Realty Sector sees minimal direct impact of Budget 2018
Finance Minister Arun Jaitley on Thursday presented his fourth budget. While expectations were high that the Budget 2018 will offer major sips for real estate sector, no major demands were met, according to industry experts.
Budget seems to be heading to have minimal direct impact on the real estate industry. A significant departure from the last 3 budgets, said Joe Verghese, Managing Director, Colliers International India.
However Verghese added that change in capital gains tax for equity could accelerate the shift of preference from equity to other investment assets like real estate. This would be a reversal of the trend we have seen the last five years. More investment could start to real estate.
“Budget 2018, shied away from addressing some of the key concerns of the real estate sector, a departure from the previous years. As one of the main sectors of the economy vying for an industry status and a demand side boost, and one that has powered through the impact of a new regulatory regime and the GST, the budget seems to leave the sector at status quo,” said Shubika Bilkha, business head, The Real Estate Management Institute (REMI).
Affordable housing, however, saw an encouraging boost with establishment of a dedicated Affordable Housing Fund (AHF) in National Housing Bank, funded from priority sector lending shortfall and fully serviced bonds authorized by the Indian government.
“The additional commitment to rural affordable housing is a welcome addition, as is the recapitalization that allows banks to lend Rs 5 lakh crore,” added Bilkha.
Here is how other industry experts reacted:
Shishir Baijal, Chairman & Managing Director, Knight Frank India
There has been a silence in the budget on stimulating mainstream real estate demand. The sector grappling with the reforms-driven new order has been bereft of any meaningful interventions that could have been achieved through the budget.
Neeraj Bansal, partner and head-ASEAN Corridor and Building, Construction and Real Estate sector, KPMG
Both the buyers as well as the developers were expecting much from this Budget in terms of improving the purchasing power of the buyers as well as simplification/ clarification on some of the key tax issues concerning the sector. Amendments were also expected on taxability of REIT structures to augment this alternate investment mechanism for the investors.
Neeraj Sharma, Director, Grant Thornton Advisory
Affordable Housing and Infrastructure gets a significant push this Budget. As a result of the government’s move to create a dedicated fund for affordable housing, more developers will embrace this segment of real estate, creating much-needed traction on the ground.
Rajesh Krishnan, founder & CEO, Brick Eagle
I think having a dedicated National Affordable Housing Fund is a brilliant idea to tap into banks PSL shortfall to raise a large corpus for this national cause. While more details are yet to be ascertained, we hope that the Fund will focus on project finance to catalyze housing development rather than refinancing home loans.
Bhavin Thakker, Country Manager (Tenant Representation), Savills India
With the introduction of 10% tax on long term capital gains (LTCG), investors may alter their investment preference which we expect will see the real estate sector attracting more funds than before.
Manoj Gaur, vice-president, CREDAI-National and MD, Gaurs Group
This year’s union budget presentation missed on providing the much needed cushion to the realty sector. This was the first budget session post the implementation of RERA and GST, and thus we had hoped for certain incentives for this sector.
Sarjan Shah, MD, Satellite Group
Disappointing budget from the perspective of private sector involvement in creating mass housing stock that will make homeownership a reality for all Indians. Budget has unfortunately ignored the stressed and vilified real estate sector that is in desperate need of Government support through specific targeted tax breaks that help make building affordable homes in India viable.
Samir Jasuja, CEO and founder, PropEquity
Government needs to look at increasing FSI and density norms in areas where social infrastructure exists so developers can launch affordable projects in areas where the middle class can live.
Dikshu C Kukreja, founder, C.P. Kukreja Associates
The announcement of establishing 2 new full fledged schools of planning and architecture and 18 new schools of Architecture and Planning will be set up in the IITs and NITs is an excellent announcement. In a nation of our size which is in the throes of development, there is a need for design professionals across the country. These new institutions shall meet the need which is otherwise being primarily addressed by private universities which are not affordable for all. It is now for Council of Architecture which is the regulatory body to ensure that these new institutions become centres of excellence with a world class curriculum and faculty.
Ashish Jindal, co-head (Real Estate) Sanctum Wealth Management
Post demonetisation, the secondary market witnessed a bit of turbulence due to the absence of liquidity. Additionally, in major cities, the circle rates were increased and had become more than the market rates. This resulted in a gap between the two rates, which was counted as income in hands of both buyer and seller. Finance minister has given a big relief by allowing upto a 5% gap between the two and this has the potential to remove the irritant and revive secondary market transactions.