The focus of the new government on growth-oriented policies for India's real estate sector is appreciable and the maiden Budget of the NDA government is widely expected to put this intent to action on the ground. A K TIWARY writes
The Union Budget 2014-15 has ensured that issues like lack of institutional funding, complex tax framework, lengthy approval processes, and slow pace of infrastructural development will be looked at properly , which will boost the real estate development in the country .
A number of initiatives like the additional tax exemption on housing loan interest for self-occupied homes, raised to Rs 2 lakh from the present rate of Rs 1.5 lakh, are commendable and this will make it an interesting proposition for buyers, investors, and developers.
The metro cities will benefit with a decrease in built-up area for FDI in real estate.
The initiative to allocate funds for aiding the development of 100 new smart cities is laudable. This will have a positive impact on the real estate sector, as developers will be able to offer new projects in the new cities which would boost the social and economic infrastructure in the region and create new jobs.
However, for the smoother execution of the target, the existing land act should be amended to make the acquisition simple, easy, and faster.
Shishir Baijal, the CMD of Knight Frank India, says: "It's a pathbreaking Budget with significant focus on real estate and infrastructure. The various incentives that have been provided will enhance the growth prospects of the real estate sector even further. To begin with, the pass-through status for REITs will attract significant investments into the sector, which is the need of the hour. Other monetary incentives like allocation of Rs 4000 crore towards affordable housing backs the present government's vision of providing 'housing to all by 2022'. Overall, this Budget will ensure that sentiments remain upbeat for the next few years."
Rajeev Talwar, group executive director of DLF Ltd, says: "The finance minister must be complimented for presenting a very good Budget that offers directional clarity and will surely kick-start the economy . The new government has lived up to its promise to lift the economy . The Budget has offered a number of tax incentives that will empower potential homebuyers. Incentives like a raise in rebate on interest paid on home loans to Rs 2 lakh, increase in limit under Section 80C to Rs 1.5 lakh and a raise in personal income tax limit to Rs 2.5 lakh will surely spur people into invest in the housing sector."
"The Budget has also ended the ambiguity on the tax status of REITs and introduction of this instrument in the Indian market will reduce cost of business for both Indians and foreign investors. It will also attract global funds to invest in the sector. REITs will again benefit individuals, as they can get a share in income in a rental asset even if they can't buy into a project. The fund allocation of over Rs 7,000 crore towards building smart cities is a big step towards urbanization and in line with PM Modi's vision.
DLF will surely be a contributor and a partner in this mega initiative," Talwar said.
Brotin Banerjee, the MD and CEO of Tata Housing, says: "Tata Housing Development Company (THDC) welcomes the announcements in Union Budget 2014-15. Focusing on fiscal prudence, this Budget has introduced proposals that may help kick-start investments in the real estate sector. The government's decision to provide the necessary incentives to REITs and giving a tax pass-through status is a positive step, as it will reduce the pressure on the banking system, bring in fresh equity, and attract long-term finance from foreign as well as domestic sources."
"The government's vision to provide 'housing for all by 2022' through new measures announced in Union Budget like allocation of funds for National Housing Bank, setting up a mission on low-cost affordable housing, inclusion of slum development in the list of CSR activities, will help in promoting development of affordable housing in the coun try. Extending additional tax incentives by increasing the interest deduction to Rs 2 lakh will help more people, especially the young working class population, in buying houses and this could trigger renewed interest in the real estate market," Banerjee said.
Ajay Aggarwal, the MD of Microtek Infrastructure Pvt Ltd, says: "At a first glance, the Budget looks like a fairly decent beginning for the new government. The finance minister's emphasis on 'housing for all' was explicitly visible in the Budget speech. Allocation for urban and rural housing, Rs 4,000 crore for low-cost housing, along with Rs 7,060 crore for smart cities reflects the futuristic thinking of the government's leadership, which would benefit the real estate sector in the long run. Supplementing them, tax rebates to REITs, metro trains in each city with more than 20 lakh populations, super-speciality healthcare institutes like AIIMS in each state, and schemes for development of new airports in smaller cities are the right ingredients to take the real estate sector to the next level."