Real Estate Sector awaits a turnaround from Finance Minister

By Mr. Shishir Baijal – Chairman & Managing Director, Knight Frank India

While the contagion of economic slowdown is evident on many industries now, the real estate sector has been facing a prolonged crisis. The twin challenges of weak housing demand and troubled supply side stress may need recurring and long-term government support until we are confidently back on a strong economic footing and experience positive consumer sentiment. While a series of measures, more specifically for the affordable housing segment, have been undertaken in the recent past; some well-defined and decisive initiatives could help revive the real estate sector.

It will be of immense support if the government announces measures in the following crucial areas:

• Enhancement of scope of affordable housing to cover houses up to INR 10 million. Such a move will enhance the spectrum of housing market that enjoys the benefits of fiscal, banking and other associated benefits.
• Income tax incentives have been an important consideration for homebuyers and hence, a dedicated income tax deduction of INR 150,000 per annum for principal repayment on housing loans will nudge indecisive homebuyers to consider a house purchase.
• While system-wide liquidity remains inadequate, banks and NBFCs have steered clear from lending to real estate. This is a very critical area and measures to restore the confidence of these important financiers should be re-established by some form of government intervention.
• In the wake of a large number of stalled projects on account of liquidity crunch, consumer sentiments have further dampened. The government can consider a dedicated stressed assets fund that would underwrite stalled projects and ensure eventual completion of these. This will help lift sentiments of exiting as well as prospective consumers by allaying fears around non-delivery of projects.

Corporate Comm India (CCI Newswire)