Finance Minister Arun Jaitley on February 1 presented union Budget in the Parliament. The real estate sector doesn’t take it as a boost for the sector, but sees it as a balanced budget. Here is how the participants of the real estate sector reacted to Budget 2018.
Mr Jaxay Shah, President, CREDAI
The explicit announcement on the real estate sector relates to the following-
- 31 lakh homes in 2018-19 to be built in urban areas and 51 lakh in rural areas.
- Dedicated affordable housing fund under NHB and priority sector lending accorded to achieve this goal.
- Government assuming ownership of NHB from RBI. This would translate into the focus of NHB shifting from regulation to development.
- Addressing the anomaly under Section 43 CA to tax real estate transactions at their real value rather than the value arrived at by applying the artificially higher circle rate.
These are very important. However, it is the deeper economic logic of the Budget which is the major boost for housing and real estate.
The deeper logic of the Budget favouring real estate consists of the following-
- Long term capital gains are subject to capital gains tax at 10 percent from now on rendering investment in real estate more attractive than ever before.
- Senior citizens and salaried employees receiving tax breaks giving them money in the hand to go and buy a house.
- Push on infrastructure comprising public investment in the rural areas, agricultural marketing, urban connectivity; particularly Metros etc multiply investment prospects for real estate sector.
Nayan A Shah, MD and CEO, Mayfair Group
The deeper logic of the Budget favouring real estate consists of the following-
1. Long Term Capital Gains are subject to capital gains tax at 10% from now on rendering investment in real estate more attractive than ever before.
2. Senior Citizens and salaried employees receiving tax breaks giving them money in the hand to go and buy a house.
3. Push on Infrastructure comprising public investment in the rural areas, agricultural marketing, urban connectivity , particularly Metros etc multiply investment prospects for real estate sector.
Mr Ravindra Pai, MD, Century Real Estate Pvt Ltd
There were a lot of expectations from the Finance Minister in this budget for real estate. Unfortunately, other than some minor mention about a fund for affordable housing and increased allocation for smart cities there isn’t really anything for real estate or home buyers.
Mr Manish Agarwal, Partner and Leader- Infrastructure, PwC India
50 lakh crore for infrastructure is welcome is as it reaffirms continued funding of various initiatives in Roads, Railways and Urban Infrastructure. Quantum leap in airport capacity is key requirement to keep pace with the rapid growth in aviation. Other initiatives, outside the budget, to revive private sector play in these sectors, will complement and further the impact of the budget allocations.
Mr Mukund Patel – MD of Rutu Group Companies
The budget has been along expected lines, however the budget’s affirmation to affordable housing is a positive step. The affordable housing fund can also act as a stimulus for the real estate industry, driving demand for homes that’s both affordable and aspirational. We look forward to work with the government towards housing for all in a proposition that’s a win-win for all respective stakeholders as a whole.
Furthermore, the tax incentive for corporates will also provide a fillip for the real estate industry as the added liquidity can free up resources to further consolidate the growth of the industry.
Mr. Mrinal Kumar, Partner Shardul Amarchand Mangaldas
With Budget 2018, the government continues to boost the affordable housing sector by setting up an affordable housing fund under the umbrella of the Pradhan Mantri Aawas Yojna, which will give impetus to the growth of industries ancillary to the real estate sector. Further, the relaxation of income tax adjustment in case of difference of less than 5% between the circle rate and consideration for real estate acquisitions, is a welcome change.
Mr Shishir Baijal, Chairman & Managing Director, Knight Frank India
The Union Budget 2018-2019 has predominantly focussed on revitalising the rural economy which is a good move. We also welcome the thrust on the healthcare, agriculture and infrastructure sectors outlined in this budget. Throughout last year, measures surrounding ‘Affordable Housing’ were the mainstay from the perspective of real estate industry. This was also evident in the Credit Linked Subsidy Scheme (CLSS) and the last Goods & Services Tax (GST) Council meet where they brought down the effective rate to 8% from 12%. A similar trend is visible in this budget where the ‘Affordable Housing’ fund under National Housing Bank (NHB) has been created as a part of the priority sector lending. However, 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.
