Maharashtra government cuts construction premiums by 50%
Positive for Mumbai based developers but further details awaited
✅ Based on the recommendations on Deepak Parekh committee government of Maharashtra has decided to cut construction premiums by 50% for period of 1 year upto 31st December 2021.
✅ This move is followed by a successful stamp duty cut announced 3-4 months back which led to record registrations in Mumbai in December
✅ While further details are awaited but this cut is likely to be applicable for 22 premiums collected by Mumbai which includes FSI, staircase, lift well, lobbies etc which constitutes 30-35% of the total construction costs
✅ As a result, this move will likely have a 15-17% benefit on total construction costs. Most developers are likely to use this benefit to improve the project viability which have been stuck due to depleted margins. Thus we see limited pricing pressure.
✅ We are hearing that these relaxations are coming with certain conditions hence it will take time to evaluate exact benefits until we have full details
✅However this move will be sentimentally positive for the sector and also confers our view that residential real estate is poised for a multi year upcycle with whole ecosystem in sync to revive this sector from lul of last 7 years. It's time to pounce on to good names in real estate for a superior returns over the next 3-4 years
✅ Godrej properties, Oberoi realty, Sunteck realty, Kolte Patil, Purvankara are prominent names exposed to Maharashtra markets and will see atleast 4-5% up move in stock prices tomorrow