Post budget announcements, the real estate sector seems exuberant about the market. Demonetization had already been a nightmare for some players, thus, this budget was a crucial ingredient for the boost of this sector! There have been some widespread speculations about the sector, but here’s what the industry really spoke!
Mr. Anshuman Magazine, Chairman – India and South East Asia CBRE said, “Overall, the Union Budget 2017 augurs well for real estate, affordable housing, and the infrastructure segment.The affordable housing sector is finally set to get infrastructure status. This was a long-awaited announcement. While we are yet to read the fine-print, this is indeed an important step to promote access to priority lending thereby spurring supply of low-cost housing units across various cities in India. Relaxation in area measurement as well as completion timelines to seek tax exemption are welcome steps. Further, the government has also increased allocation under the PMAY scheme. This will encourage home buyers and further boost participation from the Private players. The airport authority of land act amendment is yet another positive move which will allow development of land around the airports. This will further improve infrastructure and more importantly increase funding for the development of the airports. This is over and above the record allocation made to the overall infrastructure sector. In order to encourage greater fund flows into the economy, the FM has announced abolition of the FIPB. While a clear policy outline is yet to be revealed, this is another positive step to liberalize FDI policy framework and ease regulatory hurdles in attracting investments. The government has also been accommodative of the concerns of the real estate sector. The relaxation on long term capital gains, joint development agreements, tax rebates for builders will help reduce their tax liability. While greater rebates were expected in individual tax rates, nonetheless the rebate for individuals earning upto 5 lacs will help increase their disposable incomes. This might help spur consumption and also have a positive impact on demand for housing. ”
Mr. Parveen Jain, President NAREDCO said “The Union Budget 2017-18 has now set in motion a series of structured reforms process for the housing sector in the country. The announcements made in the Finance Bill focuses on the upliftment of the urban poor and the under privileged within our cities and rural areas”. Assigning the infrastructure status to affordable housing gives the segment the necessary push for further growth. The aim to build 1 crore housing in rural areas by 2019 for the homeless aligns with the government’s agenda to bring 2 crore housing by 2022 under its Pradhan Mantri Awas Yojna (PMAY). Affordable housing being included under infrastructure will now be able to receive liquidity support from a variety of funds such as pension funds and insurance firms, which are mandated to contribute significantly to affordable housing.
Mr. Vineet Relia, Managing Director, SARE Homes, said “We welcome the move of the government to give infrastructure status to affordable housing. This status will make it easier for developers to access low-cost funds via foreign direct investment (FDI), external commercial borrowings (ECB) and domestic banking assistance. The need for collateral against loans will also stand reduced. Bank lending rates for housing loans coming down is a positive development and will help stir demand in the market and help clear up unsold inventory for the builders. Another positive move is to provide developers tax relief on unsold stock as liability to pay capital gains will arise only in the year a project is completed. This will help the developers plan their liquidity better. The move of considering the carpet area of 30 and 60 sq meters instead of Built up area of 30 and 60 sq meters will bring in more housing projects under the ambit of affordable housing and will encourage developers to introduce more such projects.”
Mr. Chintan Sheth, Director, Sheth Corp, said“The budget 2017 was supposed to be a very critical affair post demonetization as far as the realty market was concerned. There were huge expectations from the Finance Minister Mr. Arun Jaitley and he showed some positive hopes for industry going forward” .The first positive from the budget was the proposal of tax relief to developers on unsold inventories. The second important point was the reduction of long term capital gains tax period from 3 years to 2 years which will provide relief to both investors and developers. Also, the tax liability for developers involved in the joint development agreement will arise only in the year of selling the property. These benefits can further be transferred to the buyers by reducing their financial burden while purchasing their dream home.
