Last day today: Mad rush to register high-end properties in Mumbai

With just a day left for amendments to Sections 54 and 54F to kick in, Mumbai has witnessed a ‘mad rush’ in the last two months to get high-end properties registered. However, the response in Bengaluru and Delhi has been so far lukewarm.

Real estate experts say that this is primarily on account of the fact that Mumbai is the costliest real estate market, with new supply of luxury apartments. In contrast, there is limited new supply in Delhi’s boutique colonies such as Golf Links and Jor Bagh. Moreover, transactions take time to close as deals often involve dealing directly with multiple ‘heritage’ owners rather than organised builders. Bengaluru also does not offer too many options in the Rs 10 crore segment.

Budget 2023 has imposed a Rs 10-crore cap on the reinvestment of capital gains from the sale of long-term assets, including property, which will be effective from April 1, 2023. No such cap is applicable at the moment.

There were as many as 130 transactions involving properties valued above Rs 10 crore in Mumbai in February 2023, totalling Rs 5,595 crore, data shared by Zapkey.com showed.

This number is historically the highest compared to deals closed in February of previous years. As many as 75 deals were transacted in February 2022 against the 130 in February 2023, which means there has been a 75 percent increase over last year.

"The 75 transactions that were registered last year were valued at Rs 1,324 crore, which means that there has been an almost 400 percent increase in terms of the value of these properties to Rs 5,595 crore this February," Zapkey co-founder Sandeep Reddy said.

The largest contributor to the Mumbai total was the Damani deal, valued at Rs 1,238 crore, data shared by Zapkey showed.

This analysis is based on  data made available from the IGR website shared by Zapkey. The March data is awaited.

In Delhi, data shared by Zapkey indicates that there were only about four deals in the Golf Links locality this February compared to three last February. Jor Bagh witnessed three deals last February and almost the same number this year.

Real estate experts say that the time taken by owners to let go of an asset held for decades is much longer and it may sometimes take years to close the transaction as several emotional and legal issues may be involved, not to mention the limited number of plots available in posh areas such as Golf Links, Jor Bagh and Malcha Marg, among others. It is perhaps on account of this reason that there has not been a massive rise in the number of transactions on account of the Budget proposal. Data for March is, however, awaited.

Rohit Chopra of Southdelhiprime.com, a property broker active in Delhi’s posh localities, is of the opinion that there are just about 212 plots in Golf Links, which is part of the Lutyens zone, and construction of apartments is not permitted. “How many transactions can you expect in this locality with limited stock available,” he asked.

Jor Bagh has about 233 plots, and most owners there prefer to go in for collaborations with builders for apartments; West End has 104 plots. The transactions in an area depend on the number of plots available and how much new stock is being added there, he explains.

“In that respect the Delhi market is unique because buyers have to deal with the owners of these plots that they may have inherited. For them to sell a family home is a big emotional decision and often takes long. Negotiations involve discussing clauses in the sale deed, and getting no-objection certificates from different family members, some of whom may be residing abroad. This is unlike buying a new property in Mumbai, where the only negotiation is to do with the price and that, too, with a professional builder. Therefore the deal closure rate is much faster,” he says.

Gurgaon, too, has not witnessed too many transactions in the luxury segment priced over Rs 10 crore. A few super-luxury units by DLF are available for Rs 15-25 crore, but in the resale market, said Aman Basra, a broker based in Gurgaon.

Bengaluru also does not have too much stock in this price segment, say real estate brokers.

The Budget proposal

Budget 2023 has capped the deduction on capital gains on investment in residential property at Rs 10 crore. “For better targeting of tax concessions and exemptions, I propose to cap deduction from capital gains on investment in residential houses under Sections 54 and 54F to Rs 10 crore,” Finance Minister Nirmala Sitharaman had said in her Budget proposal for 2023-24.

Any capital gains arising from the sale of long-term assets, including residential houses, are now exempt from tax if the proceeds are invested in another residential property and there is no cap on the amount on which the deduction could be obtained. But under the new provisions, a cap of Rs 10 crore has been put on capital gains on which the deduction will be available.

