A Fantastic Budget
The Finance Minister has set the ball rolling with the Budget 2017-18 for the realty sector. Rajeev Talwar, Chairman, NAREDCO shared his views on the budget with Rahul Trivedi, Assistant Editor, Realty Plus. Edited excerpts:
What is your opinion about the budget 2017? How do you see towards the importance given to the affordable housing in Budget 2017-18?
My personal opinion about the budget is that it is an absolutely a fantastic budget. I would give it 9 out of 10. I think we were all looking up to Make in India, Start-up India, how to fulfill the demand of housing i.e. Housing for All. All this will come true because of the provisions for affordable housing and more than that because of the infrastructure status. The infrastructure status means that the profits you generate for the next five years from such a venture, you can reinvest those without being taxed. This is a huge jump up. Now, every project will throw the corpus for the next project and once you have corpus for the next project, the bank finances at much easier terms will flow in.
With infrastructure given so much focus, how do you see the shift of urbanization from Tier I cities to Tier II cities?
It was required as India needed to generate more cities, the 100 Smart Cities project was going on, so this will help not only the existing cities but many more new cities will crop up along the routes of good railways, highways and seaways.
Now builders will have a pressure to offload their inventories within one year of getting the OC certificate so will it lead to another price correction?
I think the market is always finding its price level. This will also be a factor and there will be another factor that is the provision of long term capital gains will kick in after two years if you trade in properties which will also help in reducing the outstanding of unsold inventories. So, in all the markets will find a new level depending on the forces in the market, economic growth and of course how employment picks up.
Vacant land is a big issue. So, do you think that there should be correction in the land acquisition bill or something else should be done regarding the same?
I think something else has been done already. Finance Minister has announced that Joint Development Agreements will be taxed only after completion of the project. This is a great incentive for all the land owners to become partners and stakeholders in housing projects without selling their lands. For the builders and construction companies it will be a great incentive to include people as partners and get the land as part of the project so that the eventual price realized after the completion is the one to be shared and not the outflow of money which could be as high as 20 percent to 50 percent of the project price. So, if you can save that much then obviously the prices of homes will come down and land owner will be happier getting a market share rather than the acquisition share.
Don’t you think that the infrastructure status should have been granted to the complete real estate sector?
Everyone has been asking for that and the sector will always ask. Finance Minister has provided you the infrastructure status for the 90 percent of the demand, then why worry about the other. Let the market find its own level.