Mr. Rohit Poddar, MD, Poddar Housing & Development Ltd
We are delighted that this is an inclusive budget where the government has continued its thrust on infrastructure and targeting the rural economy with a commitment to affordable housing. Having said this looks like a ‘smart budget targeting the 2019 General Elections.
Mr. Ketan Musale, Managing Director, DOTOM Realty
Decent budget has been allocated to boost the infrastructure & affordable housing of Rural areas in turn easing the load of metropolitan cities.MIG and HIG groups who are the major tax payers have been ignored in current budget leaving a sour taste. Upgrading their lifestyles will be challenging which would reduce the velocity of sales of homes in metropolitan cities. The scenario of 2017 has been extended to 2018 not enhancing much in Real Estate segment, carrying forward our hopes to 2019.
Mr Neeraj Sharma, Director, Grant Thornton Advisory Private Limited
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. Enhanced spend on Infra aggregating to INR 14.34 lakh crore and monetisation of assets being held in the public sector undertakings through creation of InvITs, will fast-track the agenda of improving infrastructure in the country. Clarification around computation of tax in case of circle rate variation is a pragmatic step.
Mr Manoj Gaur, Vice President CREDAI-National & 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. Government’s seriousness and target to achieve housing for all by 2022 saw a boost for the affordable housing segment, where an affordable housing fund has been proposed. Apart from this, heavy allocation of funds towards infrastructure upgradation will help towards the nation’s development.
Mr Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz
For a sentiment driven sector such as real estate, it is imperative that the budget proposes benefits towards the personal income tax model. Today’s union budget did not address towards the taxation structure for the general masses, but did provide a benefit to MSME by extending the corporate tax of 25 percent for companies with an annual revenue upto Rs. 250 crores. Reduced tax burden on corporates might allow real estate to see new start ups and increase job opportunities.
Mr Gaurav Gupta, General Secretary CREDAI-Ghaziabad & Director, SG Estates
Union Budget 2018-19 has stressed a lot upon developing infrastructure and creating a pool of job opportunities. Though, there wasn’t a direct benefit accorded to the realty sector this time, but the proposal of development of 4 lakh Kms of road and upgrading rural infrastructure will greatly bring up the Tier 2 and 3 cities of India on the realty map. This is in the long run will help boost the housing demand and investment opportunities for those regions.
Mr Abhishek Bansal, Executive Director, Pacific Group
The government has shown keen interest towards enhancing the connectivity and infrastructure in the country by proposing an amount of Rs. 50 Lakh crores. Agriculture sector was the biggest gainer in today’s Budget presentation along with a major relaxation to MSMEs by way of reduced corporate tax. Real estate sector did not see a direct incentive today, but better infrastructure and connectivity will pave way for greater housing and commercial demand in the developing regions.
Mr Pradeep Aggarwal, Co-Founder & Chairman, Signature Global
We welcome the union budget 2018-19 by the government which has aimed to provide a major thrust to the affordable housing segment in the country with a target to fulfil the dream of housing for all by 2022. Major announcements were made for the betterment of this segment once again. Proposal to open up an affordable housing fund will greatly benefit in the long run. Plan to develop over 1 crore houses in the rural areas will significantly help the housing mission. Announcement of development of new roadways across the nation will allow the untapped regions to develop. With such scale development, job creation is bound to happen as well.
Mr Vikas Bhasin, MD, Saya Group
Real estate sector got missed out in today’s budget presentation with just some indirect long term benefits in offer. Work on the infrastructure front has been the backbone and the same has received massive allocation of funds yet again. With rapid development, more and more smaller regions will come into lime light, and may become the next investment hubs. With such large scale development, ample of job creation will occur which will open the gates for housing demand as well.
Mr Dhiraj Jain, Director, Mahagun Group
This was the last full union budget presentation by the current government which has come out with a mixed bag for the realty sector. Since this was the first budget for the realty sector after the nationwide implementation of GST and RERA, we were expecting some gaps to be filled. Apart from affordable housing segment and infrastructure development, nothing much has been presented for the realty sector. Although, he are hopeful for the remaining budget session to bring some respite for this sector.
