Mumbai February 19, 2014:- Despite the real estate industry’s low expectations from the interim budget, there were no surprises in it for the sector. The industry, however, welcomed government support to the affordable housing sector and fund allocations to the rural as well as urban housing funds.
However, areas of concern for the realty community were a lack of clarity over the Land Acquisition Bill, the interest rate regime and lack of a clear roadmap to reverse the dipping sales and increasing liquidity crunch faced by the sector.
‘Deeper issues’
Anuj Puri, Chairman and Country Head, Jones Lang Lasalle, India said: “Unlike issues pertaining to consumer durables or the automobile industry, the issues pertaining to real estate are deeper. Resolving these issues involves fiscal adjustments to key real estate-linked policies and may even require constitutional amendments. It was, therefore, self-evident that the current VOA budget would not hold anything of real consequence in store for the real estate sector.”
“However, the support extended to the residential sector in the affordable segment is positive, and will hopefully help revive construction activity beyond the leading 3-4 metropolitan cities,” he added.
Tax incentives and greater demand-supply mismatch in affordable housing is expected to attract more developers to enter into the budget homes segment, believed Puri. On interest rate policy, industry players welcomed the cut in interest rates by directing RBI to balance inflation and growth concerns going forward but remained cautious of the central bank’s response in the next monetary policy given the recent action by RBI of hiking rates.
Land acquisition
“Land Acquisition Bill continues to remain an area of concern because of issues such as inflated land cost and the complexity involved in resettlement of original inhabitants. The sector was hoping that the government would provide some respite from the stringent measures of adoption,” said Puri.
According to Anshuman Magazine, Chairman and Managing Director, CBRE South Asia, a key push given to the infrastructure and housing sectors in the interim budget included ₹6,000 crore provided to the Rural Housing Fund, while ₹2,000 crore allocated to the Urban Housing Fund is yet to be launched by the National Housing Bank.
“Having presented the roadmap ahead, the crux now lies on implementation. Let us hope that the next government will work towards implementing these key policies,” he added.
‘A disappointment’
Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield, said the interim budget was a disappointment for the real estate sector as it did not include any measures to spur depressed housing sales and ease the financial woes and liquidity crunch of the long suffering sector.
“After the elections, we expect that the new government will overhaul taxation guidelines that will directly benefit home buyers and implement specific policies that would lead to employment generation and demand creation to boost the real estate sector on the whole,” he added.
