Magicbricks Impact Study - Budget 2014
What are Smart Cities? Magicbricks finds out
from the experts
Modi’s dream project
is building 100 Smart Cities across the country and the 2014 Budget has laid
out a roadmap by providing the fund of Rs 7,060 crore. ?But what are these
smart cities? Are they good investment options? Magicbricks asks the experts.
In his
Budget-day speech, the Finance Minister Arun Jaitley said that the Smart Cities
will be developed as satellite towns of larger cities and by modernizing the
existing mid-sized cities.
Apart from the
allocation of Rs. 7,060 crore Magicbricks reveals the other key steps aimed at
encouraging the development of Smart Cities and their impact on the Property
Market. These include, requirement of built-up area being reduced from 50,000
sq. m to 20,000 sq. m and capital conditions for FDI that have been brought
down from USD10 million to USD 5 million, with just a three year
post-completion lock-in period.
What are Smart Cities,,?
So will these Smart
Cities be planned on the same lines as upcoming cities, such as Lavasa,
Auroville and Pallava?” asked Magicbricks. “Cities like Lavasa are not
considered home for lower or middle-class income groups but are targeted
towards the upper middle class. The government is keen on focusing housing for
all and that can be possible only through affordable housing.” replied Dr. PR
Swarup, director general, Construction Industry Development Council (CIDC), at
the `Magicbricks Budget Discussion on Real Estate & Urban Infrastructure’
organized by Magicbricks recently.
But are these efforts
enough to convert this vision into a reality? Is this enough? Magicbricks asked
real estate experts to find out.
“The seed has been
sown, the vision is bang-on, the intent is there and it is a welcome move. But
the actual question is how and when will this be implemented,” added Dr.
Swarup.
Speaking to
Magicbricks he added “The allocated money is just like `token money’. The
amount translates into a meager Rs. 70 crore per city, which is not enough to
develop one whole city. The blueprint of this dream is still in the pipeline.
Identification, time-lining and definition of the concept still remain to be
executed. There is also a question mark on how they will provide 24×7 water and
electricity, transit, jobs, etc.”
Why Smart Cities?
Magicbricks data
clearly shows that development in the country is city-centric and is thus,
making a large number of people migrate to the fast-developing cities. The
Finance Minister substantiated this fact when he stated, “The pace of migration
from the rural areas to the cities is increasing. A neo-middle class is
emerging which has the aspiration of better living standards. Unless new cities
are developed to accommodate the burgeoning number of people, the existing
cities would soon become unlivable.”
Impact of Smart Cities
on real estate...
Speaking to
Magicbricks, experts were upbeat about the impact this decision would have on
real estate and on infrastructure across the country. Mr. Navin Raheja, chairman,
National Real Estate Development Council (Naredco), said, “With the Smart
Cities project, there will be a surplus of land issued for urban development
and housing. This will ensure that with more supply, the prices of property are
reined in.”
Raheja also pointed
out to Magicbricks that because of lack of regular planning and small-term
perspectives, land utilization is sub-optimal. By freeing up land for planned
urban development and long 50-year term plans, cities can continually
regenerate themselves and adapt to changing demographics.
Mr.V. Suresh, Principal Executive Officer, HIRCO, added
to the Magicbricks discussion, that Smart Cities should boast of good
infrastructure, well-maintained drainage and sewerage facilities, good
connectivity and more.
What else does the
real estate sector gain from the Budget?
Discussing the impact
of the Budget 2014 on the Indian real estate market, the Magicbricks discussion
panelistsunanimously agreed that
the Budget was a positive move towards reviving consumer sentiments in the real
estate sector.Vaibhav Sankla, director, H&R Block India Private Limited said that the additional incentive on
home loan and the tax rebate is comforting to the business community and the
tax payers. “The housing loan rebate raised from Rs 1.5 lakh to Rs 2 lakh may
also boost youngsters to buy homes,” he said.
Speaking to Magicbricks,
Partner and Head Real Estate and Construction, KPMG India, Neeraj Bansal
said, “Accepting the modified version of the Real Estate Investment Trusts
(REITs) was also felt to be another positive move.“It will help in easing
liquidity requirement for developers, paving the way to raise easy capital and
also provide access to retail investors to benefit from regular income and
appreciation benefits from the real estate.”
“Overall the
government’s commitment to boost the real estate sector seems to be well
intentioned. The idea to create Smart Cities was welcomed, but it is still to
be seen how this vision of PM Narendra Modi will get off the ground.”
summarized Jayashree Kurup, Head of Magicbricks Research and Content.
For more information
please visit - http://content.magicbricks.com/tag/union-budget-2014
Aseem Seth
Head of Corporate
Communications
CEO Corporate Office
Times Business Solutions
Limited
+91 120 663 6338
+91 99102 73367
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