ICCPL PROPERTY NEWS

NHAI’S TWIN PROJECTS TO BOOST GURUGRAM’S REALTY MARKET

       In a move that is expected to decongest the National Capital and bring about a much needed impetus to the housing demand of Gurugram’s realty market, 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 Kms 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 Gurgaon 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 Kms 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 these two projects in the their advanced stages, this belt will become one of the busiest in near future.

    Infrastructural development of this scale will add to the attraction quotient of the properties falling across the Dwarka Expressway and NH 8, points out Rakesh Yadav, Chairman of Antriksh India Group, who further adds, “These two projects will boost the demand for residential projects across the two major roadways in the region that will further assist in capital appreciation in the long run. With HUDA not increasing the circle rates and budget housing gaining momentum in and around Gurugram, demand will receive a further thrust and witness a price rise in the long term where investors might make a come back.”

   Avneesh Sood, Director, Eros Group avers “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 development of such scale will promote capital appreciation in the long run.”

   “Properties located along major roadways or outskirts always receive better response from the buyers as compared to those located inside a region or internal sector roads. Such projects offer better connectivity with neighbouring regions and become easily accessible, thus promoting the demand value of the properties. With these projects now planned by the NHAI, Gurugram realty market will observe a surge in demand in near future”, says Pradeep Aggarwal, Co-Founder & Chairman, Signature Global.

    Kushagr Ansal, Director, Ansal Housing concludes, “Over the past couple of years, the realty market of Gurugram was moving towards a standstill due to escalating prices and lack of demand. These two projects by NHAI will act as a catalyst for the upcoming housing demand along NH 8 and Dwarka Expressway. There is a strong inventory currently available for these regions which in few years will start to clear. Also, as fresh development takes place, more project launches will take place that will balance the demand and supple matrix in the long run.”

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ICCPL PROPERTY NEWS

NEW GURGAON RIDING HIGH ON INFRASTRUCTURAL ADVANCEMENTS

         Catalysed by the availability of affordable homes, superior connectivity, great advancements in infrastructural developments and what all has been planned in terms of future growth prospects; New Gurgaon has off late emerged as a spirited residential and commercial hub in the National Capital Region. New Gurgaon has been immaculately planned and it’s two main clusters include Sectors 102 – 113 along the to be operational Dwarka Expressway and Sectors 76 – 95 & 95A. The region has seen keen interest from top developers such as DLF, Vatika, Ansal Housing, etc. and for that matter, even North India’s leading affordable housing developer Signature Global.

Commenting on how New Gurgaon is developing into a state of the art modern micro pocket, Avneesh Sood, Director, Eros Group says, “The two regions are emerging well into micro pockets and have been identified as budding strips for residential projects in Gurgaon, along the National Highway 8. The catchment area of these pockets extends from the sectors immediate after the Kherki Daula toll plaza and extending up to Manesar. Accessibility and good existing connectivity has also made this region more visible to the masses.”

New Gurgaon scores very high on connectivity front with direct access to NH 8, KMP Expressway and the Dwarka Expressway. With rail and air connectivity in close vicinity, it only adds more feathers to the cap and an ISBT has already been proposed close by to this micro pocket will only provide extra impetus to it’s growth quotient. Putting more weight on it, Pradeep Aggarwal, Co – Founder & Chairman, Signature Global says, “For the development of a region, infrastructure and connectivity go hand-in-hand and are of utmost significance. Without either one of them, the region can only witness growth at snail’s pace which in present time, won’t be considered suitable for development and returns. Projects like DMIC and Gurgaon Manesar Urban Complex give this region an edge over the others which is solely the reason why the workforce of Manesar and Gurgaon are eyeing the new developing sectors owing to the availability of affordably priced homes.”

In terms of other infrastructural developments, New Gurgaon has still a long way to go by the standards of what has been planned for this region. Social infrastructure is almost absent if one talks as of today but with considerably progress on physical infrastructure, social infrastructure will also catch up pace. However, from an investment point of view, New Gurgaon has all the attributes which makes it a preferred destination for better real estate returns. Explaining further on this, Rakesh Yadav, Chairman, Antriksh India Group says, “The pressure on the existing infrastructure is increasing day by day and newer areas need to be developed on priority. New Gurgaon is the outcome of one such decision but to help the cause further, these upcoming regions will have to well supported with socio – physical infrastructure enabling them to meet the standards of the millennium city. One of the key factors attracting buyers towards the area is its connectivity with Delhi on one side and Neemrana on the other via NH 8.”

