The Budget has triggered mixed reactions from the real estate industry. Measures like external commercial borrowing (ECB) for low-cost housing, steps to increase funding for roads, highways and infrastructure will surely add momentum to the growth of the sector. However, the measures announced will not provide benefit to developers in metros as concerns like high land prices and construction costs continue to remain a worry, according to developers.
Below are some of the post budget reactions from prominent developers.
Sanjay Chawla, CEO, Era Landmarks Ltd
We welcome the Union budget tabled by Hon’ble Finance Minister, Pranab Mukherjee. Interest subvention on loan up to Rs 15 lakh will benefit the customers buying houses up to Rs 25 lakh. The union budget also allows ECB for the low-cost housing, a much needed step by Government since the sector at large face credit crunch. Tier II and Tier III cities will witness the boost in real estate by current measures announced in General Budget, however the real estate developers operating in metros will not be benefitted in any way since the higher land cost in cities prevents developers from constructing low cost apartments.
Ravi Saund, COO, CHD Developers Ltd.
Infrastructure has taken a centre stage yet again in the reforms in the Union Budget 2012-2013. The steps to increase funding for roads, highways and other infrastructure will surely add more terrain on the Indian realty map taking tier II and tier III cities on new growth trajectory. The 1% tax rebate for home loans of up to Rs 15 lakh on homes costing up to Rs 25 lakh will prove beneficial for developers in the category of residential sector. Exempting proceeds from the sale of a residential property from Capital Gains tax if they are invested in equity or equipment of an SME definitely provides home owners with more reinvestment options. Companies engaged in infrastructure and affordable housing are in for some heightened activities in the near future as the government opens up funding options for such companies. Allowing ECB for affordable housing is no doubt an admirable move. This will ensure easy access to funds and better capital availability for developers of affordable housing. ECB will attract more developers to enter affordable housing.
Col R S Sodhi, MD, Alpha G:Corp
The Finance Minister has today again expressed his concern at the slowdown in the industrial sector in his Budget speech, which has been affecting the overall GDP for some time. The Real Estate Sector, which is among the highest employment generators and affects every segment of India’s population, has repeatedly been asking for Industry Status. If that is finally facilitated now, it will not only give a much-needed boost to better real estate development in the country and to the realization of the general population’s aspirations of owning property, but also sizably augment the collective industrial output of the nation.
Chaitnya Parekh, CMD, Soham World
The Budget 2012-13 is combined with positive and negatives at the best. It seems fair to state that the Indian real estate sector does not have much to cheer about. There is hope for major improvement but nothing much has been done. No consideration has been given to real estate in this year’s Budget. Raise of 10% to 12% service tax will increase the cost of production for developers, who are already reeling under high input costs, Later this increased burden will be passed on to end users. It is has increased the service tax and also the excise duty which would directly make an impact on various inputs of real estate which ultimately is likely to make an impact on the price of the properties.
Prodipta Sen, Executive Director & Retail Head, Alpha G:Corp
The Finance Minister in his Budget speech has again stated that efforts are on to build consensus on FDI in Retail. This is much needed, most importantly in order to check the ongoing fall of the rupee as also tackling farm to retail bottlenecks and inflation of food products. It would also positively affect the agriculture sector itself by way of better logistics, warehousing and the process of eliminating commissions to middle men. If political compulsions are acting as roadblocks to this logical step forward, the Government can start with FDI in multi-brand retail in a phased manner. Creating general public awareness of the many benefits of modernizing the Retail sector will also help in the smooth implementation of this much-needed growth measure.
Manoj Gaur, MD, Gaursons India Ltd
Thought Budget hardly had anything substantial for real estate. There are certain things that will help sentiments in the sector. The 1% interest subvention for home loans up to Rs 15 lakh has been kept intact and is a relief for the buyers of LIG segment. Developers who will come up with this segment will see a constant flow of buyers. Some of the areas that might benefit from this step are NH 58, NH 24, and certain sectors of Noida and Greater Noida. With the increase of service tax and likely increase in many products buyers might end up with less money at disposal, which is in turn harmful for the affordable housing segment.
Sanjay Rastogi, Director, Saviour Builders Pvt. Ltd.
Demand for affordable housing will remain intact and it might increase, as low-cost housing loans up to Rs 15 lakh that were eligible for 1% interest subsidy has been retained. This year people might see a smooth market for houses that will not exceed the cost of Rs 25 lakh. Though the sector was expecting some more good sops to be given to help boost this segment’s market but then we have to be content with whatever has been laid out in the budget.
Gaurav Gupta, Director, SG Estates
Disappointing Budget for the real estate industry. No demand for the housing industry met. None of the exemption on housing loan is increased under Section 24 and Section 80c. Service tax instead of being removed has been increased by 2% across all categories. Industry status not provided the real estate sector nor any mention on reintroduction of sec 80IB. Housing though contributing around 5 percent to GDP has not been given any significant impetus. Only silver lining is allowing ECB for affordable housing and exemption of capital gain tax on property if proceeds reinvested in SME.
Manoj Goyal, CMD, KDP Buildwell
The one percent sop on apartment up to 25 lakh that has been retained will benefit people buying homes in tier II and tier III cities, however in cities near tier I people will hardly benefit as there are very few options available in that price range. We were expecting that we will get something related to the sops that will benefit the buyers in tier I cities and periphery regions. Then we have to see real estate in the light of likely price rise in many products such as petrol and increased service tax, which might affect the people’s buying capacity.