Mr. Shrinivas Rao, CEO-APAC, Vestian
The Union Budget 2018 held many expectations, primarily owing to the testing phase that the economy underwent in the past year. While the realty fraternity harboured hopes of relief measures such as lower taxes, rationalisation of the GST rates and infrastructure status, the budget decided to focus on strengthening agriculture and rural economy, providing healthcare to economically less privileged, care for senior citizens, infrastructure creation and working with the states to provide more resources for imparting quality education in the country. This budget, thus, is a measure aimed towards improving the rural sector, that forms 66.86% of the country’s population, which in turn shall work towards creating an equal economy in the country.
Mr. Farshid Cooper, Managing Director, Spenta Corporation
Reducing corporate tax rate to 25% for companies with turnover below Rs 250 crores will be very positive for the real estate industry. The trickledown effect of the tax saving will mean disposable income in the hands of the common man, thereby increasing consumption and investment in real estate. Disappointed that stamp duty was not incorporated in GST to ease pressure on homebuyers.
Mr Rakesh Makkar, Director, Grihashakti – Fullerton India Home Finance Company
We welcome the announcement of a dedicated affordable housing fund in the National Housing Bank. This initiative, as well as the GST announcement last week on rationalization of affordable and low-cost housing, will encourage formal credit penetration into the sector. The Affordable Housing Fund will further add momentum to Government’s agenda of Housing for All by 2022 by providing easy access to formal credit.
Mr. Sarjan Shah, MD, Group Satellite
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.
Mr Puneet Dalmia, Managing Director, Dalmia Bharat Limited
The budget reaffirms the strategic direction of clean governance, inclusive growth and bold moves on infrastructure and disinvestment. Very comprehensive and wholistic!
Ms Sarojini Ahuja, VP Sales & Marketing, Transcon Developers.
This year’s Union Budget was inclined largely towards the fulfillment of government’s dream of ‘Housing for All 2022’ and allocation of fund for affordable housing was a boost yet lacks clarity. However, we were expecting a revision in GST rates so as to pass on the additional benefit to the home buyers, which was missing in this budget
Mr Manoj Paliwal, Chief Marketing Officer, Omkar Realtors and Developers Pvt Ltd
Understanding the government major focus on affordable housing to achieve the target of housing for all, the budget was largely inclined towards the same. Rural infrastructure push will surely boost added housing in these areas resulting in employment generation. Further, the introduction of a long-term capital gain tax of 10% on shares is a step towards creating a bit of level playing field these two assets classes i.e Real Estate and Stock market. This move is positive for Real Estate.
Mr Ashwin Sheth-CMD-Sheth Group
The Union Budget 2018-19 has struck the right chord in line with its affordable housing vision which will promote a robust development of the Real Estate Sector. We applaud the finance minister’s decision to establish a dedicated affordable housing fund in the national housing bank to make this vision a reality. The government has taken a step in the right direction by focusing on infrastructure development with respect to road and rail connectivity as this will catalyze the growth of the housing sector. Initiatives to boost the Mumbai suburban railway network will significantly boost the residential and commercial market in the city. Moreover, focus on the smart cities project will help in improving the standard of living for residents. However, clarity on single window clearance and GST was much anticipated. We also expected incentives for first time home buyers which would have helped increase demand and create equilibrium in the demand-supply gap. Most importantly, granting industry status to the real estate sector which is one of the largest contributors to the growth of the economy was the need of the hour. While this budget focuses on the overall growth of the economy, we will adopt a wait and watch approach and hope adequate measures are taken to complement their continuous endeavours to boost the real estate sector.
Mr. Yadupati Singhania, CMD, JK Cement Ltd
On the infrastructure front, the Finance Minister has shown remarkable restraint, and therein lies the brilliance of his announcements. India is at the cusp of an infrastructure revolution, and the budgetary support of Rs. 5.97 lakh crore for FY19 will be a big positive for the sector and supplementary industries such as cement. The focus of the government will likely remain on effective and timely execution of existing projects, with the FM promising construction of 9,000 km highways by the end of FY19. Also, it was encouraging to see the reinforcement of the government’s commitment to the Bharatmala Project, which will be a major boost to demand in the next financial year. Besides this, the announcement of the Affordable Housing Fund was also a positive announcement, especially since it will create an impetus for the housing sector, which contributes around 65% to India’s cement demand.
