Stung by GST, RERA builders adopt wait-and-watch approach

The reality business saw its sunshine days during the mining boom. Projects were announced and sales made in the twinkle of an eye. It was great days. But now, those days seems like from another age. Today the landscape is dotted with unsold properties and sadly unfinished properties. Demonetization and RERA has resulted in more confusion. It’s been a while since these major steps were initiated and the builders are growing to accept the changes, but what really is the situation.

Given the depressed state of the market, it is the rare builder who is willing to speak publicly about is his or her feelings. RERA, they believe is very good and will bring about much needed discipline in operations. More importantly it will weed out the smaller players or those who feel it is ok to walk roughshod over the rules. 

However, all of them seem to indicate that demonetization was not a great idea, as it sucked out money from the economy and dropped a big boulder, so to speak on operations. This has meant that now many builders are even considering the possibility of exiting the business. 

Speaking off the record a builder based in Panjim with projects in Porvorim said “It is too much hassle now; I am seriously considering exiting the business to deal in land only. Buy property, convert it and get all the papers in order and then sell it to interested builders. I make my pretty margin and get out.” 

Other builders are also considering upping their game so to speak. A Patto-based builder said “Many small scale builders in Goa, don’t seem to understand the modalities involved in RERA they were busy constructing small buildings in the villages. They have land but are now reluctant to go ahead and build. Some of them have construction material in stock too. They would like to sell out, land and the entire lot. If I can get it for a pretty penny, I will certainly buy it. I can consolidate my operations and go ahead.” 

According to him there were several small builders contemplating their future in an age where it would be impossible to play by the system given all the checks and balances being put in place.          

“All the builders are waiting for December and then I suppose, new projects will be registered. The projects started six month ago will come under ongoing projects and those registered now will come under new projects,” Chairman CREDAI Goa Chapter Desh Prabhudesai said.

Business, he admitted was low and units were not moving at the desired rate and the industry was mired in a rather poor weak sentiment.

That could be one way of looking at it but like all things in life, there is another side too. A builder into construction of luxury apartments, who did not want to be named, said nothing had really changed for him. 

“I focus on the market that buys their second or third property in Goa. In that segment, these changes don’t really make a difference. Yes, the segment that focuses on the first time buyer has been affected very badly. Builders in that segment are looking even to exit the business. A Mumbai-based builder, who has property in the Kadamba plateau is looking to exit the entire deal. Many of these guys operated without systems. RERA will not affect us. We always operate in an ethical manner and we are disciplined. RERA will just mean a little more paper work,” he pointed out. 

There were parties he said still buying villas and bungalows in the RS. 15 to 20 crore range in Goa. Consolidation in the industry was happening with builders consolidating operations by either buying out smaller builders out or just deciding to focus on certain segments of the industry.

A source in Aman Builders said new projects would be announced in December once RERA was in place. In addition, according to him, the Planning Department Authority in Vasco was not functioning so once all this fell in place, projects would be announced. 

Raghav of Linc Property Dev smiled and said “We intend to announce a project in December, once everything is clear. It will be an affordable housing project with one bedroom flats costing Rs 29 lakh. It will be based in Sukkur. The market is undoubtedly depressed but this will sell for sure”.      

Perhaps the final word should go to Chinmay Borkar of Akar Reality who said “RERA is fine, but my bigger fear is GST. There is an absence of clarity about the input credit I will get for the GST I pay to my contractors. That is a problem faced by so many builders; no one knows what rate has to be calculated. The cost of flats will go up for the builders and the customers will lose out”.

The sales figures seem to be in the dumps, utter confusion reigns, several builders are selling out and almost everyone seems to be waiting with bated breath for December. One can only hope and pray it all works out fine