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Indian Real Estate News
Budget 2012: Real estate bets big on revival of fortunes
Source: Source: The Economic Times Feb 28, 2012
Having been hit the hardest by the economic downturn, realty majors are betting big on the Budget 2012 in a bid to revive the sector's fortunes. Experts say the sector needs government support as well as further stimulus to get out of the current slump.

As a first step, experts seek industry status for real estate, since the sector is a major driver for economic growth and generates countless jobs across its various verticals and associated industries. It will also help the sector raise debt from FIs at a much lower rate.

"In this budget, we expect the central government to grant the real estate sector the industry status as that would help the reeling sector raise debt from financial institutions at a much lower rate, which may partly improve the liquidity crunch crisis," says Samir Jasuja, founder and chief executive officer at PropEquity, a real estate data, analytics and intelligence firm.

Further, affordable and low-cost housing needs some incentices because it has now largely been abandoned for big-ticket developments. "Last year, a 1% interest rate subsidy was provided for loans towards affordable housing. The scope of this subsidy should be amplified and broadened to include a wider price band of budget housing to benefit home buyers, especially in lower income groups," says Anuj Puri, chairman & country head, Jones Lang LaSalle India, adding that more funds should be allocated to the Rajiv Awas Yojana (RAY) for urban housing targeted at the EWS and the LIG sections.

RK Jain, ED of Wave City says that affordable housing remains a segment where the government should definitely continue to provide developers with tax free status which was available earlier. "Rather than restricting it to unit sizes, the government should restrict the prices at which these units can be sold. Affordable housing developers need to be given incentives for creating such an infrastructure in the country. Hence, integrated affordable housing project development should be accorded infrastructure status for the purpose of RBI, SEBI, IRDA and CBDT," he says.

Moreover, stamp duty needs to be brought down further to 4-5% and made uniformly applicable across all states. Also, if stamp duty has already been paid on one transaction, there should be a mechanism to provide concession or a system of credit for any subsequent transactions. "This would avoid the resultant cascading effect of stamp duty, thereby reducing the cost of a property. The concept of credit for taxes paid on subsequent transactions already exists in other statutes such as CENVAT, VAT, MAT, etc," says Jain.

Further, the implementation of the revised DTC will have strong implications on SEZs. The industry requires clarity on the issues that may emerge, and how businesses would be promoted in Special Economic Zones. "Taking cues from the healthy growth of IT/ITES in Tier I cities and its effect on the growth of employment, the government should actively roll out an incentive-based IT policy (such as STPI) for Tier 2 and Tier 3 towns as well," says Puri.

So far as retail is concerned, relaxing FDI up to 51% into multi-brand retailing will help Indian retail benefit greatly from increased spending in back-end logistics infrastructure and growth of organised retail.

Tag: Real estate in india, indian properties, property in india
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