The much awaited and proposed Jewar International Airport has gone another step ahead in becoming a reality as it recently received a No Objection Certificate (NOC) from the Ministry Of Defence. This development holds a great significance as now there is clarity over this chapter that has been much talked about for several years. History has been a witness to how infrastructure and connectivity helps a region to grow and perform in all possible avenues. And once the infrastructural development gains momentum in a region, real estate becomes prominent. Gurgaon’s case study is a clear example of how presence of an Airport transformed it’s realty sector completely. Similarly, the upcoming Jewar Airport is expected to multiply region’s growth in the long run. Furthermore, once the work will commence, we will witness the emergence of corporate and commercial sectors in the region.

“This project will revive the realty sector across various regions in NCR that are being hit adversely due to negative sentiments and slowdown in the market. Soon, there will be an unbelievable change in the shape of NCR realty sector, and the primary boost will be received by the markets of Greater Noida, Yamuna Expressway, Ghaziabad, Noida and even Agra. At present, these markets are receiving moderate views from the public and due to the distance from the capital, it is hard to pull the customers. Once the airport here gets going, these regions will get the right fuel to ignite growth in demand for these regions”, elucidates Manoj Gaur, President CREDAI-NCR & MD, Gaursons India Ltd.

Adding further, Ashok Gupta, CMD, Ajnara India Ltd. states, “Development of infrastructure is directly related to the growth of real estate in the given region. Also, there are levels of infrastructural developments which affect the sector differently. Availability of an airport, metro rail, railway station and other such civic amenities provide better boosts to the region than provision of simple public conveyance and other such smaller amenities, as the former cater to a macro level of public. Hence, when the work on Jewar airport is commenced, there will be a significant increase in demand for real estate along with promise of future capital appreciation.”

How it all began

Back in 2001, the then active CM of UP, Rajnath Singh had proposed the idea of developing an Airport in Jewar. This idea was well accepted and approved by his successor, Mayawati, but was later denied by the current U.P. government. The talks had revived in the beginning of 2015 and this time the centre and state governments are looking deeply into the matter. This government has already acquired over 2000 acres of land for the proposed airport and more can be acquired, as space is not an issue in the region. This development of the Jewar Airport is sure to benefit the real estate sector which has been taking a massive toil due to the economic slowdown over the years. There hasn’t been much activity happening in the sector which has dampened the sales, especially in the last 2-3 years. Keeping this situation in mind, the development of infrastructure in the form of a new airport will greatly help in bringing the demand back in the key regions. Rajesh Goyal, Vice President CREDAI-Western U.P. & MD, RG Group explains, “It’s been over a decade that this project has been kept pending and finally the dream is turning into reality. The entire belt across Greater Noida, Noida Expressway and Yamuna Expressway is currently witnessing a dampened demand as there are more investors than end users. The area is yet to become end user centric and this can happen only when sound infrastructure is in place. The presence of an airport will provide the right thrust for the demand as this will be a major gain for the infrastructure of the region. The sector will observe better market acceptance in the regions which will result in greater demand and better price appreciation in near future”.

Strong push to demand

“A development of this scale will bring about massive price appreciation and enhanced demand in the markets of Greater Noida, Noida Expressway and Yamuna Expressway. This is extremely important for the overall development of these regions as Greater Noida is moving very slowly and Yamuna Expressway is yet to generate credibility. On the flipside, creating a second airport in NCR before IGI gets exhausted, it may render both airports impractical. The user charges at both airports will surely rise since the operating cost and capital expenditure at both airports would be spread over the same flyer base. But from the realty perspective, the demand for commercial properties will boost up, like it happened in Gurgaon after IGI”, avers Dhiraj Jain, Director, Mahagun Group.

“Proposed Jewar International Airport would be an integral part of Greater Noida region, which itself has become an important part of NCR , the planning of this region has been done with futuristic vision. The region is a fair mix of ready to move in commercial & residential properties and is also developing as an IT hub. Dedicated freight corridor is also an important feature in this region. Addition of an International Airport to such a planned & rapidly developing area shall give a different magnitude to this region and big growth opportunities in real estate can well be seen in this area, which is on the path of developing as a model region of NCR”, said Ashwani Prakash, Executive Director, Paramount Group.

