“Affordable Housing continues to get preferential treatment given the ‘Housing for all’ agenda. Creation of the Affordable Housing Fund will certainly ease the funding gap. While providing a safe harbour is a welcome move for property transactions, the margin of 5% may not serve the purpose. REIT investors would have to now factor LTCG tax while evaluating investment opportunities which would increase their return expectations.”
Bhairav Dalal, Partner – Real Estate Tax, PwC India
Year 2018 sees a populist budget presentation by our Honourable Finance Minister, Mr. Arun Jaitley catering to the needs of the common man and the economy. The budget has provided financial allocations in maintaining the Governments larger vision of ‘Building the Nation’ and ‘Housing for All’. The budget’s capital expenditure focussing on key sectors such as agriculture, infrastructure and housing, amalgamate to provide necessary momentum and thrust to the economy. Changes in corporate taxation will incentivise many to invest, and be competitive. Overall the budget creates an environment for inclusive growth, and infuses transparency into the system.
The Real Estate industry was seeking some very important amendments like the industry status, streamlining of taxation norms for REITs, rationalisation of GST, and extension of tax SOPs for SEZ units, which we hope will be addressed soon. Having said that, the progressive nature of the budget has paved way for economic growth, and we look forward to a good year with continuous improvements for the realty sector.
The Budget will have a positive impact on the cement sector with infrastructure investments and affordable housing to drive demand. Cement companies are expected to see superior volume growth given the government’s focus on housing for all, smart cities (99 already identified) and building toilets under Swachh Bharat Abhiyan (to construct over 2 crore toilets during next financial year). It must be noted that most of cement demand comes from housing segment. The Budget proposes to create an 88 lacs new houses, which will ultimately trigger the demand for cement.
Aditya V Agarwal, Director, Emami Group
“While the announcement of the affordable housing fund and increase in allocation towards infrastructure have brought the much-needed hope for the real estate sector, the lack of inclusion of announcements relating to lowering of GST and bringing stamp duty under the ambit of GST has been highly discouraging.
The government’s announcement to establish a dedicated affordable housing fund in the National Housing Bank through various funding measures will give the much-needed boost to the realty sector. As part of this measure, almost 31 lakh homes are to be built in urban areas in 2018-2019 and 51 lakh in rural areas.
Infrastructure has also received a major boost in this Budget. Rs 5.97 lakh crore has been allocated for development of infrastructure across the country Rs 2.04 lakh crore towards smart cities. This move will definitely boost the real estate sector in the long-term as development of infrastructure is one of the major hurdles facing the industry. Bengaluru also stands to gain from this announcement with Rs17,000 crore allocated for the development of a 160-km of suburban railway network for the city. Bengaluru is in need of an alternative mode of transport that will offer some relief to its traffic woes.
Beyond these measures, what is needed to revive the sector are a few steps that go beyond. Giving infrastructure status across the range of the sector to cover not just the affordable segment but also the accessible luxury and others could have pepped up the sector as also a host of industries that depend on real estate. The industry was also pinning hopes on the budget for some relief in the form of a drop in GST rates from the current 12 per cent to 6 per cent and inclusion of stamp duty under the ambit of GST. However, none of these found a mention in Mr Jaitley’s Budget.”
Ashok Naidu, Director, Kumari Builders and Developers
Get more of real estate
Subscribe to our mailing list and get interesting real estate stuff updates to your email inbox.