Mr. Amit Ruparel, Managing Director, Ruparel Realty
Driven with the target to provide housing for all by 2022, we appreciate the government’s move to build 1 crore houses under Pradhan Mantri Awas Yojna in the rural areas. This move will create housing demand and generate employment. This budget saw the government offering several benefits to the infrastructure sector, at the same time missed out on a few important aspects of the realty sector. Infrastructure status to the entire real sector is still not implemented this could have reduced the developers cost of borrowing for projects. Also the real estate sector looked forward to Single window clearance mechanism which could have helped the developers in making the process more seamless and quicker.
Mr. Rohit Gera, MD, Gera Developments and VP CREDAI Pune Metro
The thrust of the budget on rural India, infrastructure, health care is positive. The budget unfortunately once again neglects the distressed real estate sector. While the finance minister has recognised the challenges around the anomaly between circle rates and actual consideration the difference of 5% is inadequate. This should have been at least 10%. The introduction of long-term capital gains tax on equities however will be positive for real estate. Typically a 3 year indexed effective tax for real estate works out to approximate 10% which will be equivalent to the same tax payable on equities. The LTCG tax on equities therefore will push some investors towards real estate. The increase in the turnover limit to Rs. 250 crores for the tax @ 25% will cover most real estate developers across the country.
Mr. Navroze Dastur, Managing Director, NCR Corporation India
True to its expectations, Budget 2018 has spelt out roadmaps and allocations across various initiatives of the Central Government. I welcome the budget and appreciate the clear commitment shown by the Government towards fueling the growth of digital adaptation by focusing on technology. The Budget kept the agenda surrounded by themes of transformation and energization. In the direction of making India a digital nation a needful decision was made, with the focus rightly on digital India, the budget also gave boost to the FinTech and manufacturing sector through Digital India. However, along with increased push towards digitization, cash continues to remain the world’s most trusted and fastest form of payment and consumers still want to use cash and rely heavily on ATMs.
This budget has made special provisions to ensure greater financial growth, with emphasis on enhancing cyber security in the financial sector. Initiatives to upgrade digital infrastructure, especially with regards to the protection of data has also been addressed.
As the global leader in Omni-channel solutions, we belief that the initiatives taken by the Finance Minister holds huge potential for enhancing economic growth and the government’s policies will usher in a new era of prosperity providing stimulus to cash and digital payments alike. The budget holds great promise and will have a long term impact.
Mr. Ashish Jindal, Co-Head, Real Estate, Sanctum Wealth Management
The establishment of a dedicated Affordable Housing Fund under National Housing Bank, funded from priority sector lending shortfall and fully serviced bonds authorized by the Government, is a big positive for the real estate sector. It would go a long way in meeting the Hon’ble Prime Minister’s vision of housing for all by 2022. Further, it could drive a few major real estate companies to look at affordable housing as a viable business opportunity.
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. Hon’ble 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.
Mr Shailesh Puranik, MD, Puranik Builders Pvt. Ltd
The year 2017 was marked as a year with highlights and challenges with various news and policy changes. The industry has going through a transition and challenging times due to many pivotal policy changes like RERA, REIT, GST, Demonetisation that occurred last year. 2018 also looks like to ride along the lines of 2017, However, we expect the government to take some corrective measures in the Union Budget 2018 that would provide relief to the real estate sector.
To begin with there should be no constraints and allowance must be given on the entire interest of housing loan as a deduction for taxation purpose which will again fuel demand for housing. We also expect that the Housing loss set-off limit should be increased from Rs.2 lakhs. The Budget 2018 should provide more incentives for the first time home buyers and developers who have been reeling the burden of RERA and general slowdown last year. It would be helpful if additional limit is set for the principal amount of the home loan, as usually this limit of INR 1.50 lakhs under 80C which gets exhausted under regular investments like PPF, FDs, EPF, insurance premium and much more. Considering the slowdown witnessed in the real estate market the above recommendation can help the sector to gain some momentum and will reap higher growth prospects for builders as well as better returns for the end consumers.