Mr. Sam Chopra, Founder and Chairman of RE/MAX India said, “Post the DeMO drive, our government has been focusing on making our economy policy and system based and hence following the targeted delivery approach to become more planned and professional. Very rightly said by the FM, ArunJaitely, the positive signs and optimistic outlook of the economy are showing green shoots and the effects of DeMo are not expected to spill over in the next year. The affordable housing has been given the infrastructure status which is likely to result in improved participation from private players.Affordable housing is a priority for this Government and it was expected to get an Infra Status. With this the developers can access foreign funds at a cheaper cost. Also with the restriction of Cash Transactions to Rs. 3 Lacs, the cash component will be eradicated completely from this sector and hence making it more transparent. The sales are expected to increase in the residential market with Real estate developers getting tax relief on unsold stock. Under Real Estate Industry, Affordable housing was given major emphasis. One such related announcement was where Instead of build up area, carpet area will be counted for affordable housing. Reduction in the holding period for computing long term capital gains from transfer of immovable property from 3 years to 2 years is another major change in the budget. Overall, the housing sector will gain immensely from the Budget 2017”.
Mr.Sanjay Malhotra, CEO, Emaar India said, “The budget presented today focusses on ramping up spending on infrastructure, provides the necessary impetus to Housing for All program and continues the structural reforms initiated couple of years ago. The agenda of Transform, Energise & Clean India , shall improve the quality of governance & quality of life. The move from discretionary administration to policy based administration is visible in the budget proposals. The long-standing demand from real estate industry saw the light of the day, with affordable housing segment getting the Infrastructure status. This, along with increased allocations under NHB and PMAY-Gramin, will enable larger funding available to Home buyers & Developers, at a lower cost and also make the sector eligible for various incentives. Proposals like reduction of holding period for the purposes of long term capital gains tax from 3 years to 2 years, changing the base rate of indexation to 1.4.2001, shall provide the necessary respite to the property owners and also makingproperty an attractive investment option.
Mr. Amit Modi, Director, ABA Corp and Vice President CREDAI Western UP said, “The budget this year comes across as a well balanced approach and allocation, to start with the Rs 3.96 lakh crore on infrastructure is surely going to provide the much needed boost and job creation across the nation. Affordable Housing being declared ‘Infrastructure’ with bring in all its associated benefits, but at same time non-allotment of ‘industry’ status to real estate sector has come as a major disappointment since this has been an long standing demand by the real estate industry. We must appreciate the fact that the government is very serious on the mission of housing for all and in the same light we have seen some extremely aggressive approach towards affordable housing.
Mr.Navin Makhija, Managing Director, The Wadhwa Group, said, The Union Budget 2017-18 has struck the right chord keeping the long-term objectives in mind, and we believe that it will bring positive improvements and lead to a progressive growth in the Real Estate Sector, particularly affordable housing. The government has successfully managed to address the housing needs of millions by increasing the allocated amount to the affordable housing to Rs 23,000 Cr, and we look forward to capitalizing on this. This move will certainly boost the sector and make affordable housing a reality. Moreover, the decision by the Finance Minister to grant Infrastructure status to affordable housing will incentivize developers to construct more budget homes. With the new status, developers stand to receive tax benefits, subsidies and gain access to institutional funding and land specially released for affordable housing in prime locations. This move will result in the increased supply of homes in this category. Developers will also be able to secure faster clearances and funds for expansion plans and various projects. The infra status grant is a win-win situation, for both, buyers and developers. Affordable Housing now becomes a priority lending sector for banks resulting in easier and lower funding for home buyers. We expect that there will be faster project execution and stringent payment methods will increase transparency and bring much-needed credibility to the sector.”
Vishvaraj Infrastructure Ltd, Chairman and Managing Director Mr. Arun Lakhani said, “A big infrastructure push along with a substantial hike in provisions for the National Highways in the Union Budget for 2017-18 is a major takeaway and I congratulate the Finance Minister for the growth oriented approach. A 25% higher capital expenditure is sure to give the economy a big growth momentum. Priority to doubling of farm income and rural development makes it a balanced and inclusive budget. The focus on rural sector, large allocation of Rs 3.96 lakh crore for infrastructure development and social spending are welcome moves. New dispute resolution mechanism for quick dispute settlements and abolishing FIPB will improve the ease of investing in India along with the push on digital that will bring in efficiency and eradicate corruption. Addressing arsenic and fluoride menace in 28,000 villages gives the budget a human touch while reducing corporate tax rate by 25% for MSME and the move to curb cash donations for political funding are very good moves.”
