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GST Impact on Real Estate

Mumbai Real Estate Sees NRI Homecoming After Two Years

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Mumbai Real Estate

When it comes to invest in real estate in India, Mumbai attracts the maximum interests from the Non-Resident Indian (NRI) community. Despite the highest property prices in the country, Mumbai continues to garner attention as the most sought after investment destination in India. In the current scenario, a stable government in the centre and a growing economy has ensured a sustained preference by the NRIs.

NRIs constituted 20% to 25% of sales in the Greater Mumbai real-estate market but during the last two years, the market has seen a dip of about 7% in this sector. This has happened due to various factors such as frequent changes in rules and regulations and delayed possession, a lack of transparency and the exorbitant pricing. The real estate sector went under the big change with the Demonetization, which effectively pointed it away from cash transactions. Then followed a series of new regulations such as RERA, GST, which had a tremendous effect on the market, taking it down a slow path as the potential buyers and investors opted to wait for a better opportunity.

As most of the states started to fall in line at the initiation of the implementation of the Real Estate Regulation & Development Act (RERA). The landmark law finally brought the long awaited transparency and accountability requirements for developers into the system. The Goods and Services Tax (GST) impacted the business operations of the developers. Affecting the older ways of working, Demonetisation did not affect self-governing developers with the right products targeted at the working masses. Therefore, the rest realised the importance of reforming of the business models, in order to improve the potential of the market.

Hence after the dearth of two years, NRIs have slowly started to purchase property in the Mumbai region. All owing to the Real Estate Regulatory Authority (RERA) and a liberal home loan regime, which are together acting as great confidence-boosters. According to the latest figures by the Confederation of Real Estate Developers’ Associations of India (CREDAI), the number of attendees at the property exhibition in Dubai was a huge figure of 13,500 NRI visitors, where 210 builders showcased their projects. Also the choice of the NRIs have shifted from luxury apartments to the smaller houses, which are proving to be the better options for investment.

The encouraging reforms by the central and the state government has given a new momentum to the real estate sector. The introduction of the real estate investment trust (REITS) Act, relaxed Foreign Direct Investment (FDI) regulations and the decrement in the rate of interest has helped in replenishing the real estate sector.

Trying to boost the sales, the developers are running overseas campaign, to promote the changing face of the real estate sector. The job insecurity abroad has propelled the NRIs to buy houses, back in the country, where they can live in case if they decide to return home. There are subvention schemes that are being offered by the developers. Where NRIs has to just pay 5% to 10 % on booking and the rest after possession making it an attractive option.

“USA, UAE, Hong Kong, Singapore and Australia are seeing our seminars, roadshows and events. That are being conducted to spread the awareness about features such as the fixed deadline for getting possession, hence generating a good response. Our Andheri project has seen a 25% sales of inventory towards the NRIs,” said Rahul Maroo, senior vice-president and head of international sales at Omkar.

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