Mr. Pushpender Singh, Managing Director – JMS Buildtech Pvt. Ltd
As Real Estate makes pivotal contribution to the economy, the fall in the GST rate in budget 2018-19 would have provided the extra boost to the sector. However, investment of 2.4 lakh crore for 99 smart cities will attract more investments into the market which will uplift the commercial reality and increase the demand for office spaces.
Mr. Gaurav Mittal, MD, CHD Developers Ltd
The Finance Minister presented the Union Budget 2018, we welcome the budget. It has paved growth path for the affordable housing segment. Finance Minister announced of establishing dedicated affordable housing fund is an announcement at right direction aims to meet the overall housing target of the government of building 1 crore houses by 2019. Expanding of coverage under Pradhan Mantri Awas Yojna (PMAY) will fulfill every buyer’s dream of owning a housing.
Mr. Vineet Relia, Managing Director, SARE Homes
The Union budget brings some relaxation for the housing sector. The 1 cr houses to be built under Pradhan Mantri Awas Yojna (PMAY) and establishment of a dedicated affordable housing fund will act as a booster for affordable housing sector. Besides, the announcement of allotting Rs 2.4 lakh crore for 99 smart cities, will increase the investments in the sector. However, lowering of GST rates was also expected to provide the extra push to the sector.
Mr. Rahul Singla, Director Mapsko Group
Finance Minister Arun Jaitley presented his Budget for the year 2018-19 in Parliament. The budget is largely focused on uplift of the affordable houses in the country. For next year, we expect a budget which will open a plethora of opportunities for real estate sector especially for ready-to-move-in which will help in the overall development of the country.
Mr Ssumit Berry, Managing Director, BDI Group
We welcome the Union Budget 2018-19 presented by FM Arun Jaitley with emphasis given to the affordable sector. The announcement of establishing dedicated affordable housing fund has brought more relaxation to the affordable housing sector not only this the benefit of increasing coverage under PMAY is also a positive news for the end users.
Mr. Ashish Sarin, CEO, Alpha Corp
The emphasis on strengthening rural income and giving a push to affordable housing segment is a positive development. Although the real estate sector was expecting more in terms of getting industry status to the sector, the push towards “formal employment” and Infrastructure development will create a positive push for employment creation, which is the critical need of the hour.
Mr. Anshuman Magazine, Chairman India & South East Asia CBRE
It is fair to say that this year’s budget is a populist one, focusing on providing social security at the grass root level. The various announcements and funding provided are towards promoting the further growth of small scale industries as well as improving nfrastructure, particularly across rural India.
There is some good news for the real estate sector as well. With the aim of improving connectivity the Finance Minister has proposed the redevelopment of over 600 railway stations, completion of 9,000 kms of highways as well as improvement of regional connectivity with UDAN expected to connect 56 unserved airports and 31 unserved helipads in the country. This will have a positive impact on the country’s trade movement. Additionally, the budget also focusses on the development of the suburban railway networks in Bangalore and Mumbai. This focus on infrastructure development is in line with the governments long term objective of making India future ready.
The establishment of a dedicated affordable housing fund under the National Housing Bank for priority sector lending will provide a further impetus to the development of housing in this segment. Additionally, the fact that differentials between market value and circle rates for properties (upto 5%) will not be adjusted, will also help the demand for housing. From a taxation point of view, the increase in standard deductions to INR 40,000 per annum will help individuals have more disposable income which could be channeled towards higher investments into real estate.
It was hoped that this year’s budget would finally address the need to put in place single window clearance and accord infrastructure status to the sector. Though these issues continue to remain, this year’s budget has focussed towards strengthening the country’s agricultural and rural sectors, two significant contributors to India’s economy.
