Stamp duty rebate boosts Kolkata’s real estate business

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Kolkata’s real estate business has received a significant boost since an announcement by the West Bengal state government. The government announced a 2% rebate on stamp duty for the registration of all documents in July 2021. However, this excludes the documents of amalgamation of contiguous land. When a similar announcement was made in Maharashtra in September, many developers extended a matching rebate to make a transaction ‘free’ of stamp duty payment altogether. The end result was record-breaking sales and launches.

The main effects of the Stamp duty rebate on Kolkata’s real estate business 

With the Stamp duty rebate announcement, Kolkata’s real estate business will see significant benefits. Here are some key ways in which the business will profit.

1. Better sale of properties

The stamp duty rebate has significantly boosted the sale of properties in Kolkata. Kolkata and Kolkata Municipal Development Area (KDMA) witnessed 4,683 sale of flats in Kolkata documents in the month of September. The 2% stamp duty rebate significantly aided homeowners in buying flats in Kolkata. This was a change from the past trend, when the period of Durga Puja witnessed a lack of action commercially.

According to a report by Knight Frank, Kolkata’s real estate business in October saw the year-on-year growth of 87%. Seeing this, the government has decided to extend the rebate for an additional three months up to January 2022. 

2. Helped the economy post the Pandemic

This rebate on stamp duty was given to combat the economic slowdown in the wake of the Covid – 19 pandemic. This provided some much needed relief to Kolkata’s real estate business which was hit particularly hard by the situation. The rebate was beneficial to home buyers and also boosted the sale of properties at Kolkata. This 10% reduction in circle rates will continue till January next year. 

This demand stimulant came at an opportune time. The city saw a significant drop in the sale of flats in Kolkata in the early stages of the pandemic. Thus this stimulant was critical to boost the market and give it some growth. The stamp duty rebate revived Kolkata’s real estate business and prompted fence sitters to make purchase decisions. 

3. More residential sales deeds registered

During the July-September period, KMA registered (QE 2021) a total of 15,160 residential sales deeds. This marked a 122% year-on-year (YoY) growth over Q3 2020. In 2021, July, August, and September noted a YoY increase of 39%, 268% and 80% over those months of 2020. 

Since the stamp duty cut was only applicable for 22 days in July, the upward momentum came in August 2021. But it slowed down in September 2021 on onset of the Shradh period of 11 days from September 20th, 2021. Due to a period of heightened momentum in the registration of residential sales deeds in August 2021, it constituted 48% of the quarterly total. 

For the first nine months of the calendar year of 2021, 35,149 residential sales deeds were registered. This marked a 102% annual increase over the same period in 2020. Because of the lockdown during the first wave of COVID-19, a strong YoY change was witnessed in May 2021 which is largely attributed to a lower base than any strong activity in sales registration. 

How did sale of apartments benefit in the Kolkata’s real estate business?

In terms of unit sizes, apartments above 500 sq ft witnessed a 260% y-o-y growth, though the apartment sizes of up to 500 sq ft registered percentage degrowth of 23%. Unit sizes of 500-1,000 sq ft and 1,000 sq ft and above clocked nearly 260% y-o-y growth for each. The bigger sized units continue to be the flavour of the festive season and pique the interest of domestic homebuyers and non-resident Indians.

The highest percentage jump has been observed in the unit sizes of 1,000 sq ft and above. During Q3 2021, apartments above 1,000 sq ft witnessed a massive 403% jump in registrations over Q3 2020. 

How will the Stamp duty rebate affect the Kolkata’s real estate business long term?

The continued momentum in buying will lead to an increase in supply, thus providing an impetus to Kolkata’s real estate business. Cheshir Bijal, Chairman and Managing Director, Knight Frank, India, said the recent recovery in Kolkata’s real estate business is a direct result of the stamp duty cut by the West Bengal government in July this year. These demand drivers have a multiple impact, not only on the residential real estate sector but also on the economy as a whole. “With the continued momentum in buying, we expect supply to also proceed at a rapid pace that will lead to more jobs and greater prosperity,” Bijalal said.

The report also stated that demand stimulus measures in the form of low interest home loans, and the festive season have increased homebuyers appetite to invest in Kolkata’s real estate business prompting the increase in buying of flats in Kolkata.

A big boost to Kolkata’s real estate business

Through the Pandemic, the real estate industry suffered heavy losses but the stamp duty rebate has been the sliver of hope that everyone needed. For the near future too, the report also said that despite the deadly second wave earlier this year and the fear of a third wave of the pandemic, residential sales instruments recorded in the ten months of the 2021 calendar year have doubled compared to 2020. Thus the happy times are here to stay for Kolkata’s real estate business.

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