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Demonetisation has Beneficiary Long Term Impact on Real Estate with Initiatives of RERA and GST

The transparency brought in by demonetisation, aided by RERA, GST reforms and liberalisation of FDI norms, has boosted the performance by fair Real Estate companies.

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Long Term impact on Real estate
Long Term impact on Real estate has been depicted by Demonetisation.Wikimedia.

New Delhi, October 4: Though the government’s radical measure of demonetisation has disrupted the economy and has hit the real estate sector — already reeling under prolonged slowdown — it will turn out to be a blessing in disguise in the medium-to-long term.

As an asset class, real estate has been a big source of generating and consuming black money. The cash component in real estate has been there at various levels, beginning with land transactions where it amounts to 30-50 per cent. The cash payout is quite high in luxury housing too. The consumption of cash has been as high as 30 per cent in secondary market transactions.

The primary market transactions, however, are by far bereft of cash component as home purchases are financed through loans from banks and housing finance corporations. It is another matter that even in primary market deals, developers have been encouraging cash payouts by luring property buyers with good discounts on property price.

The speculative buying by investors through offerings like underwriting and pre-launches has also been involving cash payout, leading to artificial price hike and in turn making homes out of the reach of masses.

Demonetisation, coupled with the government’s move to check benami transactions through legislation and curbs on cash transactions, was meant to clean up the system.

This sudden ‘shake up’ was, however, not without its adverse impacts. Demonetisation badly affected the liquidity in the capital-intensive real estate sector, deepening the problem of massive fund shortage/cash crunch faced by developers reeling under delayed deliveries, which deterred buyers from purchasing property.

long term impact on Real Estate
There are long term impact on Real Estate due to Demonetisation. Pixabay.

The impact was more evident in markets like NCR and Mumbai which were largely investor-driven, compared to southern markets of Bengaluru and Chennai and even Pune in the west, which have been end-user driven. The premium/luxury residential segment, in which the cash component was more in transactions, got impacted by demonetisation.

Real estate experts’ belief that the impact of demonetisation is only short-term and will not have long-term impact, stems from the fact that developers who have been following transparent and fair practices have not been affected by demonetisation and instead it worked out to their advantage.

This also turned out to be a positive development for big global real estate consultants like JLL India which doubled its profits in 2016 over 2014-15, with 60 per cent revenue growth.

One key positive impact of demonetisation and RERA (Real Estate Regulation Act) has been that speculative investors deserted real estate and end-users/genuine buyers, who were all these years pushed to the sidelines, came out in large numbers. Now, it is the property consumers who are driving the real estate market, especially residential market, aided by the government’s pro-industry and pro-consumer initiatives.

The step to promote affordable housing and according real estate industry status for the purpose of making easy and cheap funds available to the sector also helps.

Demonetisation has particularly boosted foreign funding. The transparency brought in by demonetisation, aided by RERA, GST reforms and liberalisation of FDI norms, has boosted the confidence of foreign investors, which is clearly evident from the spurt in foreign investments, particularly from pension funds.

This will inject much needed liquidity in the sector starved of funds. Targeting consumers, the government under the Pradhan Mantri Awas Yojana (PMAY), is providing substantial interest subsidy to home buyers. The clampdown on floating cash in the system has contributed significantly to curbing inflation which, in turn, helped RBI in cutting interest rates, thereby boosting home buying.

The proposed measures to liberalise FSI norms and rationalise stamp duty, will give further fillip to the residential sector, particularly affordable housing.

Demonetisation had a salutary impact on property prices by curbing cash transactions and checking speculative pricing, in turn increasing affordability, which is a key to achieve the government’s flagship mission of ‘Housing for All’. RERA & GST are further aiding demonetisation to control prices.

long term impact on Real Estate
Demonetisation aided with RERA and GST will put long term impact on Real Estate. Pixabay.

The key provisions in RERA, to speed up project completion, by checking diversion of funds through mandatory escrow account, stringent penalties to check project delays, together with the government’s move to make all building sanctions online, will go a long way in checking time and cost overruns of real estate projects, thereby controlling home prices.

The ban on pre-launching of projects under RERA will also check artificial spurt in pricing. GST has come to tackle the flow of cash in the purchase of building materials by introducing input credit tax. Further, the government’s plans to liberalise FSI norms, especially for affordable homes, and rationalising stamp duty will have a sobering effect on property prices.

But for some little lingering effect, economists and real estate experts believe that the overall downside impact of demonetisation has faded and its impact is not going to be there in the next quarter.

Says Ashwinder Singh, formerly CEO of JLL India & now CEO of leading real estate consultancy, Anarock Consultants: “Other than in terms of the initial confusion-induced decline in sentiment, the trend that is emerging now, points towards a recovery in buying sentiment with serious buyers already returning to primary markets.”

