With commercial real estate gaining momentum across the country, builders anticipate a positive impact on residential realty as well. After all, both the sectors are interlinked. In a tete-a-tete with Priyanka Kapoor of QuikrHomes, M D Zahir, Managing Director, Ahad Builders talks about the current real estate market and the future growth prospects.

In the first half of 2016, there has been a lot of commercial activity. Do you think Commercial Real Estate is doing far better than residential real estate at present? How will it impact residential real estate?

Yes, it is true that commercial real estate is doing much better than the residential but it is a cycle. At the end of the day employees working in offices need accommodation. Either they must go for rental housing or they must purchase their own house. Hence, both the segments are interconnected.

How long do you think residential real estate will take to pick up?

I don’t agree that residential real estate is doing badly as of now because housing is a basic need. However, when compared to what the market was 1-2 years back, definitely there has been a little slowdown. This could be due to multiple interruptions including RERA which in a way prompted consumers to keep their eyes wide open. This was followed by the GST Bill which in turn slowed down the sales. However, things are now moving up!

Will GST Bill increase property prices in the near future?

Especially in real estate, government is taking more than 30% in the form of taxation. The difference is that earlier we had service tax, VAT etc. which differed from state to state and in a way was irritating for the consumers. But with GST in place, property buyers will just have to pay one uniform tax.

But at the same time there are certain sectors where there was no taxation like stamp duty. When somebody goes for registration there is currently no GST at all. But now, we are told, GST will be implemented in registration as well.

Overall, GST should be have a positive impact on real estate but prices may not really rise to a large extent.

Click Here to Know: GST Implications On Real Estate

Our recent survey indicated that maximum buyers are waiting for prices to fall. Do you think it’s possible and what major challenges do builders face in selling their inventory today?

You will have to re-ask the question to them in the other way as to how rates will come down. Banks have barely reduced the interest rates. They have reduced it by 0.1% or 0.2 which is meaningless. Additionally, no raw material is coming cheap. The entire India is being controlled by the Cement cartels. In such a scenario, how can one expect prices to come down? No builder works for charity. At the end of the day, they also want to earn money. Hence, falling of prices is not at all possible.

With RERA now a reality, how is the sector progressing?

RERA is fully in favour of the buyers. In the past few builders, particularly outside Karnataka, have taken undue advantage and launched projects even without buying the land. For instance in Noida, there have been cases where buyers have paid more than 60 per cent of the total amount but the builder has not even identified the place etc. Fortunately, this is not happening in Karnataka.

Secondly, RERA would affect in the beginning because certain laws in it are very draconian. For instance, project maintenance up to five years.

To be continued…..