The memorandum to the Budget provisions said the primary objective of the sections had been to mitigate the acute housing shortage and to give an impetus to house-building activity. “However, it has been observed that claims of huge deductions by high net-worth assessees are being made under these provisions, by purchasing very expensive residential houses. It is defeating the very purpose of these sections,” it said.

Top deals in Mumbai from February to March 2023

As many as 28 housing units worth Rs 1,238 crore were bought by family members and associates of Radhakrishna Damani, founder of Avenue Supermarts, which runs the D’Mart chain of stores, in Mumbai recently.

Welspun Group chairman BK Goenka purchased a penthouse for Rs 230 crore in Mumbai.

On March 10, Bajaj Auto chairman Niraj Bajaj purchased a triplex apartment of over 18,008 sq ft on the top three floors of the same project for ₹252.50 crore, making it the costliest penthouse in the city. The transaction fetched a rate of ₹1,40,277 per sq ft on the total area.

The family of industrialist JP Taparia, founder of contraceptive maker Famy Care, has purchased a sea-view luxury triplex apartment for over Rs 369 crore in Malabar Hill from the Lodha Group, documents shared by Zapkey showed.

Madhav Goel, director of Tufropes, a leading manufacturer of synthetic fibre rope and netting solutions, had on March 23 bought a 9,546 sq ft apartment in the sea-facing Lodha Malabar project on Malabar Hill for Rs 121 crore. The apartment is located on the 19th floor of the luxury Grand Palace Lodha Malabar residential project on Walkeshwar Road. It was purchased from Macrotech Developers Ltd, a listed developer. The buyer has paid a stamp duty of ₹7.26 crore, according to documents accessed by Indextap.com. The transaction fetched a rate of around ₹1,26 lakh per sq ft.

Earlier, VR Medicare Pvt Ltd bought a bungalow in Mumbai for Rs 49.75 crore. The transaction was registered on March 1, 2023, documents accessed by Indextap showed.  The buyer has paid a security amount of Rs 2.98 crore. The area of the land is 10,872 sq ft and the carpet area of the bungalow is 4,523 sq ft. The ground plus two floors bungalow is located in Chembur, Mumbai.

Jai Mahtani, a non-resident Indian, has purchased an apartment in Morena House, located on the posh Carmichael Road in Mumbai, for Rs 83.37 crore, IndexTap.com documents show.

Property deals in Delhi from February to March 2023

In Delhi, Vasudha Rohatgi, the wife of former attorney general of India Mukul Rohatgi, has bought a bungalow in Delhi’s posh Golf Links for Rs 160 crore, property registration documents showed. The area of the bungalow is 1,806.35 sq m and the property was registered on February 24, the sale deed showed.

Saas company RateGain’s founder Bhanu Chopra had recently bought an 850 sq m bungalow in Delhi’s Golf Links for Rs 127.5 crore. According to registry documents accessed by Zapkey, the property was registered on February 24.

A property was bought in Golf Links for Rs 46 crore by Kusum Prad Pvt Ltd in March 2023, according to details shared by Zapkey.

According to news reports, Maxop Engineering director Shailesh Arora had also purchased a 575 sq yard bungalow in Golf Links for Rs 68.5 crore.

Property deals in Bengaluru from February to March 2023

An independent house was purchased by Kamlesh Pukhraj on Richmond Road for Rs 36.5 crore in March, details shared by Zapkey showed. The property measures 1,318.98 sq m, including land, a house, garage and servants’ quarters.

Essae Teraoka Pvt Ltd bought a bungalow in Koramangala, Bengaluru, in March 2023 for Rs 27.60 crore. The plot measures  9,600 square feet along with a residential building with a ground floor and first floor, measuring 6950 square feet of built-up area, details shared by Zapkey showed.

In another deal, Keywest Enterprises LLP bought an independent house in Koramangala Extension in Bengaluru measuring 748.14 square metres (8,050 square feet) for Rs 24.15 crore, details shared by Zapkey showed.