A fast-growing economy fired up the real estate market

A fast-growing economy fired up the real estate market after almost a year-and-a-half of property gloom, with prices touching the pre-crisis peak and companies announcing structures that will pierce the sky. The property party would have been perfect had it not been for the service tax slapped on under-construction buildings and as expected, the burden was passed on to the buyer. The Budget proposal meant that 25 per cent of the gross sale value of the property would be taxed and this resulted in a 2.5 per cent increase in the rates of houses under construction.

Prices, on an average, increased by 30 per cent across India, forcing the Reserve Bank of India to tighten the norms on lenders’ exposure to the realty sector. The year also saw some of the developers getting embroiled in one controversy or another — like Unitech Real estate in the 2G spectrum allocation scam, Emaar MGF in the CWG and Lavasa in the green norms violation case — which made 2010 a not-so rosy year for them. The robust economic growth, coupled with increased focus by developers on building affordable homes, helped the realty sector recover from the slowdown in demand, which was hit by the global economic recession of 2008.