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Karnataka Property Market shows signs of revival after GST, RERA

Bengaluru

The real estate market in Karnataka is seeing a revival after the hard knock it took in the wake of the Centre’s move to ban high-value currency notes in 2016, followed by introduction of goods and services tax (GST) and uncertainty surrounding the Real Estate Regulation and Development Act (RERA). 

The department of stamps and registration said the realty market recorded a nearly 20% increase in revenue from property registrations in the last seven months of 2018 as against the corresponding period in 2017.

The 250 registration offices across the state collected nearly Rs 6,000 crore as revenue from property deals between June and December last year. “It’s an increase of about Rs 1,000 crore from the previous year’s revenue,” said Inspector General of Registrations and Commissioner of Stamps KV Thrilok Chandra. 

Nearly 10 lakh property documents were registered till December 2018 as against 9.2 lakh in 2017, although the December figures are yet to be compiled by the department. “The market has moved out of the shadows of successive reforms like RERA and GST after demonetisation. The revival prompted the government to increase the guidance value after a span of two years,” Chandra said.

Bengaluru saw the highest sequential growth followed by Mysuru and Mangaluru. Hubballi-Dharwad, Belagavi and Kalaburagi also recorded decent growth.

Real estate companies echo the view. Viswa Prathap Desu, Senior Vice President, sales and marketing, Brigade Enterprises, said of late, customers are showing a keen interest in investing in a new property after realizing there’s no point in waiting for prices to fall. “Also, the Pradhan Mantri Awas Yojana (PMAY) and Credit Linked Subsidy Scheme (CLSS) launched by the Centre have provided a much-needed fillip to the sector,” Desu opined. 

Errol Fernandes, CMD, Ferns Estates and Developers, said: “The residential sector, which was under a lot of pressure because of demonetization, is steadily growing and there’s renewed optimism among home buyers following reforms like RERA and GST due to the transparency and accountability they have brought to the market. Developers too have become more sensitive towards customers’ demands and are offering more affordable and attractive schemes. There’s also been a rationalisation of new launches, with the focus being on clearing existing inventories.”

Better sales, fewer new launches

Bengaluru continues to be the most preferred residential property market in south India with increased housing demand and supply. IT, ITeS and startup firms are driving this positive demand. 

The after-effects of GST, demonetization and RERA have influenced the market in a positive way as only credible players and projects continue to exist and the process of buying a home has become easy and time-bound, with all promises being delivered. Most developers have reported better sales, and fewer new launches have helped the market recover.

Adarsh Narahari, Secretary, Credai Bengaluru

Positive market sentiment

Due to reduction of GST slab and streamlining of RERA-related compliance, the market is certainly in a better shape. Developers are expecting more new housing project launches after January because of the positive market sentiment

Suresh Hari, Vice-President, Credai, Bengaluru

June-Nov 2017 — June-Nov 2018

Documents registered: 9,37,388 – 9,98,603

Revenue from stamp duty and registration fee: Rs 4,433 crore Rs 5,255 crore

Source: Dept of stamps and registrations; Dec figures yet to be compiled

Manu Aiyappa , Economic Times, Bengaluru