Surat's real estate sector has witnessed remarkable growth, with the Surat Municipal Corporation (SMC) earning INR 829 crore from paid Floor Space Index (FSI) in nine months, projected to surpass INR 1,100 crore by year-end. Revenues have nearly doubled in three years, reflecting strong property demand. However, challenges persist, including INR 225 crore in unpaid FSI dues, rising jantri rates, and a proposed 18% GST on paid FSI, which could increase property costs by 10%. Developers and CREDAI warn these factors may deter middle-class buyers, who form 70% of the market, emphasizing the need to balance growth and affordability.
The real estate sector in Surat is showing sustained growth this year, as the Surat Municipal Corporation (SMC) has already earned INR 829 crore from paid floor space index (FSI) within nine months. Officials anticipate the revenue will exceed INR 1,100 crore by the close of the financial year, nearly doubling the earnings recorded three years ago.
Post-Covid, the city's realty sector has been steadily expanding. With the extension of city limits, growth is expected to accelerate in the coming years. Paid FSI serves as a key indicator of the sector's performance, reflecting a strong demand for properties. Both developers and buyers are increasingly willing to invest in additional construction space. Over the past three years, revenues from paid FSI have risen significantly, from INR 513.34 crore in 2021-22 to INR 625.32 crore in 2022-23, and an impressive INR 1,019.60 crore in 2023-24.
An SMC official highlighted that the steady rise in paid FSI revenues signals continued growth in the real estate market. The official estimated that the earnings by year-end would surpass INR 1,100 crore, reinforcing the sector's momentum.
Despite this growth, challenges persist. Since 2017, payments worth INR 625 crore for paid FSI from various developers remained unsettled due to bounced cheques. The SMC recovered INR 400 crore and is pursuing the remaining dues, imposing heavy penalties on defaulters. Developers noted that the hike in paid FSI rates in 2023, following a doubling of jantri rates, has further driven up costs. One developer commented that while higher paid FSI revenues signify growth, a reduction in these rates could potentially boost expansion even further.
Adding to the developers' concerns is the proposed 18% GST on paid FSI. The CREDAI city chapter has expressed strong opposition, warning that the move would push property costs up by approximately 10%. This is particularly concerning for Gujarat cities, where rising jantri rates combined with GST on paid FSI could make properties unaffordable for buyers. Officials from CREDAI stressed that the additional costs would particularly impact middle-class buyers, who account for around 70% of the market, potentially deterring them from purchasing homes.
Surat's real estate market has made remarkable strides in recent years, with paid FSI revenues reflecting a thriving demand for properties. However, the sector faces significant challenges due to rising costs from increased jantri rates and the looming prospect of an 18% GST on paid FSI. These financial burdens could dampen market activity, particularly among middle-class buyers. While the SMC's recovery efforts from developers and ongoing sector growth are commendable, striking a balance between growth and affordability will be critical to sustaining the momentum in Surat's realty landscape.
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