| Real estate prices in Mumbai are unlikely to come down. Even as the draft housing policy announced by the state government yesterday recommended that prices should be determined on the basis of carpet area, builders and industry analysts in the city said that prices will remain unaffected.
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| The proposal for approving building plans by architects was welcomed by experts.
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| Kumar Gera, chairman of Confederation of Real Estate Developers Associations of India, said, “Prices will not tumble by 30-40 per cent as a result of the price being determined on carpet area. Prices will remain intact as builders will typically load the cost of amenities on to the carpet area, so your carpet area prices will go up across localities. But you will also see a lot more transparency — you will know exactly what you are paying for and get what you are paying for.”
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| Prominent city real estate lawyer M Chinoy pointed out that the policy is only a draft and as such a political statement in view of the forthcoming elections.
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| He also pointed out that all measures listed out by the policy statement would have to be implemented simultaneously for it to have a significant impact on prices.
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| This he said may not happen given the government’s political compulsions. Besides, the roadmap suggested by the government was impractical, he said.
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| Added Gera, “On the face of it, this is a document of the government’s good intentions. If you read it at face value then a host of problems dogging the industry in the state will be redressed, if all the measures are implemented at once, assuming that zero date is today. Otherwise, the road map is not implementable in the timeline given.”
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| Gera said, “The scrapping of the Urban Land Ceiling Act alone will make the builders and developers heave a sigh of relief as more land will come into the market with the resultant softening of prices. This will allow the developer to pass some of the benefits to the end user especially in Mumbai where the land cost is the highest input cost.”
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| Single window clearance will mean that projects will be cleared that much faster and the consequent load on the end consumer will be less.
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| Niranjan Hiranandani of Hiranandani Constructions said that it was a good sign that the state has realised after a long time that Maharashtra needs a policy for the housing sector. Till date, many important decisions are taken but they were taken in piecemeal manner.
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| Another good thing is that the government has given a timeframe for implementing the decisions. This timeframe must after draft becomes policy. Hiranandani pointed out that the proposal that architect improve building plans will result in faster implementation of projects.
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| Rajasthan has this provision already.
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| It is not clear who will approve the plan if the municipal authority feels it can step in. This is a proposal in the national housing policy too. It happens in capital markets where the merchant banker does this thing for IPO. Giving the draft is a sign of good governance as later on no NGO or other body should go to court.
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| Appointing regulator and restrictions will bring discipline and transparency in the market. But it should not happen that only restrictions get implemented and positive steps like increasing supply are not implemented such as scrapping the the Urban Land Ceiling Act, for which bill will be introduced in the Nagpur session.
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| Rajesh Mehta, another consultant, said, “Now NA will be automatic that will reduce corruption and cut time.”
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| He also suggested that the proposed regulator should prepare regulations for estate agents and real estate consultants.
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| Chinoy, solicitor with Desai and Chinoy, said not much will change drastically in two months as this is only a draft and seems to be a political document, so it is anybody’s guess when it will get implemented. These are intentions but it is too early to plan based on the draft as final version may be different.
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| TDR and cessed building cases are pending in the court. Hence, what the ultimate policy will be, will depend on the verdicts in these cases also, he said.
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| On the rental housing, Rajesh Mehta said property tax burden must come down and income tax incentives, as stated in national housing policy, must come simultaneously. |
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