RICS applauds Budget 2017 for its affordable housing and infrastructure push

~~ Affordable housing to be given infrastructure status~~

~~ “Housing for all” gets uplift. Pradhan Mantri Awas Yojana allocation increased to Rs 23,000 crore ~~

~~ Massive infrastructure outlay pegged at over Rs 3,90,000 crore ~~

Sachin Sandhir, Global Managing Director – Emerging Business, RICS reacts to the budget:

New Delhi, February 03, 2017: The Budget 2017 broadly focussed on farmers, rural economy, infrastructure, affordable housing, youth, employment, digital economy and fiscal discipline. We believe that it is a fairly balanced Budget. The decision to invest in rural areas, infrastructure and poverty alleviation whilst maintaining fiscal consolidation is to be applauded.

Real estate:

This year’s Budget, has partially addressed one of our long standing demands of granting infrastructure status to the real estate sector by moving affordable housing to the infrastructure category. Needless to say this will incentivise real estate developers to focus on affordable housing which is where the maximum demand for homes lies. An industry status will help developers in accessing capital (equity and debt) at lower costs.

The government has also redefined “affordable housing”, which is important in a country like India with varied markets. We are glad the government has recognised this with its announcement that it will count carpet area of 30 and 60 sq meters for affordable housing instead of built up area. The limit of 30 sq meters applies only in municipal cities of four metropolitan cities and in the rest of the cities the limit is 60 sq meters, which will increase housing size by 30%. This will incentivize affordable housing for developers who were earlier deterred by the small size of homes.

Extension of tax free profit from three to five years for developers of affordable homes will give more time to builders to finish projects. We are quite happy to see affordable housing get the importance that it deserves.

The government’s announcement to build 1 crore houses for the poor by 2019 along with the allocation of Rs 23,000 crore for Pradhan Mantri Awas Yojana will bring the country closer to realising “Housing for All” mission by 2022.

There is more good news for the real estate sector. Real estate developers holding large amounts of real estate inventory will get some respite with the reduction of long term capital gains tax period to two years from the erstwhile three years.This will encourage investment in the real estate sector. Abolishing Foreign Investment Promotion Board will also make it easier for developers to get foreign funding through the automatic route.

Infrastructure and construction:

Infrastructure is a priority for this government. We have seen this reflected in this year’s Budget as well. The allocation for infrastructure is substantial at over Rs 3,90,000 crore. It has provided Rs 2.41 lakh crore for transport sector, including railways, road and shipping. Allocation for national highways has been increased to Rs 64,000 crore from Rs 57,676 crore. Higher investment in infrastructure is much needed and will spur economic growth.

Key measures that will impact real estate, construction & infrastructure as follows:

· Affordable housing to be given infrastructure status

Ø Moving affordable housing to infrastructure category will help developers raise both equity and debt funding at competitive rates

Ø Banks will look at affordable housing sector as a priority sector for lending

· Affordable housing redefined

Ø Instead of built up area of 30 and 60 square meters, carpet area of 30 and 60 square meters will be counted for affordable housing. This increases size of affordable housing by 30%. The limit of 30 square meters applies only in municipal cities of four metropolitan cities and in rest of the cities the limit is 60 square meters. More developers will look at building affordable houses because of the increased size

· Holding period for capital gains tax on sale of property (land and building) reduced to two yearsfrom three years

Ø It will bring more supply into the market and will help builders with large amounts of real estate inventory

· National Housing Bank to refinance individual loans worth Rs 20,000 crore in FY18

Ø Will provide relief to lenders

· Total infrastructure outlay pegged at over Rs 3,90,000 crore

Ø The government provides Rs 2.41 lakh crore for transport sector, including railways, road and shipping

Ø Allocation for national highways stepped up to Rs 64,000 crore from Rs 57,676 crore

Ø Outlay for railways fixed at Rs 1,31,000 crore with Rs 55,000 crore Budget support

Ø Rs 27,000 crore to be spend on Pradhan Mantri Gram Sadak Yojana; 1 crore houses to be completed by 2017-18 for houseless

Corporate Comm India(CCI Newswire)