Maharashtra and Haryana, the two states which went for legislative Assembly elections on October 15, have another thing in common. They are among the most prominent property markets and together are estimated to constitute 30-40 per cent of the pan-India real estate universe.

While the polls might not substantially impact the property prices in the state, these could slow down policy clearances and infrastructure projects critical to real estate, say analysts. Since the elections happened just about a week ahead of Diwali, a time for the biggest real estate launches, those tracking the sector say there could be some changes and delays in new projects.

A short-term impact on real estate activity and approval processes is likely because of these elections, says Anshuman Magazine, chairman, CBRE, a global consultancy in the sector. “It is usual for project approvals to come to a standstill before elections.” he said and added that infrastructure projects in the states could also be hit, affecting real estate. A Cushman and Wakefield study put the total estimated unit launches at 172,500 across major eight cities of India in 2013. As for prime residential, Mumbai made for 17600 new apartment units in the first half of 2014 and Pune 5,000, according to CBRE data.

The study also shows Mumbai is one of the biggest chunks, constituted 2.2 million sq ft of new prime grade-A commercial supply in the first half of 2014 of a total of 14 mn sq ft across this segment in India. So, in grade-A commercial space itself, Mumbai is the primary real estate driver in Maharashtra and together with Haryana forms more than a third of the pan-India new supply.

Real estate players are a bit cautious and do not want to dampen the Diwali spirits. Lalit Jain, chairman of the Confederation of Real Estate Developers’ Association of India, told a newspaper: “In Maharashtra, the political system has no role to play on project approvals.” Niranjan Hiranandani, managing director, Hiranandani Constructions, said there would not be any perceptible change due to elections before Diwali. However, people would look forward to new policies in housing and incentives for affordable housing. Those policies would depend upon the result of the elections and who forms the new government. Many issues in real estate are governed by state laws. The actual loss to real estate caused by policy uncertainties will be clear after the poll result and how quickly the new government is able to take charge, an analyst said. “The silver lining in all this is that the real estate market is already slow, limiting the impact of elections,” he added.

Now residents of Chembur and Andheri East can look forward because of revised property tax system of the BMC (Brihanmumbai Municipal Corporation). Some other localities in Mumbai such as; Goregaon East, Malad West, Andheri West and Kandivali East are in the other areas, which are getting benefit because of revised property tax system. Availability of large size properties in Mumbai will keep the profits towards lower end. Earlier, BMC was cleared the new property tax system in 2013, all the housing societies in all over the Mumbai, recently received the revised property tax system, which is appears to be paid for the year 2010 to 2013. According to new tax guidelines, now property tax will be calculates on the property’s capital value, rather than the rental value of the property.

The area’s which have low plot value and high rental value will get the benefit because of new tax system. Properties in Chembur and Andheri East hold high rental value and low property value and here the built-up area is less in comparison of other areas of the western localities, so these areas will get the benefit. But it can vary from property to property because tax system consider several other factors such as; the age of construction. According to recent reports and data the capital value of properties in Andheri East region range from Rs 12,000 to 19,000 per sq ft, while the premium areas such as; in western area the value of property range from Rs 20,000 to 40,000 per sq ft, and in Chembur property rates are in the range of Rs 14,000 to 19,000 per sq ft. Whereas the rental value of these localities ranges Rs 35, 000 to 55, 000 per sq ft. Local realtors are not so happy with the new form of property tax as it depends on Area, Age, Price and type of property. These factors play an important role in assessing the cost of land.

Formula for property tax calculation:

Capital value = Built-up area* Base value *Type of building* Age factor* Use category* Floor factor

Chembur and Andheri are one of the well established localities of Mumbai, where one can find the building in different age cycle. Andheri West is a prominent residential location, whereas eastern part has some of the old residential and commercial buildings, which has age more than 30 years. Hence, in these areas there will be mixed impact and property tax will be measurable on case to case basis.

In case of re-developed properties, there will be flip side because of increased base value and change in the built-up area. The other positive feature for these localities is the size of residential and commercial units. According to recent reports, approximately 30 per cent properties in these areas have an average size of 300-500 sq ft, it stands for 1BHk and according to old tax system BMC has decided to levy taxes.

With the massive landslide win of BJP -led NDA headed by Modi in 2014 Lok Sabha Election, there is a sense of positivity in the buyer community. Other than the financial issues, Lok Sabha election result was the main reason behind delaying property investment by the buyers.  For the first time saffron party has crossed the 300-seat mark without any support.

It is believed that the real estate industry and buyers are equally positive about changes such as policy changes and relaxation in monetary reforms. During the election campaigning, BJP had assured to set up 100 smart cities throughout the country. Thus, buyers are expecting from the new government to revive existing real estate policies and the coming next six months are going to be the perfect time for investing in real estate.

With the huge rally in equity market, the Sensex gained over 1,300 points above 25,000. The Nifty was also up by over 400 points and is trading above 7,500. With the wave of positive change the top gainers in Stocks are DLF, Oberoi Realty, Prestige Estates, Godrej Properties and Sobha Developers. Each one of them jumped 3-9 percent on hopes of getting more projects through the new government.

Creation of a new government is exactly what the Indian economy and the real estate sector wants at this time. While investors look optimistic, end users seem to be waiting that home loan interest rates will come down easing their pockets. However, it will take some time for us to witness any improvement at three months from the formation of government.