M. Murali, Managing Director, Shriram Properties, said, I would say, this a well balanced, mixed and a progressive Budget coming in the wake of series of reforms which aimed at increased transparency, elimination of corruption and growth of digitalisation. The budget reflects the efforts of the Government to continue the reforms, yet, keeping in mind the welfare of the weaker section of the society. Focus on farmers and rural spending to encourage rural employment is most welcome, as India being basically an agrarian economy. The budget shows that we are on path of fiscal consolidation – fiscal prudence without compromising on public spending – with Fiscal deficit pegged at 3.2%. Infrastructure allocation of 396000 crs shows the concern of the Government for suffering infrastructure development in the country.
Mr. Tushad Dubash, Director, Duville Estates said, “The Union Budget presented by Finance Minister Arun Jaitley is a people’s budget where Affordable Housing has been the focus and will be given infra status. This bodes well for home seekers living in tier II and tier III cities, which is also in line with government’s vision of ‘Housing for All 2022’. Also, since affordable housing will now be given infra status, we can look at funding through insurance companies, which is a huge alternate sector and opens up a new avenue for real estate funding.”
Mr.Ravindra Pai, MD, Century Real Estate said,”Budget has been good for the realty sector in general. Key reforms being the infrastructure status for Affordable Housing and lowering the tenure for long term capital gains tax to 2 years. Also, the incidence of tax for Joint Developments has been clarified which had given rise to a lot of litigations in recent times with the department”
Mr. Kishore Bhatija, MD – Real Estate Development, K Raheja Corp said, “The Union Budget is comprehensive and addresses aspects that will help in the economy’s growth. We are glad that the direction laid down by the Finance Minister is towards the steady progress of the sector and country. The government has been working towards boosting the affordable housing segment and the announcements made today are in line with their objectives. The infrastructure status to affordable housing sector is a quantum step for the development of housing. In addition to this, the tax relief for developers on unsold inventories is a positive step resulting in lowering the burden on their shoulders. The changes in income tax slabs are a welcome move which will leave more liquidity in the hands of consumers boosting consumption. We were expecting clarity on the implementation of GST, and look forward to it being addressed shortly.
K. M. Pai, ED & CFO, Orient Bell Limited said, “From the economy perspective, the government has laid down broad framework for growth in the coming years. The Finance Minister’s budget has shown a 24% increase in expenditure which aligned with a perspective of ‘Transform, Energise and Clean India’. The intention to boost affordable housing with an infrastructure status is no doubt a positive move along with a tax deduction to the MSME sector. In addition, the resolutions and various initiatives to promote ‘Swachh Bharat Abhiyan’ and ‘Make in India’ will give a push to the tile industry.
Mr. VP Mahendru, CMD, EON Electrics, said“The Union Budget 2017-18 has come up with some interesting steps when it comes to the LED lighting industry. With rural development being one of the major focuses for 2017-18, there has been an increased allocation for the rural electrification which will in turn benefit the manufacturing and sale of the electrical appliances. I strongly feel that it is a bold move by the government to put a target of 100 percent electrification of villages by May 2018. The provision for 5 per cent tax exemption for companies whose turnover is less than INR 50cr is also commendable. The budget should have also targeted incentives and concessional interest rates for manufactures of LED Lighting products and projects keeping in mind that LED lighting can play a big role in enabling implementation of our government’s vision of 100 per cent rural electrification, and energy conservation. Establishment of SEZs (Special Economic Zones) for the LED lighting industry continues to be a critical priority for the industry”
Mr. Neeraj Gulati, MD, Assotech Realty Pvt Ltd. said, “The budget has provided the much awaited relief to the real estate sector. The sector has been looking at the Union budget as the game changer and it has introduced recommendations in the right direction. Policy changes throughout 2016 have been helpful in making real estate a more transparent as well as a stronger sector. Giving infrastructure status to affordable housing is a welcome move and is likely to result in increased participation from private players and improve capital inflow. Apart from that, National Housing Board (NHB) will also refinance individual loans worth 20000 crore in 17-18 offering capital relief to the lenders. With the lending rates already low, providing tax sops to smaller businesses will also augment the purchasing power and is a welcome step for the real estate sector. Reducing tax slab of individuals will also propel investment in the sector.”