Real estate firms will be closelymonitoring the forthcoming budget for any proposals that affect them. To be sure, they have a long wish-list to present Finance Minister Pranab Mukherjee.
With inflation showing few signs of stabilising any time soon, the realty sector is facing several challenges and is looking for a Budget that will ensure tax boosts for low-budget housing, infrastructure spending, a streamlining of regulatory processes and Reserve Bank of India actions to continue taming inflation, which has which has severely impacted the industry.
Knight Frank, a real estate consultancy firm, says that although last year started with renewed focus on infrastructure spending (the government allocated more than 48 percent of the total planned expenditure in the 2011-12 Budget), several new projects failed to take off due to delays in approvals and decision making.
An increase in infrastructure spending, especially in urban areas, will also unlock the value of neglected land assets in peripheral and suburban districts.
For this fiscal year, real estate firms are hoping that the focus on infrastructure will continue and the government will come up with a long-term game plan for infrastructure improvement in the economy.
Pranab Datta, Vice Chairman & Managing Director, Knight Frank India also highlights the importance of addressing the challenges of rising urbanisation. Enhancing connectivity and implementing partnerships for infra projects, such as the case of the Delhi-Mumbai Industrial Corridor, need urgent attention, he added.
In order to address the problem of acute shortage of houses in the country, Kamal Khetan, chairman and MD, Sunteck Realty, in an interview with Deccan Herald said affordable housing should continue to be a focus area in Budget 2012. "Rather than restricting it to unit sizes, as in the past to 1,000 / 1,500 sq feet per housing unit, the government could, instead, have a maximum per unit value of say Rs 15 lakh for units near Tier I cities, Rs 10 lakh for Tier II cities etc," he said.
Housing loans should also be made priority lending, so than banks can offer concessional terms of borrowing to keep the cost of tenements within the reach of the common man, say realty experts.
DTZ, a global real estate advisory, also expects the central government to provide incentive packages for commercial development of Tier 2 and Tier 3 cities."With the withdrawal of STPI benefits and IT/ITeS Special Economic Zones largely concentrated across Tier 1 cities, the country lacks any key incentive policy for growth of Tier 2 and Tier 3 cities," it said in a column in Economic Times.
It also wants the government to allow foreign direct investment in multi-brand retail in Tier 2 and Tier 3 cities as it will not only provide a good source of much needed investments in the retail sector but also help in increasing employment and curbing inflation.
Anuj Puri, chairman & country head of real estate consultancy Jones Lang LaSalle India, said that commercial realty developers are hoping that the government would actively roll out an incentive-based IT policy (such as STPI) for Tier 2 and Tier 3 towns.
He added that the residential real estate sector is hoping that the 1 percent interest rate subsidy provided for loans for affordable housing last year will be extended and increased to include a wider price band of budget housing to benefit home buyers, especially from lower-income groups. They also hoped that the government would enact provisions for Special Residential Zones (SRZs) to promote the growth of housing stock at targeted locations.
Finally, the real estate sector, which is a major driver of economic growth and contributes nearly 5 percent to the country's GDP, is hoping to win industry status, which will allow it to access debt lending at more competitive interest rates and lower collateral values, Manju Yagnik, vice-chairperson of the Nahar Group told the Economic Times.
He added that the forthcoming Budget could also introduce appropriate reductions in tax rates as nearly 35 percent of a home's sale value consists of taxes like excise, VAT, service tax and stamp duty among other things.
Updated Date: Dec 20, 2014 08:27 AM