By Aditya Raghunath
Investing.com -- The Maharashtra government cleared a proposal to cut levies on real estate by 50% until December 31, 2021. This move could trigger lower prices for prospective homeowners in Mumbai, the country’s most expensive real estate market.
The cut in levies will reduce the price of various premiums that builders have to pay to develop their properties. Mumbai has 22 different premiums that need to be paid to construct a project. These include FSI, staircases, lift well, lobbies, etc. Cities like Bengaluru have 10 premiums to be paid while Delhi had five and Hyderabad has just three. According to a report in the Financial Express, premium payments sometimes account for 50% of the total construction costs.
If prices drop, this will lead to an increase in demand. When the Maharashtra government cut stamp duty rate in the state, the MMR (Mumbai Metropolitan Region) saw a jump of 67% registrations in November 2020 compared to 2019 and recorded its highest ever sale of units in December 2020 at 19,220 flats according to property consultants Knight Frank.
Shares of real estate companies with a significant presence in Mumbai are trading up today. Godrej Properties (NS: GODR ) is up 2.3%, Oberoi Realty (NS: OEBO ) is up 2.02% while Indiabulls (NS: INBF ) Real Estate is up 8.74%.
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