Pre Budget Expectations - Mumbai Real Estate

Priority list

The real estate sector hopes for lower interest rates, easier finance options and simplification of procedures from the upcoming Budget, says Shilpa Sachdev


As a sector that contributes significantly to meet one of the basic demands of life, the housing industry has much to ask for the Finance Minister in the upcoming Budget. With a view to keeping housing affordable, competitive and buyer-friendly, the real estate sector hopes that the government will chip in more incentives at the policy level.

With FDI in multi-brand retail, infrastructure status to affordable housing and RBI's recent reduction in the repo rate and CRR, there is optimism in the air. However, experts present their list of expectations from the budget, starting with lower interest rates that will redeem buyer interest.

Anshuman Magazine, Chairman & MD, CBRE South Asia Pvt. Ltd. Says, "The expectation from the budget is to reduce the interest on home loans, especially for mid-end housing as well as give further tax incentives for investments in housing. The reduction in CRR and Repo rate announced by RBI will bring in some liquidity into the banking sector. This is a positive move and hopefully will reduce interest rates marginally which will help the real estate industry. This will also propel growth in construction activity across the country."

Magazine adds, "Government measures regarding permitting foreign investment in sectors such as retail, interest subvention schemes for the low economic strata and enhancing liquidity in the market are likely to revive demand for real estate space, especially in residential and retail. The budget should continue to allocate a larger share of funds for infrastructure development. Another step would be the introduction of Real Estate Investment Fund (REIT) in the market which will help mobilise funds to be invested in the real estate sector."

In the last few years, the realty sector has been grappling with a few challenges that need to be addressed at the earliest. These include higher costs, slow pace of growth, declining sales, difficulty in raising funds and stalled project approvals. Enlisting his demands, Boman Irani, CMD, Rustomjee says, "Currently, the sector is looking at certain key policy decisions which make home-buying a priority for everyone in the country. Giving infrastructure status to the affordable housing sector will help facilitate easy financing and address the housing problem to a large extent. Also, the one percent interest subsidy on home loans should be extended up to Rs 35 lakh."

Irani feels that the Government can play a major role in incentivizing the real estate industry by bringing down the taxes which comprise over 35 per cent of the sale value. He says, "A reduction in the base rate is extremely important as it will enable banks to lower their lending rates thereby resulting in reduction of interest rates charged to developers and home-buyers. Government should also look at developing provisions for Special Residential Zones (SRZs) in order to incentivize housing stock. Reduced taxation and simplified taxation by possibly introducing GST will be another welcome move. It will also significantly bring down prices benefitting the home buyer. We are looking forward to a raise in the income tax exemption limit to three lakhs and a reduction in excise duty rates to put higher disposable income at the hands of the public."

In order to meet the demand for additional homes, there is an urgent need to speed up the approval process and also improve infrastructure to sustain the spill-over growth, believes Sukhraj Nahar, Managing Director, Nahar Group. "We expect the government to come out with the single window clearance system for approving projects. To match the increasing residential development taking place in tier I and tier II cities, there is a need to improve the infrastructure base in these cities. Additional funding assistance to the prime cities for infrastructure and for the real estate industry to meet the shortage of working capital is expected from the Budget," he adds.

The government needs to issue guidelines that will foster the growth of affordable housing and encourage more township projects to meet the growing housing need. Dhaval Ajmera, Director, Ajmera Realty and Infra India Ltd. says, "With growing urbanisation in metros, the real estate industry is seeing huge opportunity for creating newer townships. It is vital that the Government should promote townships alongside industrial belts and give developers fiscal benefits to township development to entice developers in this segment. Clear guidelines should be announced by Government in order to avoid any kind of ambiguity on point of levying Service Tax on under construction projects."

Ajmera adds, “A sheer relief could be bringing in affordable housing.  This should be considered important with priority lending given to banks who could in return offer concessional costs to keep the cost of tenements within the reach of the common man. The budget should look forward to extending existing benefit of Sec 80 IB(10) of IT Act for developing affordable housing as  the country is still in a huge shortage of tenements.”

published in Times Property, Mumbai on Feb 16, 2013

Thane Area Scan

Consistent growth

Genuine demand is driving the residential property market in Thane, says Shilpa Sachdev

Thane, also known as the city of lakes, has emerged as a preferred residential location in the recent years.  The city is flanked by the Sanjay Gandhi National Park and is surrounded by Yeoor and Parsik hills. Once an industrial hub, the city has completely changed in nature. Most industries have now turned into high rises. 

Pic courtesy: Hiranandani Constructions

Shveta Jain, Director – Residential Services, Cushman & Wakefield says, “Thane has witnessed phenomenal growth. The city has expanded towards Ghodbunder road which has seen a number of new launches in the recent past. With commercial office spaces also coming up in the city, growth prospects look good. The city is expected to grow in the coming years and is preferred by both investors and end-users alike.”