There are already large township projects which have been planned in New Gurgaon and some are even delivered. The Delhi Mumbai Industrial Corridor (DMIC) has plans of developing multiple centres of excellence and is likely to provide further impetus to growth around this micro pocket. DMIC is bound to see huge investments in the form of FDI which will not only boost the overall economy of the country but also the clusters falling along it. Automobile and other subsidiary industries have already created a hub out of Manesar which is a promising sign. Commenting on how all these parameters including connectivity have acted as the backbone for the sector, Kushagr Ansal, Director, Ansal Housing concludes, “There are two ways of providing proper connectivity to a property, the first is choosing an area which is already well connected and the other would be to develop the property and then wait for the connectivity to improve. Sound infrastructure has always been substantial to meet the initial and continuous footfall in a region. In case of New Gurgaon, connectivity is in surplus but still lot of ground has to be covered in terms of social infrastructure and civic amenities because in the absence of these, you cannot have a complete property in true sense. And in the long run as infrastructure steps up in the region, realty prospects will greatly shape up.”

ICCPL PROPERTY NEWS

INDIAN REAL ESTATE WELCOMES GST

          1st of July 2017; this date will go down in the history books of our country when the biggest tax reform got implemented with full force across the nation in all the industries and sectors. Real estate sector being one of the largest contributors towards the Indian GDP and employment generation, it’s reactions, objections and suggestions are always considered whenever any big policy implementation takes place in the country.

The much awaited Goods and Services Tax (GST) has been finally implemented inspite of all the bottlenecks and confusions looming, where even real estate sector has got its rate finalised. Real estate being a case of land, which is an asset, is neither regarded as a good nor service. As a result, a different solution has been provided to counterbalance the negative effects of tax on the valuation of property. After the final notification, the government has declared the GST rate for under-construction properties in real estate at 18 percent which will be applicable on two-thirds of the value of the property. The one-third or 33.33 percent discount on property value has been given against the land price. Since land is an asset and with court pronouncements, this has resulted in it being kept out of the GST regime.

Previously, a different formula for the calculation of service tax was carried where an abatement of 70 percent was allowed on the total value of the property to adjust against value of land and commodities utilised for the construction of a unit. Therefore, buyers earlier had to pay only 15 percent on the 30 percent of the property value. Thus, the net service tax for the real estate was 4.5 percent only. Whereas now, the GST rate for under-construction real estate has been decided at 18 percent; but the net tax incidence will remain at 12 percent (two-thirds of 18) of the selling price for a unit or property.

Apart from service tax, a property may go through several other central and state levies in the form of VAT, excise, CST, registration and stamp duty charges. These jointly contribute and brings the total indirect taxation to about 5-10 percent, varying with states. Stamp duty and registration charges are exclusive of this and further adds to the net cost for the buyer. But with GST, a 12 percent levy along with registration and stamp duty charges, property prices for under-construction units are expected to go up if the benefit from input tax credit is not passed on by the developers.

Now with the GST in place, it will bring about clarity, transparency and uniformity towards taxation in the country’s real estate sector. Also with the anti-profiteering clause added in the GST law, it will be mandatory to pass on the benefit of tax reduction arising out of the input tax credit to the final customer. The multiplication of taxes will now get curbed as credits of input taxes paid during each stage of production can be availed in the succeeding stages of value addition.

In a nut shell, GST for the realty sector is projected to be beneficial in the long run, if implemented in a proper manner. The only dampener can be if the benefit of the input tax credit is not passed on to the buyers. In the long term and for the overall economy in general, GST is expected to contribute 1-2 percent towards the Indian Gross Domestic Product (GDP).

Industry Reacts:

Avneesh Sood, Director, Eros Group

The biggest tax reform in the form of GST has finally arrived and is expected to pave way for a much transparent and uniform tax structure in the Indian realty sector. For the residential real estate front, this reform is sure to be a sentiment booster in the short run but challenges may come up for the developers due to the initial transition process into the new tax regime. And for the investors and stakeholders of this sector, much gain will be on offer in the long run.

Abhishek Bansal, Executive Director, Pacific Group

Elimination of various indirect taxes, lower transportation and logistic costs, benefit arising out of input tax credit and simplification of tax structure are the major highlights of GST which will allow a much needed breather for the unorganised nature of the realty sector. A simple and clear method of purchasing property under the GST regime will attract the homebuyers towards the sector which in the long run will add onto the demand for property.

Manoj Gaur, Vice President CREDAI-National & MD, Gaursons Group

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.

Pradeep Aggarwal, Co–founder and Chairman, Signature Global

With prices going up post the tax reform, government will have to find out ways of minimising the effect of this rise on the average Indian homebuyers. Banks will have to be pushed to further lower down on their lending rates, ensuring that the end payout remains the same in cases of property purchases. Keeping the affordable housing segment out of GST’s ambit is a good move but measures for the removal of stamp duty charges must be taken into consideration to further lower the burden off the mid-segment buyers.

