“The metro cess from April 1st, 2022, in Mumbai and Pune is likely to have a detrimental impact on the residential market recovery currently underway. While Mumbai recorded 96% of pre-COVID sales in Q4 2021 (compared to Q4 2019), Pune’s sales were 252% of pre-covid numbers. On an annual basis as well, Mumbai and Pune saw sales improve by 30% and 130% on a Y-o-Y basis in 2021. These are clear signs of the demand momentum returning and at a time like this additional cost burden will be felt by the affordable and mid-segment buyers. One has to recognize that the RBI has retained its accommodative stance by prioritizing economic growth and supported residential sales recovery by keeping the repo rate unchanged, despite inflationary pressures. At such a time, the state government could have looked at deferring this cess, given the fact that the stamp duty concession is also slated to end by 31st March 2022 for the time being. While the metro cess will be utilized for infrastructure upgradation, the timing could have been pushed further to allow for a sustained recovery to play out in the residential market.”

    Dr. Samantak Das, Chief Economist and Head of Research & REIS, India, JLL