The contribution of the real estate sector to the country’s GDP could go up to 18 per cent by 2030 (from the existing 7 per cent), says Jaxay Shah, National President of the real estate developers’ association, CREDAI (Confederation of Real Estate Developers’ Associations of India). There might be teething troubles because of new regulations, but the long-term outlook for the sector is a positive one. He reiterates that the residential segment continues to be a “buyers’ market”, and that it is the right time to buy a home. Shah, who was recently in Kolkata, spoke to BusinessLine about the real estate market outlook, taxation issues, among others. Excerpts:

Are developers happy with the present regulatory environment?

There will be some teething troubles in the initial days. But, in the long run, regulations such as RERA will be good not just for the customer (home buyer) and developer, but also for domestic and international investors, and financial institutions. Two years after RERA was implemented, we have not seen many grievances on the customer side. For example, in Maharashtra, we have been able to solve 90 per cent of the problems through reconciliation process (by the RERA Chairman). However, there are some taxation issues that we are in discussions with.

Can you elaborate on the taxation part?

While there is GST at the Central level, stamp duty is also charged by State governments. First, we are demanding differentiated GST rates between a metro and non-metro, primarily because land costs are not the same in these places. (GST on construction is 18 per cent. After deducting the land cost, which is pegged at one-third, the GST on real estate is 12 per cent). The other demand is reduction in stamp duty rates. It is a known fact that when compliance improves, industry prospers and revenues grow under a low-tax regime.

What about financing for real estate projects?

Sadly, there is no head-start for a first-generation entrepreneur / developer coming into real estate, especially if he does not have land parcels in his possession. All that we are asking is that banks support developers by either financing them at the time of buying of land for affordable housing projects, or that there be some priority lending option to such developers (working on affordable housing).

So, is there any slowdown in the sector?

Yes. See, rules have changed and there were [regulatory] disruptions. Some impact will be there with new launches coming down. For instance, a person previously taking up five projects in a year, now does only three. But let me reiterate, these are temporary problems only. The long-term story remains extremely positive.

Can you give us an outlook of the real estate market?

The ecosystem in real estate has been developed. And the government is working on last-mile connectivity. After three years of downturn (from 2014-16), there was ‘notebandi’ (demonetisation), RERA, and finally, GST. So, the frequent disruptions shook up the industry. But on the brighter side, industry and the developers showed their resilience. So to sum up, the situation was fragile, but we are getting better every quarter. Sales numbers are good, and there is 10-15 per cent growth pan-India. This is still a buyers’ market over the next one year.

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