This is one of the path-breaking budgets with far-reaching consequences, especially for the real estate sector.The budget has a lot for this sector and this comes at a time when the beleaguered sector has been looking for measures to boost its sentiments. The real estate sector, which has been hit the hardest by the demonetisation move, will be one of the major beneficiaries of this budget.
Prudence in fiscal discipline is welcome and will encourage the Reserve Bank of India to look at a lower interest rate regime that will provide much needed fillip to this stressed sector. Increased focus on infrastructure, especially construction of new roads, improvement of the existing ones and coastal connectivity, will go a long way to benefit real estate business.
Increase in allocation of funds under PMAY (Pradhan Mantri Awas Yojana) shows the government’s focus on 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 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 offer 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 long-term capital gain tax from three years to two years is welcome. It 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. The decision will benefit real estate developers and in turn, should also benefit the end consumers.
Satish B N
Executive Director, South India, Knight Frank India Pvt Ltd