The
real estate industry which has been looking forward for rapid development and
growth in the real estate sector and infrastructure space since the NDA
government has taken over at the centre, gets a place of importance in this
budget. The Confederation of Real Estate Developers’ Associations of India
(CREDAI), the apex body for private real estate developers in India is
confident that with liberal norms for FDI and tax incentives for the REITs ,
besides the focus on low cost housing, infrastructure development and the
budget allocation of Rs. 7060 Crores for development or up gradation of 100
smart cities along with the promise to deliver ‘pucca’ housing for all by 2022
will bring “Acche Din” for the real estate sector.
Speaking about the budget Mr. C Shekar
Reddy, National President, CREDAI said, “The budget unfolds some
important initiatives for the real estate sector. Our demand for easing the
norms for the FDI in real estate sector has been accepted by the FM in the
budget and to encourage development of Smart Cities, which will also provide
habitation for the neo-middle class, requirement of the built up area for FDI
is being reduced from 50,000 square metres to 20,000 square meters and capital
conditions reduced from USD 10 million to USD 5 million respectively with a
three year post completion lock in. If these projects commit at least 30% of
the total project cost to affordable housing, they will be exempted from
minimum built up area and capitalisation requirements, with the condition of 3
years lock in.
 |
| Mr. C Shekar Reddy, National President, CREDAI |
This will make more projects eligible for FDI funding and
specially promote affordable housing segment. Apart from this the Government is
also looking keen to make REITs more attractive and has proposed making it a
vital tool to attract and encourage investments in the sector by providing tax
incentives for REITs have been proposed as requested by us. This will encourage
retail investors participation in commercial real estate and provide a source
of funding to the developers helping improve liquidity and encourage them to
undertake more projects. However our long standing demand for an infrastructure
status to the housing segment has not been granted, which is disappointing as
it limits the access for bank and institutional funding to the real estate
sector particularly the affordable housing"
Mr. Reddy further added that
“Finance Minister has proposed to allocate Rs. 4000 Crore via National Housing
Bank to boost low cost affordable housing for urban poor and Rs. 8000 Cr
allocation for development of rural housing. We are waiting for more clarity on
how the funds would be used. If this allocation is for the interest subvention
scheme as proposed in the BJP manifesto it will give a boost to affordable
housing by increasing the eligibility of the people and increase the demand for
such housing giving a boost to affordable housing.
Morover the allocation of
7060 Cr is to develop or upgrade the existing 100 smart cities. Proposals such
as allocation of Rs. 50000 cr for urban infra projects, development of Metro
projects in cities with population of 20 lakh and above, setting up 7 smart
industrial cities and steps for reviving the SEZs will trigger job creation and
stimulate the demand for housing. Proposal for investment in national highways
and state highways along with development of airports in tier I & II cities
will further boost the infrastructure leading to industrial development and
have a ripple effect on boosting the real estate sector.”
Adding to this Mr. Reddy said, “Though
our expectations related to the personal taxation and exemption on interest
rates have not been fulfilled, however the little change of raising the tax
exemption limit by Rs. 50,000 and raising limits on exemption under section 80
C by 50,000 will add to the investible surplus in the hands of the common man
backed by the increase in exemption on interest on Housing loans for self
occupied houses to Rs 2 lakh from 1.5 lakhs under section 24 (b) would help
improve the sentiment and stimulate the demand for housing.”
Overall Mr. C Shekar Reddy National
President CREDAI commented that , “ The budget has a vision towards
shaping the future of the country and spreading the development across the
board. The budget has given the real estate sector the due importance, although
our long standing demand for infrastructure status for the real estate sector
and an exemption of service for real estate projects is still awaiting the
government nod. Some of our other demands have been heeded to and been
incorporated in the budget.
With the pro real estate stance taken in this
budget and our meetings with the cabinet ministers before the budget we are
hopeful that we can work closely with the government and get the desired
response to other non fiscal requirements like streamlining of online approval
process by eliminating all the NOC’s etc. However we at CREDAI are confident
that the “Acche din” for real estate sector are definitely on the cards as the
Government in the budget has given stimulus to the industry and infrastructure
sector which will have a ripple effect on the Real Estate industry.”
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