Agra-Lucknow Expressway: A Teaser

Underway is a project that will link the City of Taj with the Nawabon Ka Shahar. The length of the expressway would be 302 Kms and will be the longest expressway in the country. The estimated cost of the project would be around Rs. 15,000 crore. The project will also provide easy connectivity and seamless travel options to the NCR through Greater Noida-Agra Yamuna Expressway. The Agra-Lucknow Expressway would link the main districts of Agra, Firozabad, Mainpuri, Etawah, Auraiyya, Kannauj, Kanpur City, Unnao, Hardoi and Lucknow. “Strategically, the regions of Noida and Greater Noida have a great industrial/commercial potential and consequently, infrastructure would be required. This will also lead to employment opportunities along with economic up gradation. For the sector, a lot of demand for housing and office spaces will erupt along with strong capital appreciation in and around Greater Noida. Jewar airport will be the perfect icing on cake which will give a much needed push to the demand in the regions. Moving further, the Agra-Lucknow Expressway will expand this demand till tier 2&3 cities that will fall in between Agra and Lucknow, thus allowing realty development in the untapped regions”, concludes Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz.




       In a much forecasted move, the apex bank today has decided to keep the rates unchanged on account of high retail inflation being still above RBI’s expectations. This was also the last RBI bi-monthly policy review for the present Governor, Raghuram Rajan, who is to finish his tenure in September. The repo rate at present stands at 6.5 percent with reverse repo rate under the LAF kept unchanged at 6 percent. Cash reserve ratio (CRR) remains at 4 percent with MSF rate and Bank rate at 7 percent respectively, and Statutory liquidity ratio (SLR) at 21.5 percent. This is the second time in succession that the rates have been kept unchanged since the last rate cut made during April’s monetary review.

“Being the last review policy for the present governor, it was quite anticipated that a balanced approach would be executed. Also, since the retail inflation was higher than projected, this decision was pretty much on the cards. For the realty sector, it is a good decision considering the passage of GST with still rising uncertainty over the rates”, says  Rakesh Yadav, Chairman, Antriksh India Ltd. Adding further,  Kushagr Ansal, Director, Ansal Housing explains, “This policy review decision has not come out as a surprise, and chances are that we might not see a rate cut in the remaining policy reviews for this calendar year as the newly appointed governor will take time and might follow a stable approach before commencing with any hikes or reductions. GST has been passed and the RBI will have to take actions in the next policy review based on what rate gets decided.”

“As the retail inflation observed higher numbers, it was clear that RBI will use a wait and watch approach, and this policy review being the last one for Raghuram Rajan, chances were slim that a rate cut was possible. Although, this time the monsoon has resulted better than forecasted which will allow the next policy review to become a bit lenient. The banks are yet to pass on the benefits of previous rate cuts and with the upcoming festive season, this sector will majorly bank upon how the next policy review shapes up”, avers Vaibhav Jain, CMD, Rise Group.

“Choosing not to cut down on the key rates is a wise step as the current market is susceptible to inflation and with the recent rise in retail inflation measured against the CPI, the future trajectory of inflation is uncertain. Although, with the festive season around the corner, this sector is forecasting a rate cut in the next policy review of RBI so that the banks can pass on the benefits right before high-sales volume that is witnessed during festive season”, states Rahul Chamola, MD, One Leaf Group.

“The apex bank has decided not to cut down on the rates in an accommodating measure for all. With the last reduction only two policies old, it wants to be sure if the market is ready to stabilise in the anticipation of more rate cuts. As Raghuram Rajan bids adieu with this policy review, a tough task lies ahead, as the sector will be expecting a rate cut in the next policy review since the market is expected to gain momentum with better monsoon this time and festive season ahead. A cautioned approach might also be underway with GST rate yet to be decided”, concludes Dhiraj Jain, Director, Mahagun Group.


(G)overnment (S)implifies (T)axation

     In a decision that will bring about clarity, transparency and uniformity towards taxation in the country, the much discussed and long pending Goods and Services Tax (GST) bill has been given a go ahead by the upper house of the Parliament. This bill was already passed through the Lok Sabha, and now with the Rajya Sabha passing it, a majority of states will have to approve the constitutional amendments then the Parliament will need to pass another bill to implement the tax, before the Presidential signatures come in and form it into an Act. Finally, a council for GST will be formed which will comprise of state and federal officials who will decide the final rate which may vary for different goods. GST, which will replace the several existing local and state taxes with a single tax, is anticipated to largely benefit the real estate sector of India. After its implementation, it will replace the current indirect taxes such as service tax and VAT along with other multiple taxes like CST, excise duty, etc.; which will greatly reduce the burden from the developers, the benefit of which will be passed on to the buyers of this sector. This in turn will help the demand to grow back and allow developers to score better in the sector. This effect will be visible soon on the economy as GDP will get a better contribution from the realty sector.

