This has been one of the path-breaking budgets with far reaching changes especially for the real estate sector. It is positive that the real estate sector has come in the central spectrum of the Union Budget. This has come at a time when the beleaguered sector has been looking at measures to boost the sentiments. The real estate sector which was the hardest hit by demonetisation move will be one of the major beneficiaries of this budget.
Prudence in fiscal discipline is welcome and will encourage RBI to look at a lower interest rate regime that will provide the much needed fillip to this stressed sector.
Increased focus on infrastructure especially construction of new roads, improvement of existing roads and coastal connectivity will go a long way to benefit the real estate sector.
Increase in allocation of funds under Pradhan Mantri Awas Yojana (PMAY) shows the focus of government towards making Housing For All a reality by 2020. Providing infrastructure status to Affordable Housing, a long standing demand of the real estate industry, will not only bring the cost of financing down but will also open up additional avenues for developers to raise funds. We believe that the shift in eligibility criteria for Affordable Housing from built up area to carpet area will increase the unit size by 20-30 per cent and will offer home buyers the benefit of owning larger units. This will also encourage leading real estate players to enter the Affordable Housing segment.
The move to reduce the tenure of the Long Term Capital Gain tax from three years to two years is extremely welcome and will help the marketability of real estate as an asset class.
Changes in the taxation aspect of Joint Development Agreement (JDA) will greatly encourage more land owners to partner with developers that will benefit the real estate developers and in turn likely to benefit the end consumers.
- Shishir Baijal, Chairman & Managing Director, Knight Frank India