Gujarat: Home loan disbursals rose to Rs 5,283 crore in Q2 2020 – ET RealEstate

AHMEDABAD: In what could imply an increase in house sales, disbursement of fresh housing loans across Gujarat rose by 46% to Rs Rs 5,283 crore for the quarter ended September 2020 from Rs 3,620 crore in the same period last fiscal, shows data released by the State Level Bankers’ Committee (SLBC).

Compared to the preceding quarter of April-June, the surge in fresh housing loan disbursals works out to be 130% with a total of Rs 2,298 crore being disbursed in the quarter.

According to the SLBC, the total outstanding amount under housing finance by banks stood at Rs 92,195 crore by September as against Rs 76,280 crore in the same period last fiscal. The outstanding amount was Rs 89,818 crore in April-June 2020.

“Demand in the housing sector improved in the July-September quarter. People whose incomes have not been significantly affected during the pandemic have invested in the real estate sector. As a result, fresh disbursals for housing loans went up during the quarter,” said M M Bansal, convener, SLBC, Gujarat.

Industry players also confirmed a significant uptick in housing sales during the September quarter.

“Housing has now become a social security. Sales improved across all segments such as affordable, luxury homes, farm houses and plotting schemes. Fence sitters also made the decision and bought residential properties,” said Jaxay Shah, national chairman, The Confederation of Real Estate Developers’ Associations of India (CREDAI).

“Had the state government reduced stamp duty by 2%, fresh disbursals would have passed Rs 10,000 crore,” he added.

According to real estate consultant Knight Frank India, residential sales were buoyant in August and September. The Ahmedabad market alone saw 1,176 housing units being sold in the July-September quarter against April-June of 2020.
Gujarat: Home loan disbursals rose to Rs 5,283 crore in Q2 2020Industry players attributed the improvement in housing sales to factors such as low interest rates on home loans, discounts from developers and fence-sitter deciding to buy homes in the July-September quarter.

Even non-performing assets (NPAs) declined during the second quarter. “NPAs are usually less in the home loan segment as home buying has a certain sentimental value attached to it.

Moreover, the Supreme Court has imposed a stay on banks from classifying accounts as NPAs, since September 4 this year. This coupled with people opting for the moratorium kept NPAs in check,” said Bansal.



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Price surge in raw materials raises construction cost in Ahmedabad – ET RealEstate

AHMEDABAD: Home buyers will now have to shell out around 20% more to own their ‘affordable’ dream pad. A surge in prices of steel, cement and other raw materials has raised the construction cost of affordable housing projects in Ahmedabad by around 30 per cent. This means that the additional cost will be passed on to the buyers.

The situation could lead to delay in delivery and stall projects in some cases, impacting home buyers at large, said real estate experts. They also believe that the builders will face the difficult task of convincing the customers to bear the extra cost burden. This means that a 90 sqm (107 sq yard) house priced at around Rs 45 lakh, will cost around Rs 50 lakh (excluding the taxes).

Therefore, many developers in the city have put the affordable housing projects on hold and may increase the property prices as it would not be feasible for them otherwise.

Areas like Shela, Ghuma, Shilaj, Vaishnodevi circle, Tragad, Sugad, Naroda, Kathwada, New Maninagar and few other areas around 200 feet ring road are the ones where affordable housing schemes are either on or have been planned.

As per CREDAI (Confederation of Real Estate Developers’ Association of India), steel prices have increased by more than 45 per cent since the beginning of this year.

The manufacturers have been taking undue advantage of the increase in demand for steel by increasing the prices every month, it says. At the beginning of this year, the per tonne rate of steel was Rs 40,000 and this has touched Rs 58,000 this month.

Price surge in raw materials raises construction cost in Ahmedabad
Similarly, in January 2020, cement price (50 kg bag) was around Rs 349 per bag, which is currently priced at Rs 420-Rs 430 per bag.

Atul Shah, partner of Navpad Real Estate which is coming up with two affordable housing projects in Chandkheda said, “We have started two 3BHK projects with homes priced below Rs 45 lakh. Since we have not even reached the ground level of the project, the materials are going to cost us a bomb. So other than for the bookings done at the earlier rates, we will be increasing the flat’s cost by 20-25 per cent.”

Prashant Shah of Nirman group told Mirror, “We have a project of 3BHK in Adalaj area and the flats are priced at around Rs 45 lakh. We have booked 55 flats so far and for the remaining we will have to increase the cost by around 20 per cent because the project has just started and will take 2-3 years for completion.” He added that with the hike in prices of raw materials, they will have to bear additional 30 per cent of construction cost which is comparatively high for an affordable housing project.

