Mumbai:India’s financial capital Mumbai witnessed a decline in residential property prices for the first time in a decade last year following a crackdown on undeclared cash, new consumer protections and the roll-out of a nationwide sales tax, according to Knight Frank.
“Unlike the conventional narrative, developers cut down prices to offload their unsold inventory,” Samantak Das, chief economist and national director at Knight Frank, wrote in the report published on Wednesday. The base price in Mumbai has declined 5%, which translates into an effective price benefit of as much as 12% for buyers once incentives such as a waiver on stamp duty are considered, he wrote.
The past year has been packed with uncertainty and volatility for the real-estate sector as reforms nudged developers toward being more transparent. Prime Minister Narendra Modi is spearheading a campaign to wipe out the shadow economy, boost tax compliance and widen the revenue base. The real estate sector has been among the hardest hit as a large part of transactions were done in cash, some of it generated via tax evasion.
“At the end of 2017, India’s residential sector appears to have shrunk to a fraction of its size in less than a decade," according to Shishir Baijal, chairman and managing director of Knight Frank.
The Indian property market will continue to face headwinds this year and no hardening of prices is expected, Das said at a press conference. The second half of 2018 can see the beginning of a recovery as disruptions from the goods and services tax settle, infrastructure building gains pace and economic activity improves, he added. Bloomberg
No comments:
Post a Comment