The entire demonetisation exercise undertaken by the government and aided by other reforms, like Benami Property Act, RERA and GST, is to be looked at in the backdrop of the government’s multi-pronged policy to create institutional and regulatory framework for speedy and steady growth of the economy. And at the centre of all these initiatives is real estate, which is a key contributor to GDP. Going forward, these policy initiatives will help make real estate more organised, transparent, credible and affordable, making the sector investor and consumer friendly. (IANS)

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Premium Real Estate No longer Ruled By Location

Location no longer a key factor in choosing real estate

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Real estate in the face of pandemic doesn't get ruled by location. Pixabay

BY ADITI ROY

The perception of ‘premium’ means in real estate has moved from snob value to define family wellness and health.

As one deals with the global COVID-19 pandemic, developers and buyers are focusing on features in residences which enhance hygiene, wellness and sustainable living which need to be inherent in the design and makeup of housing projects.

“Wellness amenities such as yoga studios, meditation rooms, spas, gymnasiums, tennis courts and jogging tracks became the new rage among urban homebuyers. Such features eventually transcended luxury home projects and came to be expected in mid-range homes, as well. Wellness amenities now deliver a far more convincing ‘premium’ punch than architectural eye-candy. Branded developers were quick to sense the shift and began integrating such features into their projects,”says Prashant Thakur, Director & Head – Research, ANAROCK Property Consultants.

“The world we live in has suddenly been sharply redefined. In times of unprecedented job insecurity, rent is a burdening expense, property ownership is a vastly more attractive investment rationale than reposing faith in volatile financial markets, and the home is a focal point of an entirely new work ethos,” Thakur adds.

“Premium” beyond branding

The current lot of homebuyers are willing to pay extra for premium products and features. For most Indians’ homes are the single-largest lifetime investment they make so it makes sense to secure the best options available within one’s means. While branded builders deliver premium via superior properties and locations, the concept of premium in the backdrop of the severest healthcare crisis is wellness, says a survey by ANAROCK.

Real estate
Real estate doesn’t revolve around location anymore. Pixabay

Wellness as a Project Design Imperative

Real estate that encompasses wellness elements in a building’s design, materials and amenities is a major global trend. Wellness features in a residential (and also commercial) building enhance its desirability as it improves the overall environment and well-being. Among the most popular wellness amenities are gyms, yoga/meditation rooms, roof gardens and enhanced natural lighting and ventilation. As we edge more into the luxury domain, buyers also seek projects with art studios, hobby rooms and Zen gardens where they can unplug and rejuvenate.

The practice to get buildings certified for wellness is being followed by several international developers. This trend, which is being seen in residential, commercial and even avant-garde retail spaces, involves the building receiving a wellness certification based on its design and operational strategies. Similar to the LEED certification program by the U. S. Green Buildings Council, where a building’s ‘green’ features are evaluated and rated, wellness ratings assess the wellness features of a real estate development – how much they contribute to the health and wellbeing of occupiers.

Green Commercial Real Estate

While the residential real estate is gradually catching up to it, this trend is currently more visible in contemporary commercial spaces. Globally, owner-occupied commercial establishments are driving demand for green features and practices. Some of these features include active stairways, biophilia, enhanced air quality, natural sunlight, vertical gardens etc. Such amenities are seen as a way to attract and retain young employees who are highly focused on working in healthier environments.

Even Indian developers are savvy to the trend of tenants placing a high premium on wellness. An increasing number of Indian employees now look for workplaces which help them retain a certain level of fitness and wellness. India Inc is already replete with Grade A office spaces that feature gymnasiums, breakout areas, jogging strips and meditation corners. Coworking spaces, which millennial workers and start-ups favour, have been among the earlier adopters of this trend.

Real estate
Real estate customers and developers focused more on sustainable living. Pixabay

The ‘Premium’ Is High

There is a significant cost attached to incorporating wellness amenities into a building’s architecture, so properties in such buildings cost more than those without any features. The upkeep of such features also adds to the overall maintenance expenditure of the building. However, these features translate into benefits such as improved employee efficiency, performance and retention in office buildings, and a higher happiness and satisfaction quotient in housing projects.

Given that such amenities are in increasing demand, developers now look at including such features in their buildings’ design, over and above providing innovative health-centric amenities. Buildings in India which have wellness baked into their DNA are still a relative rarity, but even a lower saturation of wellness features can be a USP. Definitely, interest in such features in housing projects has never been higher than in COVID-19 era, which has brought the need for complete self-sufficiency in residential real estate front and centre.

Unfortunately, because of the high costs involved, we are unlikely to see this trend percolating down into affordable housing very soon. Such amenities come for a premium, and developers need to keep affordable housing… well, affordable. Nevertheless, some of the latest affordable projects being developed in the less expensive peripheral areas of our major cities do have a degree of basic wellness features.

