Indian real estate sector is a major driver of economic growth, contributing 5-6% to the country’s GDP. Moreover, the sector has a direct bearing on every citizen of the country and in this respect Budget recommendations are critical to propel growth in the housing sector. ConstructionBiz360, therefore, took insights of various industry experts on pre-Budget expectations across residential, commercial and retail real estate.
According to Jitendra Jain, managing director and CEO of Neev Group, “Budget 2012-13 must make provisions for incentives to developers focusing on mid-market housing segment to bridge the demand-supply gap in the segment. Moreover, the Budget should focus on implementing Special Residential Zones (SRZs), simplify the tax structure and increase tax exemption limit of common man to encourage investments in the sector.”
Anuj Puri, chairman and country head of JLL (India), says, “The Budget should amply broaden the scope of 1% interest rate subsidy — which was provided for loans towards affordable housing last year — to include a wider price band of budget housing to benefit home buyers, especially in lower income groups.” Industry status, increased infrastructure spending, provisions for SRZs, single-window clearance for real estate development projects and strong intentions to implement the proposed real estate regulator in 2012 are some of the other pre-Budget expectations of Mr Puri.
Stimulate residential demand
In its pre-Budget memorandum, DTZ emphasised on extending the current ceiling of housing loans to stimulate residential demand, particularly in mid-range and low end housing segments. Furthermore, it suggested giving tax concessions and relaxations in development norms (for instance floor space index) to developers interested in SRZs and key incentives for growth of tier I and II cities.
For impetus on retail real estate segment, DTZ recommended allowing FDI in multi-brand retail in larger tier I and II cities, providing significant incentives for development of supply chain and logistics infrastructure and withdrawal of service tax on retail rentals.
Pankaj Bajaj, president of CREDAI – NCR, opines, “In view of high land prices, high taxation and rising cost of construction, this year’s Budget should aim at rationalising various taxes on the housing industry, which includes service tax, works contract tax, VAT, and also give incentives to state governments to reduce state level taxes like stamp duty. The Finance minister should also consider reintroducing some measure like the erstwhile 80 I (B) to give tax exemption for affordable housing.”
“Reasonable financial aid by way of loans at cheaper interest rates for both builders and end users would be one of the boosters. Since the large Indian population still remains homeless because of poor income, the government should identify and release residential lands in and around urban areas at subsidised prices with hassle free compliances and approvals so that the industry could build and offer homes at affordable prices,” points out Anuj Goel, executive director at KDP Infrastructure.
O P Agarwal, chairman at Lotus Infra Projects Pvt Ltd also has a long wish-list, however the highlights are the enhancement of provision under the Rural Housing Fund to at least Rs 5000 crore and enhancement of credit worthiness by creation of ‘Mortgage Risk Guarantee Fund’ under Rajiv Awas Yojana (RAY) for LIG and EWS segments.
Real estate experts have lots of expectations from the upcoming Budget, which is scheduled on March 16, 2012, in view of the fact that the sector has been partially ignored in almost all the previous Budgets.