According to 3Brick.com team, the current effect of Mumbai real estate was anticipated 2 months ago but it was unexpected that it would result so shortly. Coronavirus has assured that even the real estate sector is enforced to accept the actuality.
As per the reports of real estate, it mentioned the particular data that developers around 7,110 from its database of 11,835 are in the class of default probability. In case if it is analysed today it will show the unsafe data has increased at a level somewhat two-thirds of entire developers. Additionally 64% of the complete supply in the market is presently not yet completed. After all, the normal position of construction for projects is at 66% finishing rate so it indicates that projects are in the last level of finalising. Likely as important investment as of now has taken place so developers will have to reduce rates,sell apartments and finalize the project.
Most understandable doubt after that is how much rates are gonna be reduced. The average advantage level for maximum developers is 15%. Alike if developers are made compulsory to reduce their complete margin, it would convert into a rate cut of 10-15%.
Presently as almost business as well as salaries are reduced in a huge way, as there is no experience to anticipate that rate reduction of 15% by developers will fuss demand. Then we will have to depend on any org or institution that can analyse this current situation or a significant burden on the population.
As a result, BMC and the state government in mumbai that have made homeownership so high costly that common transaction size over last 5 years has been Rs 1.31 cr in cheque, as it is expected that 20% of the amount has made through cash, that converts it in certain transactions size of about Rs 1.55 cr.
Who can be held accountable for this?
In the past 9 years, the state government and the BMC have received a huge amount of Rs,120,000 cr from sale of FSI, property taxes and stamp duty in the commercial capital. Approximately Rs.37,000 cr has been pull out through levies charged to developers for authorization to construct more space in a project – Floor Space Index .This amount is then move onward to the buyer.In addition Rs.35,000cr has been charged over stamp duties that move as a direct extra rate to a property buyer at the time of registration.In case if a property is purchased then the tax of annual property knocks over municipal corporation has received Rs 44,000 cr from the year 2013.
To assume that for a sector that is usually appropriate and approximately funds the administration so some measures would be there to restore it. The situation is like, it is actually less that the government or municipal body can really do at this moment. The municipal body catches almost levies upfront so the charges at that time has been done by the developers.If there is any decrease in levies it results for new development and it advantages in average term.As BMC repays in connection with developers are not actual while creative solutions are far away from their inspiration. As the alone indicator is in the tremble of the state government as it is devastating stamp duty over to zero.It will effect automatically over the last amount to the buyer by 5%.In case if anyone gets confident, so there are high chances of GST on properties like under construction being pull out & it will also cut rates by 5%. Another part in this series is the lender & unjust to anticipate that the lenders can come up with less rates in the instant time.
In this progressive time,there is almost 20-25% rate decreasing as expected that each and every participant gives all that would be hopefully waived such as stamp duty & GST, builder margin,except GST on inputs. Builders with a high status and not shattered balance sheets can even choose to work with a marginal loss just like to look at their some of the projects carried out effectively & sold. In fact, just as an expectation, it will not accompany a rate decrease of more than 30% for the end user.
The situation is difficult but it will try to handle the stimulated demand to a slight level for the projects that are selected & developers.Mumbai’s administration will regret its action over the industry that supports.
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