BUDGET 2021: TURNING EXPECTATIONS INTO REALITY

BUDGET 2021: TURNING EXPECTATIONS INTO REALITY

Economic experts while having an approving review of the budget are sceptical on how it will revive the economy and reach the projected target growth.

Though Budget 2021 did not incorporate any direct benefits for the realty sector, many indirect benefits would flow in from the corroborative measures, feel the real estate players. 

Anuj Puri, Chairman Anarock Group mentioned that even after the devastating effect of the pandemic on the economy, the country has bounced back with V shaped economic recovery. “The real estate market has opened for investments, no new taxes have been introduced and FDI inflow is increasing in real estate and non-real estate sectors.”

 

Shweta Shalini, BJP Spokesperson, Advisor to Former Chief Minister of Maharashtra, Former Executive Director – Maharashtra Village Social Transformation Foundation stated, “Indians perform best under pressure, risk taking capacity is tremendous amongst Indians. We consider this entire budget as “Atmanirbhar Budget”. The term “Atmanirbhar” is associated more than just economy, it is a mind-set and a thought process. As Indians we are surrounded with huge opportunities, we just need to tap right opportunity at right time.  Through budget we are creating a resilient economy especially for the low income families so that we can sustain the V shaped graph. We have kept a 5.5 Cr capex in this budget which is 5 times bigger from 2012.”

 

Amit Bhagat, CEO & Managing Director, ASK Property Investment Advisors said, “We have seen how debt has worked right up. Most of the NBFC are managing their balance sheet currently and they are not very keen to lend to real estate. But, the infrastructure push in the budget will lead to real estate growth. Lending opportunities are very limited as of now but in a year or two opportunities will come back.”

 

Ambar Maheshwari, CEO, Indiabulls Asset Management Company Ltd was of the view that due to hybrid way of working, 10-15% of office demand is likely to be permanently lost which can lead to a negative impact on commercial office spaces. ”However, REITs have done fantastically well in India which are mostly being managed by global stakeholders. Given these developments, I believe office realty recovery will be slow but demand will pick up.”

 

Jayesh Kariya, Partner, BSR & Associates said, “Global investors are very much interested in investing in Indian real estate including affordable housing projects. Government has done a lot of things like financial regulations, land regulations, RERA related rules, reduction in interest rate and stamp duty rates. All these measures will create demand in real estate which will last long. My only suggestion to the government is that they should give “Industry status” to the real estate sector.”

 

Saket Mohta, Managing Director, Merlin Group Of Companies concurred, “We didn’t expect but, has been V shaped recovery especially in the residential sector In the past couple of months we have raised our price by 5% due to rising demand. Talking about the retail segment, the worst hit during the pandemic, we had to talk to our retailers and give them the assurance that we are together in this critical situation. Though rents had to be deferred but there have been no lease cancellations in three malls that we operate in Kolkata.”

Under the “Pradhan Mantri Awas Yojana” government has been taking a lot of initiatives like affordable rental housing schemes. With the focus on increasing jobs, expenditure in infrastructure and capex government is doing everything which will lead to growth

 

THE OPPORTUNITIES AHEAD

Ambar Maheshwari cautioned, “Pandemic has consolidated the industry. We have Lodha and Puranik lined up for IPO. If inflation will go up then the interest rate will come down. This will have a negative impact on the real estate sector and other fields also.” 

 

Shweta Shalini said, “I completely agree that this sector needs “Industry status”. This entire sector needs to be added as an “Asset class” at least. I see a lot of hope in REIT. I would suggest there should be some fundamental changes in REITS to attract FDI and investment especially for the affordable housing sector.”

 

Amit Bhagat added, “There is consolidation of demand and supply. We launched our project in Chennai and sold 100 apartments on the first day. We have never done it in the last 2-3 years. All the top 30 developers are out of the woods. For NBFC, if you are AAA, you have a retail portfolio and you are not focusing only on real estate, you are out of the woods. AA companies are struggling because they have only done wholesale lending.”

 

Saket Mohta said, “Holding inventory is a very subjective thing for a developer. It depends on a lot of things like at what cost the land acquired and lifecycle of the project. Interest subsidies encourage buyers to purchase their dream home. I want to request the present government that the input credit that is taken away from developers should be brought back, so that we can provide benefit to our respective customers also.”

 

Jayesh Kariya explained, “If we start treating this sector in a more organized way real estate will surpass the agricultural sector in the contribution of GDP to the country. We have a strong consumption driven market for the next 2 decades. The sector supports 307 industries. Make in India and other infrastructure initiatives will lead us towards growth. For long term investment affordable housing will be a win- win situation for everyone.”” 

 

Anuj Puri agreed, “Offices will not go out of fashion or demand. Equity hopefully will come back into the real estate segment. Investors are already looking at tier 2 and tier 3 cities as they have a lot of development potential. Real estate has a big opportunity and potential to surpass the agriculture sector in order to contribute to the GDP of the country.”

The government did not shy away from spending money on infrastructure development projects. For the first time the government is thinking to have SPV in the infrastructure sector to attract FDI.”

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