The Confederation of Real Estate Developers’ Association of India (CREDAI), National Real Estate Development Council (NAREDCO) and many other organisations have written to ministers in the state governments, central government and Prime Minister Narendra Modi, urging them to take note of “cartelisation by cement and steel manufacturers”.

They also have requested the government to intervene and regulate the cost of materials that have risen during the pandemic, delivering a blow to the real estate sector.
Price surge in raw materials raises construction cost in Ahmedabad“The real estate sector has been working on wafer thin margins and is battling unsold inventory on one hand and unfinished projects due to lack of funds on the other,” said Jaxay Shah, CREDAI Chairman.

Shah added, “The government has to intervene to solve various issues pertaining to the real estate industry. There is an urgent need to control the spiralling steel, cement and other raw material prices and I urge the government to take necessary steps at the earliest.”



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Ahmedabad: Work-from-home invites commercial property tax! – ET RealEstate

AHMEDABAD: At a time when a large number of offices has switched to work from home (WFH) mode to tide over the Covid-19 pandemic, it has proved costly for a local ceramic trader. The Ahmedabad Municipal Corporation has imposed commercial property tax on the trader for ‘commercial use’ of his residence after the officers found display of ceramic articles in his home.

The AMC has also directed Suresh Tahiliani, owner of the ceramic business in Naroda, to stop using a portion of his residence as workplace as he had earmarked a small space of the property as his office following the lockdown period.

Though Tahiliani stopped using the space as office, he was forced to move the city civil court against the AMC’s notice which also directed him to restore the property to its original status of “residential” . Last week, the court stayed any action on AMC notice at least till the civic body explained its position before the court.

Tahiliani had purchased a residential property, demolished the structure and rebuilt it in 2016. A year later, he obtained the building use permission for residential purpose. He has been paying property tax to the civic body under the category of residential property for two years.

In July this year, he was asked to pay commercial tax for the property for 2019-20 after civic officials found an office being run from the premises. Tahilani had no issue with paying commercial tax, but AMC issued him a notice asking to stop using the property for commercial purposes and restore the building to its original position.

Tahilani wrote back to AMC in October explaining how he obtained BU permission after reconstruction three years ago. It was only for a short time after the lockdown that the small portion of the premises was used as an office where ceramic articles were also showcased.
Ahmedabad: Work-from-home invites commercial property tax!‘WFH doesn’t mean setting up shop at home’

Ahmedabad Municipal commissioner Mukesh Kumar said the merits of the case would have to be examined. “Usually, WFH does not mean that you can set up a shop at in your house. WFH means having a personal workstation, a few files and a corner room to yourself. AMC does entertain applications for converting part of residential properties for commercial use, but then there is a procedure.”

“We receive applications from citizens for converting part of the residence for commercial use for requirements under Shops and Establishment Act or for obtaining professional tax certificates. But when people don’t reveal that part of their properties are used for commercial purpose we have to go by the book. At present AMC does not have any tax exemption policy WFH policies,” says a senior AMC tax official.

AMC did not respond to Tahilani’s representation, and he went to civil court. The AMC has not responded to the court’s notice and the court thus stayed any AMC action pending reply.



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Co-working firm Incuspaze plans 0.5 million sq ft offices in Gujarat in 2021 – ET RealEstate

Flexible office space provider Incuspaze is planning to set up five new offices spread over 0.5 million sq ft in Gujarat over the next one year.

The co-working firm has forayed into the Gujarat market with its maiden office set up spread over 12,000 sq ft at Vijay Cross Road in Ahmedabad.

The proposed new centers will come up in cities across Gujarat including Vadodara, Rajkot, and Surat.

“In Gujarat, Ahmedabad is the first and our second office is coming up in Vadodara. We have partnered with the Alembic group and this new facility is due to be launched later this month and will have a capacity of 1,000 seats making us the largest managed office space provider in Gujarat,” said Mohit Srivastava, COO, Incuspaze.

Currently, Incuspaze is present across 30 cities with over 58 offices across India. The company’s upcoming centers in Vadodara and Trivandrum will house more than 1,500 seats combined.

“Surat and Rajkot are other cities which we are evaluating closely and are open to working with asset owners across these markets as we have plans to add 5 lakh sq ft of area In Gujarat by 2021,” Srivastava said.

Post-Covid-19, large corporate organizations are reviewing their real estate strategies and reassessing portfolios with an objective to save on their overall expenses. Around 25% of co-working spaces in the top eight cities– 6.4 million sq ft of the total 25.45 million sq ft–is operated by small players, with Bengaluru and the National Capital Region housing most of these companies.

There are over 250 co-working firms in India and the segment is dominated by the top 10 players that hold a 75-80% market share in the top eight cities.



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