New Delhi: Realtors on Friday hailed the government's decision to cut corporate tax, saying the move will have a ripple effect on all sectors including real estate, improve liquidity of cash-starved developers and boost property demand especially in the commercial segment.
Realtors' apex body CREDAI Chairman Jaxay Shah said: "It's a full house blockbuster Friday for India Inc. Game changer announcements. Market sentiment will change completely in all sectors including real estate". "It is a due corrective step by the Centre to uplift investor's sentiment and prompt investment back in drying up Indian economy. The move is well intended to revive growth traction of the economy," said Niranjan Hiranandani, President, NAREDCO.
CREDAI President Satish Magar added: "The series of announcements by FM are most reassuring as they tell of the Government being sensitive to the economic needs of the people. We are most hopeful that the special needs of housing would soon get addressed to further accelerate the investment cycle." Property consultant Anarock Chairman Anuj Puri said: "This big-bang move will have a rippling impact on all sectors including real estate as it will encourage foreign institutional investors to invest in the country." "As and when the overall financial health of the economy improves with these slew of measures, there will be heightened activity within real estate - by both actual home buyers and investors alike," he added.
JLL India CEO and Country Head Ramesh Nair said the move is expected to bolster growth of industrial real estate development in the country. He said the reduction in MAT will help real estate developers engaged in SEZs and affordable housing. Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle East and Africa, CBRE, said: "The tax announcement is indeed a welcome measure and will definitely boost the Government's ambitious Make in India programme."
The move would not only benefit manufacturing sector but would also have cascading impact on other sectors including real estate, he added. Dhruv Agarwala, group CEO of PropTiger and Housing.com, said: "Slowing consumption and falling private investment were both pulling down GDP growth. Today's announcement to reduce corporate tax rates by almost 10 per cent should help in kickstarting a fresh private investment cycle."
On the flip side, this decision would see the government's fiscal deficit come under pressure and hence result in lower government spending, he added. "However, overall this decision will have a positive impact on the economy because it will provide much needed relief to corporates struggling with slowing consumer demand and will encourage them to once again start thinking about new investments," Agarwala said.
Knight Frank India CMD Shishir Baijal termed it a "milestone effort" to kickstart the Indian economy and boost production. "This substantial direct tax reduction will allow more liquidity for the corporates that are currently assuming drastic measures to protect their profitability," he added. These measures will complement the monetary policy measures taken by the RBI in increasing liquidity and consumer spending, he said.
"As a trickle-down effect of this, we should be hoping for a revival for the real estate sector as well. This boost will certainly accelerate demand for commercial spaces, but we understand that the financial stability expected will propel growth for the beleaguered residential market in the near future," Baijal said. Omaxe CEO Mohit Goel said this was a long-standing demand of the Indian corporates, including the real estate sector.
Ekta World Chairman Ashok Mohanani said the decision has brought in a ray of light for the economy and hoped that sentiments would change in the real estate sector as well. Prashant Solomon, MD, Chintels India said: "For the Real estate sector this is an added benefit as it will encourage new entrants across the 200 ancillary industries that are essential to the sector's growth." The revenue foregone by the government on reduction in corporate tax and other relief measures will now help companies focus on investing in areas which can fillip growth in their respective sectors, said Honeyy Katiyal, Founder of Investors Clinic.
Infrastructure consultant REPL CMD Pradeep Misra said the infrastructure industry, which was until now reeling under huge tax burden, will now eye foreign investments but also look forward to the domestic investors. Taranpreet Singh, Tass Advisors Partner, said: "A pre-Diwali bonanza announced by the Finance Minister with primarily 2 objectives -- firstly to promote industrial production and achieve the Make in India motive of the Modi-led government, secondly, to foster positive signs to the glooming stock market."
Property brokerage firm Wealth Clinic director Amit Raheja said the corporate tax rate cut was much needed relief for the developers which are facing liquidity crunch. In the biggest reduction in 28 years, the government on Friday slashed corporate tax by almost 10 percentage points as it looked to pull the economy out of a six-year low growth and a 45-year high unemployment rate by reviving private investments with a Rs 1.45-lakh crore tax break.