Delhi, being the capital of India, continues to attract corporate, high net worth individuals to buy a home here in South Delhi and this has always been an advantage towards Delhi’s real estate market. There has been a correction between 5 to 12% in some areas of South Delhi but mostly prices have rebounded towards an amicable stable range.
South Delhi Property market has been stagnant since the last two years, but the good thing is that market is not falling any more since some time now. Yes, it has been purely a Buyer’s Market but there are some factors that still dominate the current market scenario.
You can call Location as the KING and Construction quality as Queen in South Delhi Property market. Whether the market is up or down if a developer has purchased a premium location property to redevelop it sells much faster than other properties in market up for sale. However, in South Delhi, most of the cost of a new build flat involves land cost which is much more than the proportionate construction cost. So, after location comes construction quality, if a builder has compromised towards the construction quality it might lead to the slow sale of the project irrespective of the market conditions. It is very unlikely these days for a builder to not use the best of the construction materials as nowadays everything is available ready to install by popular brands. Gone are the days when doors, windows, wardrobes are prepared on the site. Thanks to the fabulous brands such as Fenesta, Aluplast etc. it has become much easier and comforting for the builders.
Also, buyers are pretty aware and knowledgeable these days, it is an advised and common practice for the buyers to visit multiple properties before finalization. So, buyers are already aware of the popular brands which are being used these days. Some builders are good, some are average, however, some are exemplary such as Metro Buildtech.
Metro Buildtech – Spearheaded by Mr. Rajinder Goyal and Mr. Aakash Goyal, it is no doubt that they are the best builders in South Delhi since quite a time now. They not only provide excellent customer service but fabulous product too.
For the last 1.5 Years, the overall property market came to a pause, particularly after the demonetization. Other surprises such as GST implementation hit the trade volumes.
Most of us have seen the real-time examples of people getting rich by buying and selling a residential property invested at an appropriate market situation. Since many decades we have seen this phenomenon that residential property investment in South Delhi is a sure shot method of getting wealthy over a period. But like every other type of market, Real estate too has its own up and down timings. The fact that there is always a very limited supply of real estate in the premium location of South Delhi, the demand is there for good location-good construction projects and it will be like this only.
GST Impact on South Delhi Real Estate –
Governments have not been kind to real estate investors/ builders in South Delhi if you think about the kind of taxes levied on real estate transactions.
The goods and service tax (GST) from July 2017 disrupted real estate transactions, over the past some years, the government has begun many changes in the taxes levied, which have adversely affected property buyers in South Delhi.
GST on Under Construction Properties –
If a buyer purchases an under-construction property / flat from a builder, then he must pay around 12% GST on the Sale Deed Amount, which is often in tunes of 30 Lacs to 1 Cr depending upon the type, size, and location of the property. This has shrunk the margins/profits of real estate developers as often buyer tries to negotiate the price further with the developer to reduce the burden of GST on the transaction. There is an exception, however, If a buyer purchases as Ready Property i.e. for which the Completion Certificate has arrived/issued then he is not required to pay 12 % GST on the flat purchase. Due to this exception, there is a lot of demand for Ready to Move Properties which is a very rare product to find in a good location of South Delhi.
There is also confusion in the market regarding Input Tax Credit. Builder gets some part of GST Paid back from the government in the form of Input Tax Credit, But the mode and the exact amount of this credit are not always that simple which leads to confusion between the builder and the buyer.
Apart from GST, a buyer must pay around 5% to 8% Stamp duty for registration of the property. So, if you add 12% GST and 8% Stamp duty it comes around a whopping 20% of taxes. Due to this high amount of taxes, it has become mostly a buyers’ market instead of the investor-driven market. There are more taxes such as a tax on rental income, capital gains etc. Due to such high taxes burden, Real Estate has been low to now stable in South Delhi over the last few years.
Over the period, Buyers have realized that they should invest in South Delhi Real Estate for a longer duration of time as it is still very less volatile than the equity market.