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The vibrant Mumbai property market recorded a historic surge in registrations driven by home sales in the last month of the lower stamp duty window that began on September 1, 2020 and which closes on March 31.
The euphoria amongst homebuyers has grown stronger despite the one percentage point or 100bps increase in stamp duty rates effective from January 1, acording to Knight Frank India. From March 1 to March 24, Mumbai recorded property registrations of 12,696 units at a daily rate of 529 units which is nearly 4.3 times higher than the daily rate of registration recorded at 123 units in March 2020. The sales particularly peaked in the last few days of the month with daily rate of new registrations increasing to 707 units between March 15-24.
Non-resident Indians have recognised the importance of a ‘safe nest, back home’ amidst geopolitical uncertainities. Also, the sheer advantage of investing in Indian real estate, which in current circumstances, is a win-win for the expatriate Indian. Rera has been a major influencer for the NRI community earning foreign currencies to grab the advantage of currency valuation and never-before deals.
Dr Niranjan Hiranandani, national president of Naredco and managing director of Hiranandani Group, said: “The stimulus announced by the state government like stamp duty reduction in Maharashtra and low home loan interest rates coupled with the deal sweetener from developers had urged fence-sitters to turn into the actual homebuyers and simultaneously nudged existing homeowners to upgrade and shift to larger spacious homes to accommodate new normal scenario of work or study or wellness from home.”
At the current pace, March can witness sales upwards of 17,000 units. In December 2020 — the closing month for the first phase of reduced stamp duty — there was a stupendous increase in registrations in the last few days of the month as homebuyers rushed to make the most of the lower stamp duty window of two per cent. From December 1 to December 25the daily average of number of units getting registered in December was at 585 units.
Shishir Baijal, chairman and managing director of Knight Frank India said: “The reduction in the stamp duty rate has helped mitigate the pain in the long-beleaguered real estate sector of Mumbai. As expected, with the revival of the economy, the sales momentum grew stronger in Q1 2021 and the euphoria amongst homebuyers continued despite the 100bps increase in stamp duty rates.”
The reduction in stamp duty has created a beeline for purchase of homes outside registration offices with Mumbai witnessing historically-strong sales. Homes sales have continuously risen month-on-month in each window. Between the period from September 1 to March 24, Mumbai recorded registration of 75,688 units with numbers growing incrementally month on month in both windows.
From September 1 to date, the total revenue from apartment sales realised by the city exchequer has been over ₹25.78 billion. When compared to the period before the stamp duty cut — i.e. January 2020 to August 2020 — the government had collected ₹17.56 billion. This can be seen as a clear indication of the strong impact the stamp duty registrations have had on the revenues.
“A large part of the demand is coming from the domestic homebuyer. To put it in perspective, these are fence sitters who always wanted to buy but were waiting for a good opportunity. We have also seen eagerness amongst NRI’s to make the most of the lucrative prices being offered by developers alongside the reduction in transaction costs.,” said Ram Naik, executive director of The Guardians Real Estate Advisory.
Sales in March 2021 grew 234 per cent year-on-year over the same month last year, registering the highest annual growth in the months after the stamp duty cut. While March 2020 noted registrations of 3,798 units, March 2021 saw 12,696 units being registered.
The last few days to avail the stamp duty benefit in key markets and other cities, coupled with the reduction in home loan interest rates by leading banks for a limited period, have extended the best buying opportunity for the homebuyers.
Pritam Chivukula, co-founder and director, Tridhaatu Realty, said: “Stamp duty cuts in key markets, and the anxiety stoked by the pandemic are the key reasons attracting the NRI buyers. ”
Anupam Rastogi, co-founder and head, NRI sales of Square Yards, said: "The decision to the slash stamp duty has proved to be a master stroke by the Maharashtra government as it has not only given an impetus to home buyers to make a purchase but has also aided in generating revenue for the government. The Mumbai market had started witnessing the impact of the same in the Oct-Dec 2020 itself and the trend has continued into the Q1 2021 as the reduced stamp duty is valid only till March 31.
Square Yards sales figures also indicated a preference for the Mumbai and Pune markets with the two cities contributing to nearly 55 per cent of total number of transactions in 2020.
"What we realised on the basis of our sales performance in 2020 was that the lockdown had not really dented the buying capacity of those with deep pockets. With market dynamics such as interest rates, available offers/discounts and stamp duty and registration charges aligned in favour of buying, both the HNI and NRI segments actually saw this as a good opportunity to invest," added Rastogi.
— sandhya@khaleejtimes.com
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