The mid-segment real estate needs immediate attention

17 Oct 2021  |   05:38am IST COVID pandemic came in as a boon in disguise for the high-end luxury segment in the real estate sector in Goa, the mid and lower segments of the sector, however, continue to struggle. According to the realtors the effective cost for an ordinary buyer has gone up and their woes have increased dramatically. The buyers from this middle and lower segments are touchy and will consider every pie before taking any decision. VIKANT SAHAY while speaking to the stakeholders in the real estate market in Goa felt that a lot needs to be done in this sector to make available ‘affordable housing for the common people’

Even though the real estate sector in Goa is doing well in the higher segment, which is about Rs 3 crore and above, in sales the mid segment and the lower segment is at a snail pace, particularly after the pandemic. The real estate developers and builders are facing this issue as there are too many bureaucratic procedures and they call it as hindrance to ease of doing business.

In fact, on October 9, 2021 representatives of Confederation of Real Estate Developers’ Associations of India (CREDAI), Goa met with the Chief Minister Pramod Sawant to apprise him of the situation they are facing. The Chief Minister Office after the meeting also tweeted, “Dr Pramod Sawant chaired meeting with CREDAIand State government officials to review the efforts taken to bring about ease of doing business in the State.” The matter is now with government’s highest level and the real estate industry in looking for some relief to carry on their business smoothly. 

CREDAI, Goa President Nilesh Salkar while talking to Herald said that, “Things are getting more and more difficult as far as approvals go in the real estate sector. Although the government has made some of the applications online, most of them have had the opposite effect. Instead of making it easier for the public, the online modes seem to have complicated matters further.”

He further went on to add, “Take the case of RTO- after completing an online application which entails submitting papers online you are expected to visit the respective office and hand over hard copies for further process. Same goes for Health Department and the DF&ES. The staff too appears to be inadequately trained to handle such online procedures. In some departments there is resistance from the staff to adapt to online mode for various reasons. Many a time there is no Internet connectivity reducing this exercise to a farce.”

When quizzed on labour issues and its shortage after the pandemic, Salkar said that there is no real issue with labour as of today. However, there is a big problem with sand and local construction materials. He further lamented that the Town and Country Planning (TCP) was supposed to forward approved proposals directly to the village panchayats but that does not seem to be happening. “The sub-registrar office charges fees for mutation to facilitate mutation but the Revenue Department office seems oblivious to this and asks to resubmit papers,” added Salkar. 

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Amit Chopra President, Goa Association of Realtors (GAR) who is also the Head of West Zone of National Association of Realtors (India) and also Director in Escala Realty India Pvt Ltd, believes that the real estate fraternity all over India has been hit primarily due to a lot of issues caused by the pandemic and the shortages created by it. “Many States and even the Centre initially had offered incentives to try and kick start this sector which is the primary growth booster of the GDP and the biggest employment provider along with its affiliate industries but now things are back to square one”, he said.

GAR is the trade body of brokers, agents, consultants, involved in sales, purchase of realty in Goa, and has 46 members. GAR is the State affiliate of NAR-INDIA which is on the Central RERA Consultative Committee of government of India along with CREDAI.

“The lower middle class, and the middle class have been effected primarily by the pandemic with many loosing employment or disruption in salaries, entrepreneurs faced huge losses due to the lock downs and disruption of supply chains  though most have started recovering or are on the way to it, however this has led to a peculiar situation wherein banks find such individuals who faced disruption in income as risky cases and either refuse them loans or offer lesser loans which has led to the affordable sector being effected badly especially in Goa,” said Chopra.

While speaking to Herald the President of GAR requested the State government to instruct the banks to not consider the disruption due to the pandemic adversely.

He further said that the high stamp duty and registration charges (which also are not now considered by banks while giving loans) are causing people to defer their purchases, so a reduction in stamp duties by a couple of percentage points would go a long way. 

He also felt that the recent decision to charge registration charges at the agreement stage and increase in registration fees for the below Rs 50 lakh by 1 per cent and below Rs 1 crore by 0.5 per cent is a step that has hit the lower sections hard and should be immediately reconsidered. 

“High labour cost post pandemic with increase in labour cost by almost 80 per cent (from Rs 500 for an unskilled labour currently between Rs 800 to 900 is being paid and earlier even up to Rs 1200 was paid) and the still prevailing labour shortage almost 40 per cent shortfall, has caused huge hardships and some special provision for realty and infrastructure sectors should be undertaken to prevent frequent disruptions due to lockdowns,” added Chopra.

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Further he said that extreme increases in raw material costs especially cement, steel, and lots of other components has made under construction projects loss making and shall result in huge increase of prices to offset these costs so in interest of the nation some steps like drastic reduction in GST and incentives (like tax holidays, etc) to encourage new launches have to be undertaken if the government really wants to revive the economy.

“We appeal that the State and Central government to consider the suggestions with seriousness and to enable us to serve the nation by contributing to the economy”, he said.

“Realty and infrastructure is not just 8 per cent of the GDP but along with its ancillary industries compromises about 46 per cent of the GDP and provides the highest employment in reality which is in fact more than the government or even agriculture sector, about more than 400 industries depend on realty and infrastructure so if some support is given the dividends shall be huge,” Chopra added.

A group of realtors from North Goa and Panjim on condition of anonymity told Herald that they believe rules are not clear in this sector and this raises several questions. 

“There is no accountability in the government as nothing happens on time even with Real Estate Regulatory Authority (RERA) in place. With RERA the responsibility is only with the builders and not on the government. There are too many over lapping of various departments and there are no defined rules and some of the rules are even archaic. There are also no level-playing field or same yardsticks for many. For example during planning even 300 square meters land has different FAR, even in neighbouring plots,” said one leading realtor from Panjim.

A real estate developer commenting on the recent changes and amendments said, “I am confused. Is this registration fees over and above the 2.9 per cent stamp duty which existed till June this year or is it in place of the 2.9 per cent stamp duty?”

The realtors also added that the issue is that when we create societies the registration fee amount is 1.5 per cent which means that this money would not be adjusted and the clients end up paying 1.5 per cent higher. So 4.5 per cent of stamp duty and registration in case of societies will be now effectively cost 6 per cent for each client. “So, only individual conveyance deeds will get benefit. They have either not thought of it thoroughly or typically they want to burden real estate like always. The government thinks it will improve their revenue. What they do not realise is that the government will earn more revenue only if MSME businesses do well,” said a realtor from South Goa.

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