Project fraternity on Maharashtra Government approving lowering of construction premiums

 

Abhishek Jain, COO, Satellite Developers (SDPL)

 

''After being hit by the pandemic, the real estate sector has seen a solid recovery on the back of stamp duty reduction and a good festive season. Now this move of reduction in premiums by 50 percent will help rationalize input costs for the developers and will go a long way in expediting project completion thereby keeping price escalation in control. The industry will also witness new launches in the market attracting investments from institutions. All in all a good move that will sustain the growth of the real estate industry in the coming months.''  

 

Ashok Mohanani - President, NAREDCO Maharashtra

 

"After the stamp duty cut, Naredco Maharashtra welcomes yet another blockbuster decision of the Maharashtra Government to reduce the construction premium by 50 percent. It will give a big respite to the developers, as the cost of premium as well as approval cost contribute 35 to 38% of the project cost, whereby the project cost will come down substantially. Mumbai alone attracts around 22 premiums which is higher than other top metro cities. Higher premiums put additional financial burden on developers leading to higher costs for the homebuyers. Projects that wish to avail the benefit of concession will have to pay the full stamp duty on the sale of flats, whereby the consumers will get direct benefit of this concession, granted by the state government. The decision will also bring the relatively higher construction premium at par with other states and the lending institutions will find the project funding more viable. It will result in more funding into the State's real estate sector."

 

Rohit Gera Managing Director, Gera Developments

 

"The move to reduce the premiums is extremely welcome. It will provide respite to the cost burdens for developers thereby spurring on more supply at lower prices.  It is however important to realize that the charges paid for approvals include development charges and other charges under other heads.  Effectively this means the total benefits will be much less than 50 percent"