How real estate experts reacted to the Budget 2017

Mixed reactions from industry leaders and experts are coming in on the Budget 2017. The Union Budget 2017 has provided major thrust to the affordable housing segment by granting it the infrastructure status. While this move is expected to encourage home buyers, it is also very encouraging for the real estate players to increase their participation in the category. Here are some of the reactions:

Getamber Anand, President, CREDAI National says, “We must appreciate the fact that the government is very serious about the mission of ‘Housing for All’ and in the same light we have seen some extremely positive announcements in the budget today .The real estate industry thanks the government for understanding the need to enable efficient supply of housing stock in the country. Affordable Housing has been declared ‘Infrastructure’ with all its associated benefits. Additional refinance of INR 20,000 crore from NHB and lower interest rates resulting from increased liquidity in the banking sector would add to the funds for the sector at lower costs to the ultimate consumer. The new Credit-Linked Subsidy Scheme for Middle Income Group with allocation of INR 1000 crore in the budget for 2017-18 announced. Here too, the government has shown wisdom in making a very big effort to enable the home buyer to access cheaper capital.” Mr. Anand adds, “Long term capital gains tax benefits on housing which could be availed after 3 years has been brought down to 2 years. The real estate sector as an asset class would gain as a store of value. This is extremely good news for real estate investors as they can book profits by paying a bare minimum income tax at the end of two years only on profits earned from the sale of property. Affordable housing projects can be completed over five years instead of three years earlier to avail of 80IB and this was very necessary, keeping in mind the time taken to get various permissions for real estate projects. All in all a very good budget for real estate and also for the entire nation considering that there are going to be very big spending’ in infrastructure as well. This, along with real estate will create many jobs and accelerate the manufacturing industry contributing to the ‘Make in India’ effort of the government.”

Sam Chopra, Founder and Chairman, RE/MAX India says, “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, Arun Jaitely, 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. Mr. Chopra adds, “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."

Abhishek Lodha, MD, Lodha Group says, “This is a budget which will enable the empowerment of middle-class India, improving lives of millions. Reduction in Income Tax rates both for earners up to Rs. 5 Lakhs and MSME's, will help in increasing their purchasing power and shall also impact demand for affordable housing positively. More importantly, the simplification of rules qualifying affordable housing, tax holiday under 80 IBA and infrastructure status to this segment are significant positive moves by the government. These initiatives will in turn boost the overall economy as there will be more participation by developers in this area. The reduction in home loan rates has already proven to be beneficial for housing demand and it will further increase with the help of the above measures.”

Anand Piramal, Executive Director, Piramal Group says, “Over the past few months, we witnessed the build up with demonetisation, RERA, and REITS, and today, the finance minister has made some key announcements for the real estate sector in this budget, giving the industry the desired push. It is heartening to see affordable housing get the Infrastructure status, which, along with the increased completion timelines will significantly pave the way for ‘housing for all’ to become reality by 2022. The one year tax exemption post completion of project definitely comes as a breather. Along with other major announcements - decreased lending rates and the proposed changes in capital gains will help with liquidity issues and those holding inventories. Mr. Piramal adds, “Another major discussion point during the budget, GST is expected to lower the tax burden, potentially resulting in lower construction costs, which will benefit end-users. Since the real estate sector shares a positive relation with more than 250 other sectors, the impact of GST on each sector will have an indirect bearing on real estate. It would have been gratifying to see the real estate sector receive an industry status in this budget. However, given the potential growth that these announcements are likely to augur, we feel optimistic about the impact on our industry.”

Ashish Shah, Chief Operating Officer, Radius Developers says, “Union Budget 2017 has brought a much needed relief to the nation and specifically to the real estate sector as a whole. Awarding of infrastructure status to affordable housing will certainly pave the way for growth of the real-estate industry. This additional support will help us move closer to the vision of ‘Housing for All’ at a much faster pace. The community is especially appreciative of the tax benefits that have been attached to the sector, specifically in the form of Capital Gains Tax benefit. The reduction of the time limit from 3 years to 2 is a boon for most investors’, the consolidation of Capital Gains tax on joint venture projects only after the completion of the project also encourages joint development ventures. The relief of 1 year provided for taxation on notional rent income is also a big boon for the sector across ongoing projects. All in all, the Union Budget has brought the right mix of elements from housing, finance and taxation to create an effective ecosystem that bodes well for the growth of the sector and the economy in the coming fiscal year.”

Jagdishchandra Toshniwal, MD, Wonder Cement Ltd. says, “Boost to infrastructure in the budget will fuel growth. This year’s budget clearly shows bold initiative being taken by the finance minister to lift up the sagging sentiments and this should pay given that the housing segment has been elevated to the stature of infrastructure with a record allocation of Rs. 3,96, 135 lakh crore. Mr. Toshniwal adds, “The cement industry is likely to see an increase in the demand in the wake of new policy announcements, including the FM’s announcement of 1 crore houses to poor by the year 2019, the aim of 133Km road per day under ‘Pradhan Mantri Gram Sadak Yojana’ construction of 500 rail stations and new metro policy. Overall, I believe this budget should help us in bringing back the growth which has had a temporary effect of demonetization.”

Shubham Jain, MD, JP Infra says, “Boost to Real Estate in the budget will fuel growth in The Housing Sector. This year’s budget clearly shows bold initiative being taken by the finance minister to lift up the sagging sentiments and this should pay given that the housing segment has been elevated to the stature of the Real estate with a record allocation of Rs. 3,96,135 crore. Mr. Jain adds, “The Real estate industry is likely to see an increase in the demand in the wake of new policy announcements, including the FM’s announcement of 1 crore houses to poor by the year 2019, the aim of 133km. road per day under ‘Pradhan Mantri Gram Sadak Yojana’ construction of 500 rail stations and new metro policy. Overall, I believe this budget should help us in bringing back the growth which has had the temporary effect of demonetization.