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The ‘real’ light of Diwali

Friday, October 20, 2017

Diwali is an auspicious time to invest in property. Interestingly, a trend has been noticed wherein demand for luxury homes in city has gone down and popularity of affordable homes in the outskirts has gone up. Suraj Uchil constructs a real picture of the scenario

Its Diwali and the festive season is almost about to end. Being the end of festive times, a lot of people finalise their property deals during these times. “Usually house hunting starts from the time of Ganesh Chaturti and by the time of Diwali, people generally make their decisions, pay the token amount and many a times even take possession of their house. Diwali marks the start of  new things and hence it becomes an auspicious time for invest in property,” says Prateek Shetty, a marketing professional from Mumbai.

In this process of house hunting, a trend has been noticed where the demand for luxury homes has gone down tremendously in the city whereas the demand for affordable homes in the outskirts of the city has gained a lot of traction. Manohar Shroff, Vice President, MCHI-Navi Mumbai Unit explains, “There has been a shift in the market. Hardly 6-7% of the buyers these days are into buying luxury properties. Due to the high property rates, not many prefer buying a flat in the city. But the scenario changes drastically as we move to the outskirts of the city. Karjat, Panvel, Titwala, Ambarnath are all seeing a boom, especially the affordable housing segment. With rates well within their budget and with infrastructure development taking a high priority in these areas, people are now shifting away from the city to the outskirts.”

GST effect
Another reason can also be attributed to the recent reforms that have happened in the country. “Due to the implementation of GST, the tax structure has undergone a change and there has been an increase in the tax paid by the end customer which eventually reflects in his EMIs. With property rates already high in the city, these tax changes can change the entire game plan of the customer and hence they are now shifting to places in the outskirts where property rates are still at a comparatively low price,” cites Rahul Panvelkar, MD, Panvelkar Group.

While the shift allows the market to have its fair share of revenue, one report by the industry experts states that developers today aren’t pitching new launches in these festive times. Instead they are focusing on selling out their existing inventories. Yogesh Salunke from Blueberry Marketing says, “RERA and GST has had an impact on the industry. The market is just recovering right now. People are yet a bit confused with respect to both the reforms and its impact. So their buying decisions have also taken a hit. In such a case, it's not feasible for any developer to launch any new properties. He would rather want to sell off his remaining properties.”

Another hiccup in the process is the slow sanctioning by the municipal corporations. “These days, getting the requisite sanctions from the municipal corporation has become a troublesome affair. The process is getting slow day by day and hence the developer is unable to start work on any new projects. This has led to developers shying away from launching new projects on festive times,” says Rahul Panvelkar.

Sanctioning issues
Manohar Shroff adds that while on one hand the government has been upbeat about housing for all scheme, their attitude towards sanctioning of new projects shows otherwise. “If the sanctions don’t come on time, how do we launch new projects on time. And it’s paramount to launch these projects during festive times as the conversions during these times are very high. As and when these lapses are corrected, the market can quickly get back on its feet and the vision of housing for all can become a reality.”

Though the city has seen a low in the real estate market, the outskirts have been a clear winner this festive season. With more development projects being undertaken in these areas, the outskirts will no longer remain a second homes option for the buyers. It will become their first choice.

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