Also Read: COVID-19 Poses Serious Complications, Even Death Risk for Children: Research

These projects are preferred because many buyers are willing to compromise on the conveniences of central locations – but not on the health of their families. Homebuyers with such an orientation can look for internationally recognised wellness ratings such as WELL Building Standard and Fitwel rating, which measure and certify wellness features positively impacting human health and wellbeing. (IANS)

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Medical Fraternity Asks Central Government To Withdraw GST on Hand Sanitizers, Masks

Hospitals, ambulance, nursing and support staff desperately require sanitisers, masks and other protective equipment in 24x7 mode

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Sanitizer
, hospitals, ambulance, nursing and support staff desperately require sanitisers, masks and other protective equipment in 24x7 mode. Pixabay

In the wake of the increasing threat of Covid-19, the medical fraternity has asked the government to consider withdrawing GST on hand sanitiser and masks in these ‘difficult times’.

“We understand that certain ingredients (in sanitisers) are taxable, still in these difficult times or at least for next few months, hand sanitisers should not attract GST,” said Sandeep Sharma, President of Indian Medical Association’s (IMA) Delhi branch.

According to Sharma, hospitals, ambulance, nursing and support staff desperately require sanitisers, masks and other protective equipment in 24×7 mode.

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“We require all these items in bulk, but at present we are paying 18 per cent GST on sanitisers and 5 per cent on masks etc. Besides, medical practitioners and public at large also require hand sanitisers and masks as a major preventive measure to keep away from the highly infectious virus. It would be a big relief for people if GST is not levied on these items,” said Sharma, who coordinates with all leading chains of top private hospitals and doctors.

Meanwhile, the President of the Trained Nurses Association of India (TNAI), Roy K George, has appealed to all the state governments to ensure urgent and smooth supply of personal protective equipment (PPE), and essential items like masks and sanitisers to serve patients and combat the spread of the infectious disease to the medical staff.

Envato, Covid, Corona Virus, Corona, Virus, Gloves
In the wake of the increasing threat of Covid-19, the medical fraternity has asked the government to consider withdrawing GST on hand sanitiser and masks in these ‘difficult times’. Pixabay

“Our state associations, particularly from Uttar Pradesh and Maharashtra, have informed us that adequate supply of PPEs, masks and sanitisers has to be provided to the nurses and other medical staff,” said George, adding, “What happened in Mumbai, where 26 nurses tested positive for Covid-19 in private hospitals, suggest that frontline soldiers of the this war against virus need more attention in terms of equipments and medical kits.”

TNAI, founded in 1908, has 6 lakh nurses as its members, making it one of the largest associations of nurses in the world. It has postponed all its celebrations related to the 200th birth anniversary of Florence Nightingale, legendary social reformer and founder of modern nursing.

ALSO READ: Actor Arjun Kapoor Pledges To Donate To Various Coronavirus Relief Funds

While nurses world over combat the dreaded infectious disease, the WHO has declared 2020 as the Year of the Nurse and Midwife in honour of Florence Nightingale. (IANS)

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Apple Increases Price of its Smartphones in India Post GST Hike

The iPhone 7 (32GB) which was earlier priced at Rs 29,900, is now priced at Rs 31,500

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Apple
Another hit model iPhone XR (64GB) which was priced at Rs 49,900 will now cost Rs 52,500 -- a price hike of Rs 2,600. Pixabay

Apple on Wednesday increased prices of its iPhones in India due to the GST hike from 12 per cent to 18 per cent which became applicable from April 1.

The most popular iPhone 11 (64GB) model which was earlier priced at Rs 64,900 will now cost Rs 68,300 — up by Rs 3,400.

Another hit model iPhone XR (64GB) which was priced at Rs 49,900 will now cost Rs 52,500 — a price hike of Rs 2,600.

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Apple
Apple on Wednesday increased prices of its iPhones in India due to the GST hike from 12 per cent to 18 per cent which became applicable from April 1. Wikimedia Commons

The Rs 101,200 iPhone 11 Pro (64 GB) is now priced at 106,600 while iPhone 11 Pro Max (64GB) which costs Rs 111,200 will now be available for Rs 117,100.

The iPhone 7 (32GB) which was earlier priced at Rs 29,900, is now priced at Rs 31,500.

ALSO READ: Majority of Smartphone Apps Contain “Backdoor Secrets” Which Allow Hackers To Access Private Data

With the GST Council, headed by Finance Minister Nirmala Sitharaman, increasing the GST on mobile phones from 12 per cent to 18 per cent, industry experts had indicated that it would hit the industry and brands would not be in a position to absorb this impact. (IANS)