Indian property sector banks on budget sops
Most sectors hope that the government will unleash a plethora of goodies.
With 2020-21 Indian budget just round the corner, developers are anxiously waiting for measures to be announced to not only boost the economy but to see some relief for the real estate sector.
Anuj Puri, chairman, Anarock Property Consultants, said real estate particularly hopes for the quick implementation of Alternative Investment Funds (AIF) to rescue stressed residential projects.
"The pressure on the finance minister is as high as it could possibly go, considering the state of the economy," he said.
Most sectors hope that the government will unleash a plethora of goodies - from tax cuts and other consumption boosters to increasing credit off-take from banks to ease liquidity. The real estate sector does contribute over 8 per cent to the Indian economy - and has justifiable expectations from Union Budget 2020-21.
"The recent Iran-US stand-off may throw a spanner in the works this year. Rising oil prices limit scope to decrease interest rates for home loans, and inflation is likely to head north. In short, some of the measures that the government could provide - such as hefty cuts in personal taxes - may not materialise," added Puri.
Srinivasan Gopalan, chief executive officer, Ozone Group, said the long pending and much needed industry status for real estate is expected from this budget 2020, which will make the land acquisition and fund raising process simpler.
"With stagnant sales across the sectors, speedy implementation of the government backed AIF will definitely revive stalled projects. Moreover, one time re-structuring or rollover of the existing loans for all projects should be permitted as suggested to the Reserve Bank of India (RBI) by Finance Minister and Prime Minister's Office," he said.
The developers and buyers hope that the 2020-21 Union Budget will introduce reforms like tax sops and correction in prices which will benefit and stabilise the industry. The industry anticipates that the budget should address the long-term expectations for the industry in terms of status, single window clearance and reforms in the Goods and Services Tax (GST).
Since, rental housing and co-living are in demand among the home buyers, hoping that various reform measures are proposed to promote the same, says Anuj Khetan, director, Vijay Khetan Group.
"The real estate market in India is also expected to address the liquidity crisis faced by the government potentially which affected various segments, However, taking all these into considerations, we expect 2020 to be more stable and propel the real estate growth," Khetan said.
The industry aspires to see a win-win situation for the developers and homebuyers. With GST, stamp duty, income tax, and capital gains tax already a burden on homebuyers; an income tax rebate could be provided for new home buyers.
"The real estate sector has been going through a cash crunch and the current Non-Banking Financial Company (NBFC) crisis has worsened it. Therefore the industry hopes, the government will help the sector in raising funds from other sources by relaxing norms. Including ITC benefit in GST for under-construction homes will be a great incentive to reduce property prices and make under-construction homes attractive again. Timely completion of projects has always been a concern, and a single-window clearance will help to swiftly execute projects making it a win-win situation for developers and home buyers," said Praveen Shetty, vice-president for marketing at Runwal Group.
"We hope for a budget that is conducive and propels the growth of the economy, boosts the real estate sector, benefits the homebuyers and provides relief to the developer community," he said.
Endorsing a similar view, Tanuj Shori, founder and CEO, Square Yards, said making India a $5 trillion economy in the next five years is the primary object on the government of India's radar today.
"To achieve that, ways to increase consumer spending and investing heavily on the country's infrastructure should be the core agenda, along with enabling a supportive environment for startups. The affordable housing segment, though given infrastructure status is still struggling to raise funds from banks and NBFCs at viable interest rates, resulting in poor returns for private developers. This is a critical segment and this issue must be addressed."
The real estate sector is very optimistic about the upcoming budget may include provisions to provide immediate relief to all the industry stakeholders. Ketan Musale, director, Dotom Realty, suggests that Indian real estate needs to be made more attractive to foreign investors and the budget is an ideal platform to announce further incentives that will attract more foreign investments into Indian real estate.
"The expectation of real estate contributing 13-14 per cent to the nation's GDP by 2025 can materialise if the requisite support to this sector is extended starting this budget. Incentivising customers for purchase of real estate with a 50 per cent reversal of paid GST could go a long way in helping boost demand alongside the much-anticipated change in tax slabs. A slight change in the second-highest tax slab of 20 per cent could impact as much as 27 per cent or 1.47 million of individual taxpayers," said Kaushal Agarwal, chairman, The Guardians Real Estate Advisory. - firstname.lastname@example.org
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