Akshay Taneja, MD, TDI Infratech

Steel currently attracts taxes in the range 18-19% but post GST it will be fixed at a uniform rate of 18%. This goes on to show that the effect of GST on steel would be bare minimum but what everyone is looking at is the inputs of the steel industry like coal and iron ore which have been finalised under the GST slab of 5% might influence steel prices to come down and hence benefit the real estate sector in the long run.

Gaurav Gupta, General Secretary, CREDAI – RNE

Prices of properties are bound to go up post the implementation of GST as under-construction projects will attract taxes in the slab of 12% as against the previous 4.5% approx. With no other rebates from stamp duty and other verticals, home buyers are sure to face the brunt of this. The only respite would be from developers to judiciously pass on the benefits of input tax credits, if any applicable, to the buyers. 

Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz

A uniform tax structure in the real estate sector will enhance transparency and keep the tax evaders on check. With the anti-profiteering clause in the GST law, benefits received from the input tax credit will be helpful for the buyers which in turn will create a fresh demand for real estate. Impact of GST in sync with RERA will positively transform the Indian realty sector in the next 18-24 months. Finally, a single tax regime has always been a big hit amongst the foreign investors and thus, we expect the FDI inflow in real estate to double in the next couple of years as REITs and InvITs will also see its operations in India very soon.

Manoj Chaudhary, MD, Airwil Infra Ltd.

Earlier, the homebuyers of this sector were under the pressure of two forms of taxes; service tax and VAT on the purchase of residential units when booked prior to its completion. Before GST, there were numerous components of non-creditable tax costs such as CST, entry tax, customs duty, excise duty, etc. which were duly paid by the developer upon its procurement which were basically ingredients for the cost pricing of the units. With the GST now, a single tax structure will be followed which will remove the multiplication and duplication of indirect taxes that will promote transparency in dealings. We are expecting the demand numbers to grow by a steady 5-7 percent for the residential real estate and 10-15 percent for commercial segment over the course of next 3-5 years.

Dhiraj Jain, Director, Mahagun Group

Cement is as essential a component of the realty sector as any other and the current tax slab of 24-25% would be revised to 28% with the implementation of GST. This will directly influence the construction cost of a project ultimately pushing the prices of properties higher. On the flip side though, GST shall bring a multi-edged positive impact on the sector, bringing in more transparency, eradicating multiple taxation system and making the system more systematic and streamlined.

Piyush Sharma, Senior Vice President, Sikka Group

This is a historic moment for the entire nation where a completely fresh tax reform has been implemented in full force which is projected to boost the economy in the long run. As for the real estate sector, clarity over transacting and eradication of multiplicity of taxation will motivate buyers and bring an end to the cascading effect that inflated the prices earlier. With the availability of input tax credit, benefits will be passed onto the buyers which will gradually pick up the demand.

Vikas Bhasin, MD, Saya Group

GST will without a doubt be a game changer for the Indian real estate sector in the times to come. Ensuring a steady and stable tax regime along with transparency for the buyers, it will allow the sector to increase its contribution towards the economy and the GDP in the next few years. According to the net tax of 12 percent for the real estate sector, under-construction properties falling under the affordable or budget segment level might become cheaper, whereas the luxurious or premium category housing units are expected to see a price rise now.

Rakesh Yadav, Chairman, Antriksh India Group

With the cost of under-construction properties projected to go up due to the new tax rate under GST, the government must now work towards abolishing the stamp duty and registration charges and offer land parcels at much subsidised rates. This, if coupled with lowered rate of interest by banks for home loan will bring about a lot of cheer among the buyers in the sector and bring a sudden surge in demand. At the same time, GST will prove to be a major contributor towards offering more clarity over taxation for the buyers, which has not been a case till date.

Kushagr Ansal, Director, Ansal Housing

With the dawn of concepts like hustling in service tax coupled with reductions and various mandatory charges collected by developers earlier, highlights the importance of having a same tax base for which GST was the only answer. A single tax rate across the country will now 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 foreign demand coming into India.

Rajesh Goyal, Vice President CREDAI-NCR & MD, RG Group

The wait for GST is finally over as the much discussed consistency in the tax structure will now be visible. Real estate sector will now be charged at a net tax rate of 12 percent which will be almost 3-5 percent more than the previous combined effect of service tax and VAT on the under-construction properties. But if the developers pass on the benefits of the input tax credit to the buyers, then the effect might get more or less neutralised. Buyers are expected to relish the real estate sector post GST as they will have complete clarity over the taxation.