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Budget Blues

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With the budget less than two weeks away, the country’s realty players are optimistic that the government will provide some sops to this sector that has been reeling under a demand slowdown and liquidity crunch for some time now.
Voicing his pre-budget expectations, Prashant Solomon, joint MD of Chintels India, a leading real estate and infra developer that has recently inked an agreement with Sobha Developers and QVC Realty for the joint development of a 192-acre township at Gurgaon, Haryana says,“ We hope that the budget brings some good news for the realty sector as well. Given that the new government will have a free hand in formulating policies, we expect it to unveil policies which will remove hurdles in the smooth implementation of infrastructure projects.”
Solomon further stresses that this would provide crucial support to ongoing projects in both the residential and commercial segments. He says, “Pre-construction expenses incurred for things like license charges, government approvals need to be lowered. We are also hopeful that a stable government will stabilize prices as well and facilitate infrastructural development and liquidity to make the market more attractive.”
Solomon admits that the recent reduction of interest rates, restructuring of short term debt and equity infusion has helped ease the credit situation. “However there is still a large amount of debt to be cleared before companies can consider aggressive expansions,” he stresses. “We hope the budget brings in good news in terms of enabling cash flow in the market thereby making the process of development smooth.”
"There is an urgent need to accord the long overdue industry status to the real estate sector,” avers Sushanto Roy, head – infrastructure & housing, Sahara Prime City Limited. “This will help in the rationalization of taxes and duties specially for developing residential properties, easing up of liquidity and interest rates, institutional finance structuring and introduction of regulatory mechanisms.”
Roy’s pre-budget wish list also includes: a tax holiday for developing townships in tier II and III cities, reinstatement of section 80IB (10), rationalization of service tax and introduction of REIT & REMF for retail investors. This will improve industry sentiments and will provide the required boost,” he stresses. On the affordable housing front Roy says, “Developers need to be provided with incentives for developing low cost and budget housing while end users could be encouraged to buy with subsidised home loans rates.”
It’s a thought echoed by Sahil Phadnis, CMD of Pune based real estate and hospitality major Sahil Group. He says, “Given the ongoing slowdown, both the real estate and hospitality sector which are major employment drivers, are waiting for positive announcements in this budget. With regard to the realty space, there should be a reduction in service tax with modifications to the entire income tax structure. We also want the government to initiate focused fund-raising systems for the industry. To boost demand, the budget should provide a subsidy of 2% in home loans rates upto Rs35 lakhs.”  
Phadnis stresses that there is a need to bring down input costs if end users are to be provided with affordable housing. He says, “Section 80 IB should be re-instituted to give tax exemptions for those making smaller units. There should be increase in tax exemption to the borrower who has to repay the loan; his interest should be deducted from his income. Also, encouragement needs to be given to rental stock in the country as it indirectly helps various other sectors involved in hiring and movement of people.” 
Last but not the least, Phadnis has a special request for the finance minister. “We hope the minister creates an enabling environment for refinancing of real estate projects. Secondary markets should be encouraged to finance ready assets in the form of a combination of tax incentives for low income housing and housing loans.”
 

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