowns would ruin our dream run as an organisation as we’ve been able to almost grow 110-120% y-o-y. But, while it is difficult to believe, 2020 has been our best year since existence, with us being able to drive business worth 2380 crores since April this year.’
(Mr. Kaushal AgarwalChairman, The Guardians Real Estate Advisory)
