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Expect home prices to go up by single digits in 2-3 years, says Puravankara

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Real estate developer Puravankara's CEO Abhishek Kapoor said that the company has a launch pipeline of 14 million square feet, of which 50 percent is in the affordable segment.

Expect home prices to go up by single digits in 2-3 years, says Puravankara
After a bumper quarter that saw net profit rise by a whopping 1,024 percent to Rs 155 crore on the back of a 184 percent spike in sales, real estate developer Puravankara has outlined its launch plans for the festive season. Speaking exclusively to CNBC-TV18, CEO Abhishek Kapoor said that the company has a launch pipeline of 14 million square feet, of which 50 percent is in the affordable segment.
“We will launch a mix of plotted developments, affordable housing, and premium-luxury housing,” Kapoor said, adding that nearly 50 percent of the new launches will come under ‘Provident’, the firm’s affordable housing brand whereas 3.5 million square feet will be under ‘Puravankara’ and another 3.5 million in the plotted developments business, which is seeing significant growth.
Maintaining his company’s positive outlook for the festive season, Kapoor said that inventory levels have begun shrinking pan-India, which in turn has prompted developers to continue with project launches. “Prices have continued to increase and demand has continued to stay stable,” he said and predicted that in the upcoming festive season, there will be a demand pick up.
While Knight Frank data has indicated a decrease in average weighted price across seven property markets in H1 2021, year-on-year, several A-grade developers have reported an increase in ticket prices.
Many others have predicted a steady increase over the next 12 months, not only on account of improving sentiment but also the rising prices of construction materials, especially steel. “Single-digit appreciation of price is a realistic outlook over the next two to three years,” said Kapoor.
Whether prices actually appreciate hinges on the government’s support for the sector on the policy front. For instance, in Maharashtra, developers have been petitioning the government to re-introduce a 3 percent rebate on stamp duty.
Property sales in Mumbai soared between November 2020 and March 2021 on the back of reduced stamp duty. Since the rebate was revoked, there has been a correction in sales.
In the national capital region (NCR), a proposal to increase circle rates (guideline values) in Noida, Greater Noida and along the Yamuna Expressway could also potentially slow down real estate sales owing to possibly higher stamp duty. The Gautam Budh Nagar administration is also considering levying a surcharge of 5 to 15 percent over properties sold along the Metro Rail.
“If there is government support in terms of reduced transaction costs especially stamp duty, it will incentivise people to make buying decisions,” said Kapoor. “I believe the real estate sector can contribute to the growth of the country. However, the government needs to look at it favourably,” he added.