Updated: March 30, 2021 11:27:26 am
Pune was one of the cities which has bucked the trend in terms of absorption of real estate sales. The city had seen an increased sales in the residential sector last year. Aditya Javdekar, Secretary of CREDAI-Pune Metro, while speaking to The Indian Express talked about challenges facing the real estate industry
A year after the lockdown, what is the status of Pune’s real estate in terms of launches, sales and unsold tenement?
The Real Estate Market of Pune continues to be attractive destination for the residential and commercial units as properties in Pune, due to inherent advantages like safety and quality of life, are significantly more affordable than those in Mumbai. However, the impact of COVID19 had an adverse impact on the Indian economy and real estate was one of the worst-hit sectors. During March and August last year, when a lockdown was in force in most parts of the country, the residential sales in the city decrease by around 42 per centwhile launch of new projects were curtailed by 37 per cent.
Some normalcy was restored during the second and third quarters of the year, and 2020 actually clocked a modest growth in both residential and commercial project launches and sales. The first quarter of 2021 is being seen increased sales by those wanting to save Long-Term Capital Gains Tax (LTCG Tax) by purchasing another house property as under Section 54 of Income Tax Act, 1961.
There were issues related to labour during the lockdown, what is the status of labour now? What has been the main takeaway of the real estate industry in terms of labour management from the pandemic?
It is true that due to uncertainties and the fear, majority of the construction workers mainly coming from UP, Bihar, and Jharkhand, had gone back to their home towns during the pandemic. However the association, through its members, took the initiative to retain them, and started providing food, ration and other essential items. It also made arrangement to provide mid-day and evening meals through labour department under BOCW Act.
The association also encouraged the members to provide best facilities to the labours at labour camps and gave awards for providing safety, health, and other facilities at construction sites.
With the revival of the situation and life becoming reasonably normal from third and fourth quarters of 2020, the labour situation has improved. About 60 per cent of the labourers who had gone back have now returned.
In order to promote local youth and to provide them employment through Kushalta Abhiyan (skilling campaign) under the directives from the district collector, the association had arranged the training program for such youth. Due to pandemic the retaining of the labour had become important and, to build their confidence, the developers are taking precautions for their safety, health and accommodation.
Pune was one of the markets which had seen an increased absorption by customers. Has the sentiment continued? What are the benefits offered by builders to their customers?
The CREDAI Pune Metro was pursuing the Maharashtra government, to boost the stagnant real estate market hit by the pandemic, and accordingly the government decided to temporarily decrease stamp duty rates from 5 percent to 2 percent between September and December 31, 2020.
From January 1 this year, up to the end of March, the stamp duty has been kept at 3 percent. For Pune, this shall translate to a total of four per cent tax (three per cent stamp duty, plus one per cent local body tax). This is seen as one of the key factors driving sales up by 58 percent against the previous quarter. Buyers, be it first-time home buyers, fence-sitters, or resale apartment buyers, still wants to grab the opportunity and take home significant tax savings.
The association has made an appeal to its members to absorb one per cent reduction in stamp duty on the sales of January 2021 onwards. Most of the developers are not asking for stamp duty and registration fees from the customers. It is being absorbed by the developers which is changing the sentiments of the home buyers and looking forward for the revival of the residential sales.
How is the retail and mall segment doing? Are there talks of bigger players entering Pune’s market?
The commercial real estate sector of Pune was adversely affected by the pandemic, with the economic slowdown putting a halt on the expansion and hiring plans of many companies. Such an environment had negatively affected the sentiments during 2020. Nevertheless, as industries get back on track slowly but steadily, and a credible solution to the pandemic in the form of vaccines emerges on a mass scale by the second or third quarter of 2021, economic activity will improve, albeit gradually.
However, Pune, saw many large corporate occupiers renew their existing office leases in third quarter of 2020, as part of their long-term real estate vision, with around 1 million sq ft of gross office space being absorbed.
Overall, during 2020, leasing in the City was mainly led by banking, financial services and insurance companies (BFSI companies), financial technology firms, global and Indian technology services firms, product companies, and increasingly, co-working space operators. The city is also expected to increasingly attract large developers and an institutional funds for Greenfield projects in 2021.
Which size and price range of apartments are doing well now? How has the price rise in cement and steel affected the business?
The pandemic has led to structural changes in the demand for supply of residential / commercial market. It would be reasonable to believe that the workplace would be a less centralized and have more widely distributed teams. It appears that the size of the apartments due to work from home culture, the demand would be for bigger categories. However we cannot ignore the demands for affordable housing which is supported by the government of India to make home for all.
The price rise in cement and steel has severely affected the cost of construction. The association has taken up the matter with the government of India/CCI to look into the matter for controlling the prices.
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