'Budget augurs well for realty'
Union Budget augurs well for real estate sector by addressing major concerns of the industry including affordable housing, Real Estate Investment Trusts (REITs) and other infrastructure plans. The housing sector will get a push from both supply and demand side according to the experts from the real estate industry. “The first-time home buyers will be encouraged since they get an additional deduction of Rs 50,000 on interest for loans up to Rs 35 lakh and a house value of Rs 50 lakh.
It will reduce the cost of loan which will boost the demand for housing in the budget to mid segment. On the supply side, 100 per cent exemption of profit for developers and exemption from service tax for construction of houses less than 650 sq ft will encourage supply in the affordable housing segment,” said Shishir Baijal, CMD, Knight Frank India.
“Infrastructure and rural development focus in the budget has been encouraging and is expected to give the much needed fillip to the real estate sector. With massive push in infrastructure (huge outlay for roads and railways and developing smaller airports to improve regional connectivity) and incentives to MSME, Make-in-India will get a further boost that will benefit the real estate sector in the long run,” he said.
“Dividend Distribution Tax (DDT) got exempted, clearing a final hurdle on the way of the successful listing of REITs in India. We expect a few listings to happen in the current year itself, either by financial institutions or developers. Currently, around 229 million sq ft of office space can be seen as REIT-compliant. If we assume that even 50 per cent of these get listed, we are looking at a total REITs listing worth $18.5 mn sq ft,” said Anuj Puri, chairman and country head, JLL India.
“Budget has outlined revival plans for non-functional airports in partnership with State governments, with a vision to spend around Rs 100-150 crore on each airport to make them functional again. This will a boost to infrastructure in many tier-II and tier-III cities, and is without a doubt positive for their real estate markets. A select few projects that are commercially viable with good ridership could pick up pace in the near term,” he expected.
Sanjay Dutt, MD, Cushman and Wakefield India said, “The caveat of housing space limits (30 sq m in 4 metro cities and 60 sq m in other tier II cities) should have been equitable, and the three-year window for project completion could have been for a longer duration as approvals and construction typically take a long time. The incentives for developers would help them focus on construction of affordable housing projects across metros and non-metros cities.”
“Budget also announced increase in deduction to Rs 60,000 from Rs 24,000 under section 80 GG for those who live in rented accommodation. All these exemptions and incentives would go a long way in increasing the affordability of consumers and incentivising developers, in line with the government’s Housing for All by 2022 initiative,” he added.
Expressing similar views, Anshuman Magazine, CMD of CBRE South Asia said, “Corporate real estate will additionally benefit from the announcement of the sunset date for exemption of fiscal incentives to Special Economic Zones (SEZs) being pushed forward to March 2020. It is hoped that simultaneous implementation of all these initiatives will be followed through, while the long term funding issues for the real estate and construction sector will also be suitably addressed.”