Realty players expectations on forthcoming Union Budget
By Accommodation Times Bureau
Abhay Kumar, Managing Director, Reddvise
“Real Estate sector across India had a below average performance last year. Some pockets in cities have done well, but overall picture has been gloomy in India. Only last few months were good as Rupee depreciated a lot and overseas Indian invested lot of money in Real Estate. One of the primary reasons why 2011-2012 was not so good year for Real Estate was because of the high interest regime. Government did multiple rate hikes across major financial controlling rates/ratios to curb inflation which in turn subdued the investment climate and real estate industry was definitely a big loser. It also increased the borrowing rates and hence the home loans got really costly and retail investors postponed their buying decisions. And generally what happened was that developers of all sizes were stuck in cash flow problems because of the uncertain demand and high cost of debt capital. Real estate industry both from the supply as well demand side would see some strong measures to boost investment by lowering the interest rate regimes and increased liquidity in the banking sector. Core expectations will be
1. Lower interest regime by reducing PLR and CRR over the next 12 months
2. Relaxation of FDI norms at least reducing the amount of minimum capitalization requirement
3. Some more incentives for SEZs, which creates large employment opportunities and subsequent real estate demand
4. A strong national level real estate regulatory authority (In line of IRDA)
Response by Mukesh Bhagtani, CEO, Jaycee Homes Ltd.
We hope that the Union Budget for 2012 gives the real estate tangible benefits such as more sops for affordable housing, special economic zones should be implemented, focus on ultra low cost housing, interest rate cuts on housing loans under 25 lacs, increase in caps on tax deduction available on housing loans etc. Include real estate sector under the ambit of single tax regime and create a nationwide unified taxation system, which currently differs between states. Create ‘Real Estate Regulatory Authority (RERA)’ for bringing more transparency. Enact the Model Real Estate (Regulations of Development) Act.
Relax norms for repatriation of FDI in real estate. The market environment needs to be rendered more investment-friendly. Increase infrastructure spending to attract FDI.
Chaitanya Parekh, CMD, Soham World, Mumbai
There are a few areas that need to be looked at. Firstly, I think financing options for the real estate segment, which have become fairly accessible in recent years should be further liberalized. There is also a need for stricter regulations that can effectively curb illegal constructions. Thirdly, more transparency is required when it comes to mentioning the exact sale area during any property transaction. I think the government should ensure that it’s the carpet area that is the deciding factor when calculating the sale able area. This will not only bring about more transparency in realty deals but customers will also benefit if this ambiguity is removed. Lastly, FDI should be allowed in smaller properties also. This will not only help the economy but also boost demand by making real estate even more affordable.
Mr. David Walker, Executive Director, SARE Homes
We believe that the real estate sector plays an integral part in the India growth story, therefore, the Government should take adequate steps to encourage development for this sector. The Government has already taken several measures towards the development of infrastructure sector, however, one of the most important issues plaguing the industry is the slow pace of approvals and too many overlapping approvals which result in lack of clarity and delay in project execution. We expect a big push to assist the realty sector in the forthcoming Union Budget. We are hoping for some guidelines/directives for the introduction of single-window clearance system. We look forward to effective measures that address these issues on a long term basis for smooth execution and timely delivery of projects.
Mr. Shailesh Puranik, Managing Director, Puranik Builders Pvt. Ltd.
The real estate sector in India has witnessed rapid growth in the recent past. However, the sector has been still awaiting the ‘industry status’ at par with the Infrastructure sector. I think, it is the time now the government should honour the sector with the industry status so that raising funds would not be a constraint to the developers across the country.
We expect the Union Budget 2012-13 to be a very important opportunity for the government to provide the necessary boost to the real estate sector which has lacked sheen since years and to be recognized as an “industry” soon.
To benefit the homebuyers, it is necessary that the last year’s interest rate subsidy of 1% to be continued so that it eventually helps the homebuyers. The interest rate subsidy should be increased to loans up to Rs. 50 lakhs and income tax exemption to be increased to Rs. 3lakhs. We are also expecting some policy decision on FDI (Foreign Direct Investment) in real estate that will benefit the Indian market greatly and the market environment will be rendered investment friendly.
Mr. R. Vasudevan | MD – Vascon Engineers Limited
we expect an increase in limit of interest payment deduction; reduction in excise and VAT on construction materials manufactured in factories – like doors, windows, precast materials, precast blocks, RMC etc. and incentives to buyers for purchasing second and third homes, as it will increase the availability of rental homes.