Manoj Gaur, President CREDAI-NCR & MD, Gaursons India Ltd. said, “The wait for a uniform tax structure in the country is finally over and real estate sector amongst others will benefit largely. A well-defined GST implemented for the country will bring about a relief for this sector and its customers. Commercial realty players will be hugely benefitted as all the lost Cenvat credit, which is in current regime a cost to commercial developer can be availed if GST is applied in a free flow manner that will also help in reducing costs. A much simplified single tax rate, reduced construction costs and better transparency in the sector will be much welcomed by the developers and its customers.”

Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz said, “GST is finally a reality now and the nation will soon witness its benefits, with real estate sector to make the most out of it. Implementation of GST will basically work on three major elements for this sector; simplification of tax structure, reduction in construction costs and better transparency. Speaking about its contribution post acceptance, we are predicting a nationwide realty sector growth by almost 15-20 percent than projected in the course of next 5-7 years. There will be a quick reaction towards the sector by its customers as demand is bound to increase due to reducing costs and improving transparency in the sector that has been the hurdle making this sector suffer for long now.”

Till now, the central and state governments levied various kinds of taxes for land, property and other kinds of work contracts with the transactions mainly categorised in three parts- value of goods and materials, value of services and value of land. Also, there is a levy by the state governments through VAT on the goods, but at the same time, several states such as U.P. does not charge this. This levy is not clearly defined in certain states, where Haryana is an example. The biggest benefit that GST shall provide will be, the reduction in under-construction properties. With a single tax regime, developers will get free input credits on GST paid for services and material purchased by them. If we move forth with the views of the industry experts, GST may boost the GDP growth of the country by 1.5-2 percent. Dhiraj Jain, Director, Mahagun Group avers, “Currently, the homebuyers of this sector are under the pressure of two forms of taxes; service tax and VAT on the purchase of residential units when booked prior to its completion. There are numerous components of non-creditable tax costs such as CST, entry tax, customs duty, excise duty, etc. which is duly paid by the developer on its procurement side which are basically ingredients for the cost pricing of the units. With the GST now, a single tax structure will be followed which will allow reduction in costs for under-construction units. Developers as well as the buyers will make the most of this as reduced costs will positively impact the sentiments as well as demand for property.”

Although, there is a slight catch and a flip side to GST as well. If the GST is implemented on a higher rate, then the cost of under-construction properties will shoot up. If the rate is higher than the applicable service tax, which at present is 15 percent, this can turn out to be a dampener for the buyers as they will end up shelling out extra amount. Also, states where VAT is not applicable till now then GST will be charged. Thus, only if the GST rate is lower than 15 percent, we can forecast a better real estate scenario in future. “There is no doubt that multiplication of taxes will be curbed through GST, but the only question will be, what rate gets decided. The only dampener for this sector can be high GST rates, if above 15 percent gets decided; this will counterpoise any possible gains on incremental credits. Also, stamp duty is not proposed to be incorporated under GST and will thus continue to remain as it is at present. Therefore, decreased cost of construction will take place once a lower bracket of GST is applied as the developers will be liable to pay much less than today, thereby allowing cost of units to fall which will directly benefit the end users”, explains Vikas Bhasin, MD, Saya Group. Adding further, Vaibhav Jain, CMD, Rise Group states, “These are still early days to judge how much will the GST benefit real estate sector. There is a strong dependency on the allied industries such as steel, cement, IT and BFSI. A lowered GST rate, below 15 percent, will offer a huge benefit for the sector as not only will the cost of construction get curtailed, but there will be direct benefit while registering the properties as well. Also, there are developers and builders who are developing projects in different states or regions, specially tier 2 cities and thus have to abide by the state specific VAT laws, service tax and corresponding compliances. The presence of several indirect tax components faced by the developers at present are a major cause that bring tax inefficiency in this sector. A simplified tax structure would also mean that property prices would come down considerably enabling better affordability for people looking for property options in tier 2 and 3 cities.”

“With the dawn of concepts like hustling in service tax coupled with reductions and various mandatory charges collected by developers these days, highlights the importance of having a same tax base which can be only answered by GST. A single tax rate across the country will promote fair practices which will further encourage transparency and less evasion in the sector that supports in future growth of demand for real estate. GST will definitely prove to be a game changer for the Indian economy and provide a stimulus to the ‘Make In India’ initiative”, concludes Ashok Gupta, CMD, Ajnara India Ltd.