Real Estate

SPEED TAKE: Stamp duty cut on home purchases could work beyond Mumbai

Updated : January 06, 2021 07:41 PM IST

The strategy has worked in Mumbai: stamp duty collections in December alone were Rs 681 crore

A good indicator of how well (or poorly) Indian real estate is faring comes by way of property consultant Knight Frank’s six-monthly real estate report. The latest one for July-December makes for some grim reading, understandably so, with the pandemic impacting residential sales as well as new project launches

But any verdict passed on the health of Indian real estate based on these parameters could be missing the big picture. The numbers could do with some nuanced reading, and a good way to start is from the commercial capital, Mumbai.

Knight Frank data shows Mumbai Metropolitan Region as the top property market, with sales rising 10 percent. That begs the question: how did Mumbai buck the trend?

In July-August 2020, the Maharashtra government slashed stamp duty on real estate from 5 percent to 2 percent until December 2020.

Given all-round uncertainty, consumption today badly needs stimulus. Lower home loan rates surely help, and the RBI has done its bit on that front. If fiscal stimulus meets monetary stimulus halfway, like Maharashtra did, it would have a multiplier effect on consumption.

The strategy has worked in Mumbai: stamp duty collections in December alone were Rs 681 crore, compared to Rs 542 crore in December 2019.

Say, the Mumbai model were to be adopted across other property markets — from Ahmedabad to Kolkata; NCR to Chennai. That prospect is plausible, with some media reports saying the Centre has asked state governments to consider a stamp duty cut.

Knight Frank’s H2 numbers are worrying, but over 61,000 homes were sold during October-December, a big chunk of it in Mumbai.

Indian real estate is in recovery mode. What it now needs is a tug towards the launch pad before it gets set to blast off. Is a stamp-duty cut the tugboat that it needs?

SPEED TAKE: Stamp duty cut on home purchases could work beyond Mumbai

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