The social infrastructure has seen a great transformation in Thane. A number of renowned educational institutions, multi-specialty hospitals, malls and entertainment zones have come up in the city in the past few years and the number is expected to grow. Thane has a number of schools and colleges such as St John High school, Smt Sulochanadevi Singhania High school and many others. Lodha World School also has a center in Thane. Jupiter and Bethany both private multispecialty hospitals are present in Thane. There are five malls in Thane including the relatively new Korum mall, which further adds to the overall social infrastructure of the city.  In fact, Hiranandani Estate and Hiranandani Meadows have become two full-fledged township projects in Thane having their own school, hospital and shopping complexes. The commercial growth, especially from the IT sector, is also influencing the demand for residential property.

A Kalpataru spokesperson says, “Thane is emerging as one of the fastest developing districts with lots of malls and corporate companies establishing their business practices in the city. Global leaders in IT are vying for space in Thane to set up their offices and the trend is shifting of offices mainly in IT and ITes industry to Thane, thus giving rise to concept of ‘walk to work’ culture. The presence of Ghodbunder road, located at few meters from our residential projects, Kalpataru Hills and Siddhachal Elite, connects the city with central and western suburbs of Mumbai city. Wide roads, sprawling mega-housing projects, malls and multiplexes, healthcare centres, lakes and an enviable view of the Yeoor Hills have added to Thane’s USP, making it preferable destination for living.”

Infrastructure facilities have improved with the construction of SATIS (Station Area Traffic Improvement Scheme) and multiple flyovers being constructed over the Ghodbunder road. This has improved the quality of living in the city. Jain adds, “Thane is well connected to the eastern suburbs by the eastern express highway and to the western suburbs by Ghodbunder road. The city also has connectivity to Navi Mumbai by both trains and roads. With the huge growth in population, the Thane Municipal Corporation has taken steps to improve the overall infrastructure. Flyovers on Ghodbunder road will reduce the overall strain on vehicular movement.”

Prakash Shah, Director - Finance and Business Development, Hiranandani Constructions says, “Infrastructure in Thane is fantastic. The place has wide roads facilitating connectivity to the western suburbs in 20 minutes via the Ghodbunder road. The place has lots of greenery and many lakes to its credit. Three new flyovers are under construction which will connect the Ghodbunder road to the eastern expressway. The train connectivity to central line is in place that takes 45 minutes to reach VT station. Thane is one of the most affordable residential locations that makes it an ideal place to live and work. Also, a lot of commercial development is happening in the neighbouring areas like Airoli and Thane itself that is adding to its changing profile.

Ghodbunder road has grown into an important extension of Thane city as most new launches are coming up here. Om Ahuja, CEO - Residential Services, Jones Lang LaSalle India says, “Thane is well-developed, and represents a city in itself – a city with its own character and economic drivers, including large businesses that drive the demand for residential properties. The manufacturing sector, especially along Ghodbunder Road, plays a big role in keeping the residential property sector lively. Also, the accelerated activity in residential property development has caused an upsurge in malls and entertainment complexes, which further influence demand. Generally speaking, Thane is in the process of gaining equal desirability status with areas like Malad and Goregaon.”

With the growing real estate and infrastructure development in Thane, the city has something to offer to all the segments of the home buyer’s right from budget homes to mid-range homes to high end luxury homes. Shailesh Puranik, Managing Director, Puranik Builders Pvt. Ltd says, “The luxurious lifestyle, the connectivity, the infrastructure and its affordability are the various factors due to which home buyers across the spectrum have chosen Thane as their favoured residential destination. Our project Rumah Bali is strategically located at Ghodbunder road which is well connected to the Eastern Express Highway and the Western Express Highway. It is in close proximity with the schools, colleges, hospitals and shopping centers.”

Puranik adds, “Widening and construction of roads and flyovers has made Thane city more accessible, internally and externally. This kind of planned infrastructure will definitely support the increasing population and the growth of this city.”

Due to presence of various projects in different range, the property rates in this city, range between Rs 5000 to Rs 10,000 psf, depending on the location, quality of construction, size of the flat, & amenities provided. 

Thane offers a great living destination to the home seeker. A number of lakes, a growing number of malls, more and more new projects getting launched and a reasonable price bracket, has made Thane a very attractive residential location. 

A Kalpataru spokesperson says, “With limited scope for expansion of Mumbai city, its neighbouring cities like Thane are been favoured largely for accommodating the rising needs of home buyers. Also, the cost of living in Thane is relatively lower than the suburbs of Greater Mumbai.”

According to Ahuja, the long-term future for property in Thane is excellent. He says, “While this area remains among the more affordable ones around Mumbai, there will be a steady rise in rates as development catches up with the planning and existing supply is absorbed by buyers.”

The upcoming infrastructure around Thane such as additional airport at Navi Mumbai, extension of the Metro and mono rail network in the Thane city is likely to contribute to the appreciation of the property rates in the future. Puranik concludes, “We also see the new corridor of Thane-Navi Mumbai and Pune emerging out of the proposed infrastructure development. As a result, an investment made now in Thane is sure to give handsome returns to the investor in the next few years.”