Shares of Mumbai-based real estate companies such as Suntec Realty Ltd, Oberoi Realty Ltd and Kolte Patil Developers Ltd rose around 2.5-3% on the NSE in early trade on Monday. The Maharashtra government on Saturday announced that property tax will be waived off on residential units up to 500 sq ft located within the limits of the Mumbai municipal area. According to Urban Development Minister Eknath Shinde, the move will benefit over 16 lakh house owners.
However, some analysts say investors should not read much about today’s rally in real estate stocks. “Property tax exemption is not a game-changer like stamp duty cut. Don’t extrapolate it. Also, this exemption is not likely to benefit the listed developers much, as it is mostly applicable to projects located on the outskirts of the city. happens,” said an analyst with a domestic brokerage house, requesting anonymity. Investors must believe that the Maharashtra government had announced a temporary reduction in stamp duty in August 2020 to boost sales in the state. Stamp duty reduced from 5% to 3% on properties purchased till March 31, 2021.
“Today, major Indian indices are up, so not only Mumbai based but also DLF Ltd and Prestige Estates Ltd are up. Real estate sales were strong in 2021, but the impact of the recent price hike is yet to be seen. And that will be one of the key factors going forward for real estate companies,” said another analyst on condition of anonymity.
The real estate sector is reeling under severe cost pressures in recent months, with raw material and labor prices rising sharply. Hence, to protect margins, real estate developers have hiked prices by around 10-15% in select projects.
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