Mumbai: Crisis ridden real estate sector is not amused with Finance Minister Nirmala Sitharaman's annual budget as it misses on the ‘quick fixes’ the real estate sector needs urgently and focuses more on a long-term vision. Realty players said the budget fell short of industry expectations, with no major announcement for accelerating growth.
The realty players have welcomed the government's thrust on affordable housing and alternative segments within real estate - such as warehousing, data centres, schools, hospitals and hospitality. However, the FM could have given more for the revival of the cash strapped real estate sector.
Anuj Puri, Chairman – ANAROCK Property Consultants said apart from the affordable housing push and personal tax relief, no major benefits came in for resolving the current housing mess. ''A hike in the Rs 2 lakh tax rebate on housing loan interest rates under Section 24 of the Income Tax Act could have kick-started healthier demand for housing, especially in the affordable and mid-segment categories. But there was no announcement in this regard. Also, the Budget missed any major announcement for easing liquidity in the real estate sector – a major worry for most developers. Project delays - the biggest fallout of the cash crunch – have severely dampened buyer sentiments. There was a dire need to address this concern immediately,''he noted.
National Real Estate Development Council President Dr Niranjan Hiranandani observed that the labour-intensive real estate sector which had pegged hope on additional liquidity infusion, tax reforms and rental housing were overlooked in the budget. ''Any fiscal measure in sluggish real estate sector could have provided a fillip. Wherein, tax benefits extended to both homebuyers and developers in affordable housing sector will encourage more launches in this segment. Further, with economy in doldrums and acute slump in consumption, efforts on demand creation incentives went missing,'' he opined.
Knight Frank India executive director Gulam Zia said the realty industry was hoping that the government would come up with measures to boost housing demand. ''However, the removal of exemptions under the new income tax regime, implying no tax benefit on principal and interest for home loans would be a dampener for the sector. The extension of benefit for affordable housing for the developers as well as home buyers by one year is a step in the right direction. As far as funding constraint for the realty sector, the government spoke about enhancing the partial credit guarantee scheme for NBFCs, which again may not suffice for the ailing sector,'' he added.
On implementation of land reforms, Puri said there is no announcement in this regard. ''The lower 15% tax rate for companies looking to set up new factories can be applied only if they can acquire land easily. Further, bringing greater transparency to India’s outdated land records system would help attract more foreign investors and limber up the approval procedure for real estate projects,'' he viewed.
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