While the main respite for the sector comes in the form of sops provided towards affordable projects, the industry was left wanting for more.
The country’s real estate sector had hopes riding high on this year’s budget. However, the measures taken by the finance minister have dampened their spirits. “There is very little in the budget this year for the real estate industry. Other than allowing for External Commercial Borrowing (ECB) in affordable housing, there is nothing that the budget has to offer for the sector,” said Ravindra Pai, MD, Century Real Estate.
While the main respite for the sector comes in the form of sops provided towards affordable projects, the industry was left wanting for more. By allowing ECB for low cost housing, availability of capital in the sector has eased. This will enable developers to raise funds from overseas at substantially lower interest rates, while also ensure timely completion of projects.
“However, the ECB nod just for low cost housing projects would not help the realty sector in a big way, as most of the existing projects would be outside the ambit of this announcement,” said Samir Jasuja, founder and CEO, PropEquity.
The finance minister’s move to exempt proceeds from the sale of residential property from capital gains tax, if invested in equity or equipment of an SME, were received with mixed reactions. Experts say although it gives the home buyer more reinvestment options, it could result it cash flowing out from real estate.
“Previously, the only route for exemption was purchase of another property or tax saving bonds. At the same time, this move could also result in a lowering of sales volumes on the secondary sale market,” said Anuj Puri, Chairman & Country Head, JLLS.
This year’s budget saw the personal income-tax exemption limit hiked marginally to Rs2 lakh, which developers feel will be of little help to buyers. Although, there is minor relief for buyers of homes costing up to Rs25 lakh, as the budget offers one per cent rebate for home loans up to Rs15 lakh, said Sushil Mantri, MD, Mantri Developers.
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