Real estate sector waiting for GST reduction

The business sentiment of real estate for the past two years is down. The stretch of lull period in this sector has been too long, leading to high inventory, low sale and several job losses. Though the real estate sector does welcome the efforts made by the Modi government to clean the system and the sector, but it continues to bleed. The introduction of demonetisation, followed by Real Estate Regulatory Act (RERA) and the Goods and Services Tax (GST) brought in a severe jolt to the industry as a whole and to come out of it, is a humungous task.

President of the Goa Association of Realtors, Amit Chopra told Herald that, “In the long run the market is going to be very good. But with the high rate of GST people are not able to purchase the houses and especially with banks also not lending for the reasons best known to them. Lot of inventory has piled up all over India and these affects Goa too. However, we are lucky in Goa that in the affordable mid range segment the demand is still there and the realtors are doing fairly well here. However in the mid luxury segment there is depressed sentiment and there is a very big stagnancy and virtually all pre-launch and launches has stopped happening and most of the sales are from the actual buyers.”

The real estate sector is now heavily banking on the government to bring down the GST from 12 per cent to 5 per cent in coming days which will give fillip to the sentiments across India and revive the sector and in turn help generating jobs.  The target for real estate sector is now the actual users and particularly those who want to purchase their second home, especially in Goa. The speculative buying which happened in the era of 2006-7 has completely stopped after demonetisation. 

Sumanth Reddy President-elect of the National Association of Realtors (NAR) who was here in Goa recently to attend the third Foundation Day of the Goa Association of Realtors believes that government should also be inclusive and the more the real estate sector flourishes, the government will generate more revenue. “We are at a transition phase now and for the last five years the things have started to change. I understand that there soon will be a revision on GST and certain clauses in RERA. We are expecting GST to be at 5 per cent. We also want that the real estate sector should be given the industry status so that lending from banks can be at cheaper interest rates which will ultimately lead to cheaper homes in future. We have to focus on the borrowing cost from the banks. Once it is reduced, a huge burden can be taken off from the actual purchaser,” said Reddy.

President of the CREDAI, Goa, Dr Jagannath Desh Prabhudesai welcomed Prime Minister Modi's recent address to the CREDAI young members who are working on building affordable housing for the general people in India. “At CREDAI Goa we are trying to make affordable housing. Goa is totally different from other states and the real estate growth took place when the migration from within and outside Goa took place. After demonetisation there was a slow down primarily because the sector was becoming more organised and structured. We had a little recession phase too especially after these three reforms like the demonetisation, RERA and GST, but I expect the market will pick up soon,” said Dr Prabhudesai. 

Chairman of the Indian Institutes of Architects, Goa chapter, Mr Manguesh R. Prabhugaonker believes that in the last 50 years of real estate sector in the country there were 50 per cent of professional set-ups and about 50 per cent of unskilled unorganised  sector which really provoked the government to initiate and Act like RERA. “Like every reform RERA has given some confidence to the consumer. However, there are a lot of teething problems in RERA. My main concern in the entire act is one is the promoter working with the team of architects, engineers and chartered accountants and the service provider becomes the government and they should also be made accountable to provide an infrastructure to the entire building industry and timely clearances for many approvals. If it is not there the timely delivery too gets hampered,” said Prabhugaonker.