CHENNAI: Real estate developers broke into a smile after Finance Minister Arun Jaitley presented the General Budget, since several of his measures are likely to lift the flagging sales the sector has been witnessing in the past few months, especially in the south. The focus on affordable housing and real estate investment trusts have met with approval.
According to R Kumar, managing director of Navin’s, a major real estate developer in the south, several measures announced in the Budget could result in putting sales figures back on the upward curve. “Several of the proposals in the Budget are going to act as triggers to increase positive consumer sentiment and hence increase sales. The incentives promised for real estate investment trusts are likely to result in at least the commercial real estate development sector doing better in the coming months,” he said.
REITs have also been given CSR status for slum development and a pass-through status, which has also been met with widespread approval among developers who say that it will further help strengthen the sector. Chitti Babu, Chairman of Akshaya Homes, pointed out that with this would provide a major impetus to the real estate industry.
While Hariprakash Pandey, vice-president - Finance & Investor Relations, Housing Development and Infrastructure Limited said, “The plan to incentivize development of low cost housing, raising of income tax exemption limit, deduction of interest on self occupied properties, allocation of `8,000 crore for National Housing Bank programme for development of rural houses, will create a favourable environment that will boost affordable housing in the country.”
The budget also announced several other measures that would have both a direct and an indirect impact on the sector. The proposal to increase the deduction limit on housing finance interest on self occupied house property from `1,50,000 to `2,00,000 is likely to have a direct impact on the number of people willing to embark on home buying. “The increase in the deduction limit is going to increase in putting more people in a position to buy homes. Coupled with the raising of the ceiling on income tax exemption by `50,000, this is also going to give more purchasing power,” Kumar said.
The allocation of `4,00 crore for affordable housing in the Union budget has also met with widespread approval, with several developers saying that the measure was long ignored. A highly placed CREDAI member pointed out that while they also expected a rollback on the service tax, the budget was a huge improvement on the previous two years, which gave no attention whatsoever to the real estate segment.