City homes smaller but affordable: Report
Homes in Mumbai have shrunk in size and become cheaper, says a new global report compiled by Knight Frank India. Compared to top eight real estate markets in the country, the city has shown maximum improvement on the affordability index since 2010, the report said. Titled Urban Futures, the study evaluated the top eight property markets examining the house price to income ratio by pegging affordability at 4.5 times the average annual household income in that city. The key findings showed that though considered the most expensive housing market, homes in Mumbai have become more affordable in the last few years. “It is now estimated that a house in Mumbai will cost approximately 7 times the annual household income against 11 times in 2010,” the report said.
The report also noted that there is a decline in the average size of residential units which has contributed heavily to the pricing in six of the eight markets. “Markets in Mumbai, Pune, Bengaluru and Kolkata have seen a sharp reduction in average size of homes since 2010. Hyderabad and Ahmedabad are the only two markets that are offering larger homes. With annual sales reducing across all major markets, the shift towards making homes more affordable is visible,” the report observed. Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “A decline in property cost brackets and focus on inexpensive housing have not only improved affordability across the country but has also led to a rise in sales in 2018.”
GST on under-construction houses slashed to 5% and on affordable housing from 8% to 1%
In a big relief to home buyers, the GST Council slashed tax rates on under-construction housing properties to 5 percent without input tax credit, from the existing 12 percent, Finance Minister Arun Jaitley said. The Council also cut GST rates on affordable housing to 1 per cent from the current 8 per cent and expanded the scope of affordable housing to those costing up to Rs 45 lakh and measuring 60 sq metre in metros and 90 sq metre in non-metro cities. The new tax rates will come into effect from April 1, 2019.
Currently, the GST is levied at 12 percent on payments made for under-construction properties or ready-to-move-in flats where completion certificate has not been issued at the time of sale. However, builders will not be able to claim input tax credit (ITC) under the new GST rates. “This (GST reduction) decision will certainly give boost to construction sector,” Jaitley told reporters. However, Goods and Services Tax (GST) is not levied on real estate properties for which completion certificate has been issued at the time of sale.
Railways leases 45 acres of Dharavi land to state govt for Rs 3,800cr
In a bid to redevelop Dharavi, one of Asia’s largest slum sprawls, the Maharashtra government has clinched a deal to take over 45 acres of railway land in central Mumbai on a 99-year lease for Rs 3,800 crore where Transit homes will be built for slum re-development. Railway sources said this is a rare instance of the railways handing over land for a project to be executed by a state. Governments over the past three decades have made several attempts to rehabilitate Dharavi’s residents, the first such move being reported in 1983 when the project cost was pegged at Rs 2,500 crore. Today, the total cost of the project is estimated at Rs 26,000 crore. The 45 acres to be handed over is part of two parcels abutting Dharavi belonging to WR and CR—one measuring 17 acres, the other 90 acres.
CRZ relaxation gets road block
Residents of buildings along the coast will have to wait a little longer before they can exploit the construction benefits under Development Plan–2034. Last December, the Centre approved the Coastal Regulation Zone Notification–2018 which delinked floor space index (FSI) from coastal regulation zone (CRZ) norms. This came as a huge relief for Mumbai as a large number of buildings, slums, koliwadas, gaothans in CRZ areas could now go in for redevelopment and avail of the same FSI as applicable in the rest of the city. Under DP–2034, FSI in the island city, depending on the road width, can go up to 4.05 while in the suburbs it can go up to 3.4. The decision also opened up a potential market for developers.
However, two months later, the Centre has poured cold water over these grandiose plans by linking the CRZ Notification to the updated coastal zone management plan (CZMP)—a process that could take anywhere from a few months to a few years. What this means is that all structures in CRZ areas can only be repaired till that time, or go in for redevelopment provided they are declared as old and dilapidated. Then again they can avail an FSI of 1.33 in the island city and 1 in the suburbs. State environment secretary Anil Diggikar said the government will ask IRS Chennai to update CZMP 2011 which was approved in July 2018. “All that needs to be done is to draw the 50-meter line for the creeks and bays. The restriction on development in creek and bay areas has been reduced from 100m to 50 from the High Tide Line in the new rules. The High Tide Line is already fixed. We will request IRS Chennai to take up
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