Real Estate News

Union Budget 2015-16 is big disappointment to for home buyers

“Although the Finance Minister in his Budget Speech has announced construction of 2 crore houses in rural India and 4 crore houses in urban areas, no concession either for home buyers or for the developers has been given in the Budget.  The Budget disappointed the Real Estate sector  with proposal to increase  Service Tax from 12% to 14% .    The proposed increases in service tax alongwith  increase in Excise Duty, are bound to result in inflation and overall recession in real estate and other segments.  The proposal to reduce Corporate Tax from 30% to 25% is a welcome step for big corporates.  In direct tax segment, the only relief to taxpayer is increase in exemption of transportation from Rs. 800/- to Rs. 1600/-.  No other proposal to boost buying power of taxpayer is visible in the Budget.  The relaxation in REITS rules would, however, help attracting investment in Real Estate.”

Supertech Chairman – R K Arora

“We were expecting some big announcements from the government as this was the first budget presentations by the BJP lead government. However, budget did not have much for real estate sector. In fact, increase in service tax from 12.36 per cent to 14 per cent might affect the cost of raw material which in turn will increase the prices of homes. In a way this is detrimental to the vision of housing for all”.

Mr. Anil Kumar Tulsiani, CMD, Tulsiani Constructions & Developers Ltd

“For real estate sector there was no hope in the budget. We expected steps from the government that would the act as a boost for the sector. However, the cautious budget left everything in open and now the hopes are still alive from the next year’s budget. As on the ground, we are facing a lot of queries for price reduction in real estate but this budget left us speechless when it comes to reduction of prices in real estate. It has been years now that real estate has been asking for some good sops and help from government and I think if government is serious about housing for all, as it showed when in this budget it said that they are targeting 6 crore houses in rural and urban areas, then they should seriously contemplate on ways to make it affordable for people so that those 6 crore houses can have buyers”.

Sanjeev Varshney, MD, Prop Leverage

Union budget 2015-16 is very progressive and pro reform, as it aims to accelerate the growth rate of the country, especially measures to curb black money and creating job through reviving growth and investment will act as strong stimulants to drive the economy further ahead. Also the proposal to reduce the rate of corporate tax to 25 % from the current 30 % over the next four years along with abolition of wealth tax is a big impetus to the entire India Inc. Government has also announced steps to streamline its internal systems and policies by introducing The Procurement Law.

In the Real Estate sector, the exemption of capital gains to Sponsors upon REIT Listing is a welcome move. But to make REIT successful, few more tax incentives needs to be provided. However, in order to achieve ‘Housing for all’ by 2022, the government should provide more support / incentives to home buyers. Also, increase in the service tax would lead to pressure on Rental for commercial property but it has to be taken as a positive move for larger goal of GST introduction in April2016Tax incentives to individuals given in the form of long term savings in the Pension schemes will provide social security. This in turn will also channelize savings towards development of long term infrastructure.

It is overall a promising  budget. The government  has meticulously framed the biggest financial statement of the country as it lays down the road map for the future course of action, towards a strong and robust economy.”

Mr. Bijay Agarwal, MD Salarpuria Sattva Group

‘The Hon’ble Finance Minister has made quite a few announcements in Budget 2015 for the Real Estate sector. There is renewed emphasis on “Housing for All” by 2022 but no direct benefits on Affordable Housing.  Promoter-level capital gains tax on migration to REITs has been rationalized, which should kick start the REITs industry. Although, Minimum Alternate Tax on the migration to discourage promoters to immediately initiate the process.  Clarity on tax pass through for domestic Real Estate Funds should act as a catalyst in attracting significant investment. Removal of wealth tax should also be a positive for property investors.’

Bhairav Dalal, associate director, PwC India.

 
Overall the direction that the budget has taken is positive with several macro factors making way for a better economic regime.  However, with three consecutive bad years for real estate that left developers and other stakeholders gasping for fresh air, the expectations were only building up by the minute for the last couple of months. Unfortunately, the budget has not given them anything to cheer about. Although the initial part of the budget did mention housing for all, it did not have a game-plan attached to it.   Additionally, no sops or exemptions for homebuyers have been addressed. There is little on easing liquidity for real estate with only partial relief to REITs.  All in all, there is practically no silver lining for stakeholders. With plugging of loopholes in the Benami properties act, stakeholders who used to rely upon it to make money will have a lot to worry about. An already comatose industry will have to wait a bit longer for succor. ”
Mr. Shishir Baijal – Chairman & Managing Director, Knight Frank India 
 

“For the real estate sector, this budget has reaffirmed the government’s commitment to “Housing for All by 2020”, tax incentives for REITS and InvITS, focus on infrastructure and reduce black money by introducing the Benami Transaction Bill. The game changing announcement are the intent for the sovereign to participate in PPP project risk and NBFC with a capitalization of greater than 500 crores to be treated at par with banks under the SARFESI act. We expect that the overall positive economic cues like reduction in corporate tax, focus on infrastructure and industry, and encouraging more credit to India, will overall result in boost in the economy and will indirectly but positively impact the real estate sector.”

Amit Oberoi National Director, Valuation & Advisory Services and Research, Colliers International

 

“Overall, it’s seems a sensible budget for real estate focused on core areas like Housing, REITs and approval process.  Amidst much expectations and  debates over how the NDA government at the centre will bring the ‘acche din’ to the recession-affected real estate sector the finance minister Arun Jaitley has brought few good announcement for real estate sector such as 6 crore housing units for rural and urban housing by 2022, rationalization of capital gain tax regime for REITs, Infrastructure initiatives and set up of an expert committee for legislation on making a pre-existing regulation to expedite approvals. The budget also allocated 150 crore to create world class IT hub to take advantage of our competitiveness. Besides these positives the budget also announces freight rate hike for cement, coal, iron and steel. Iron and Cement being the crucial element of construction will be more expensive now which will further add up the construction cost.”

 Surabhi Arora, Associate Director, Research Colliers International 

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