Developers React To Union Budget 2016-17
Mr. Kishor Pate, CMD - Amit Enterprises
Housing Ltd.
This Budget could have done a lot more for the real
estate sector. However, there were some positives. The fact that the annual
housing rent reduction limit has been increased from Rs.24,000 to Rs.60,000
could lead to an almost immediate uplift for rental housing across the major cities.
This can also potentially encourage the sentiment for home ownership in the
long run.
Also, first-time home buyers have been given the benefit
of an additional deduction of Rs. 50000 on home loan interest for loans not
exceeding Rs. 35 lakh, where the value of the house is no more than Rs. 50
lakh. This will result in improved home buying sentiment in smaller cities with
lower housing costs, such as Pune. An improvement in sentiment will also be
seen in the cheaper far suburbs of the metros.
However, this deduction is not sufficient to increase
the sentiment much for first-time home buyers in the central parts of the
metros like Mumbai, where housing prices are exceedingly high and such an
exemption makes little to no difference in the burden on home buyers.
The fact that the market indices took a nosedive
immediately after the budget announcement more or less reflects the way
sentiment in the housing sector has gone. However, if the RBI announces a cut
in interest rates on the heels of the reduced fiscal deficit announced by the
Finance Minister, it could be a day saver.
Mr. Arvind Jain, Managing Director - Pride
Group:
Budget 2016-17 was far below expectations. Some leeway
has been given to first-time home loan borrowers, but the relief will not boost
demand in the metros.
That said, service tax has been exempted for developers
who are focused on constructing affordable housing with unit sizes not
exceeding 30 square meters in the larger cities and 60 square meters in the
smaller cities.
This is a significant plus, and in line with the
incumbent Government's intention to boost affordable housing.
Allocation to MNREGA and irrigation activities have been
stepped up, so it is logical to expect rural income to rise from this year
onward.
This can positively affect rural consumption story and
boost the growth of smaller towns.
Encouragingly, Rs. 1,500 crore has been allocated for
the moderation of land records in the Digital India campaign, which will
definitely have a positive impact on transparency in the real estate sector.
On the retail front, permitting seven days of operation
for small and medium-sized shops in the unorganized retail segment will allow
them to compete more effectively with malls. This will boost the demand for
retail stores on high streets significantly.
The plans to revive in operational civil airports in
partnership with their States with a rather small allocation of Rs. 100-150
crore per airport can have positive implications for the real estate
development in these cities. It will boost infrastructure, and airports are
also know influencers of demand for all categories for real estate.
All in all, this budget was exceedingly cautious and not
enough to infuse any significant doses of vibrancy into the real estate sector.
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