Dr Niranjan Hiranandani, President, NAREDCO
When he started his Budget Speech, Finance Minister Arun Jaitley said what has been largely expected that the budget will focus on Agriculture and rural economy. He did not disappoint this expectation, with what is largely a ‘Socialist’ budget. Finance Minister Arun Jaitley has managed to balance populist demands, the need to support economic growth and Prime Minister Narendra Modi’s focus on fiscal discipline and reforms.
From a real estate perspective, the Finance Minister said the government will establish a dedicated affordable housing fund in the National Housing Bank through various funding measures. “This is a welcome step”. The Finance Minister’s mention of reducing hardships faced in realty deals was ‘positive’.
It was also positive to see Suburban Railways in Mumbai find a mention in the budget, with Rs 11,000 crore of outlay. “Improved railway network and accessibility generally have a positive multiplier effect on real estate”.
Targets of Swacch Bharat, rural electricity and LPG connections have been increased substantially, which is a positive. The Budget take-away: Focus on ‘ease of living’ after ‘ease of doing business’.
Mr Sandeep Upadhyay, MD and CEO , Centrum Infrastructure Advisory Limited
Overall the initiatives announced in FM’s Budget speech for the infrastructure space seemed to be focused on the unleashing the capital expenditure cycle in line with the structural and policy reforms introduced in the sector over the last few years. While the key highlight for me was the renewed focus on augmenting rural infrastructure, however this Budget is in particular very positive for players in the transportation infrastructure sector.
Key Highlight: Augmenting rural infrastructure besides emphasizing on new roll out models in Transportation sector
Overall Comment: Highly positive for transportation sector (Roads, Railways, & Airports)
The budget as expected seems to be tilted towards the populist side driven by investments primarily focused into the Social, Agriculture and Infrastructure sector. However despite the huge capital Commitments the projected fiscal deficit being contained to 3.3% for FY19 is reassuring and commendable.
Increased weightage to push development of rural and agriculture infrastructure was one of the major highlights of the FM’s budget speech.
Overall it seems the Government’s exchequer shall have to be leveraged big time for undertaking the commitments to the Infrastructure sector which commands an all time high allocation in FY19.
The transportation sector including Railways, Road and Urban transportation sectors are the biggest beneficiaries. While the target set for the Bharatmala Projects is aspirational however completion of 9000 Kms of road projects on FY18 is commendable and demonstrates prudent policy and regulatory changes effected in the Roads and Highways sector.
While the plan to monetize assets through innovative models like the Toll Operate Transfer (TOT) is still at nascent stage however it shall be a critical tool for NHAI to reach its target. Continued emphasis on the Bond market and the encouraging Infrastructure Investment Trusts (InVITs) is a prudent move however one was expecting to hear some more concrete steps being taken around the deepening of the Bond market.
The aviation sector which has continued to witness phenomenal growth would be augmented on the airport Infrastructure side to keep pace with the overwhelming growth in passenger traffic.
The capital expenditure budgeted for Railways sector is pegged at 1.48 Lac Crores. Majority of this Capex is supposed to be spent on track augmentation and enhancing safety standard which is also the need of the hour in the Railways sector.
Ms. Shubika Bilkha, Business Head of The Real Estate Management Institute (REMI)
In the run up to the electoral year, the Finance Minister Mr. Arun Jaitley at the outset highlighted that strengthening agriculture, the rural economy, infrastructure, good health, quality of education, employment and the MSME’s was the focus of the Budget 2018. This is seemingly predictable as we gear up for an upcoming election year.
Infrastructure and urban development continued to see a thrust with Rs.50 lakh crores towards infrastructure, Rs.11, 000 crores towards the Mumbai metro, a focus on the warehousing and logistic segments, and the development of commercial land around the railways, to name a few. Further, the continued focus on the development of Smart Cities, digitization, sustainability, the provision of basic utilities shows an ongoing commitment towards urbanization. The budget also highlights the creation of additional architecture and urban planning institutions to fulfill the much needed skill gap in the built environment.
Budget 2018, however, shied away from addressing some of the key concerns of the real estate sector, a departure from the previous years. As one of the mainsectors 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.
Affordable housing, where the real shortfall exists, saw an encouraging boost with the creation of a dedicated Affordable Housing Fund by the National Housing Bank (NHB) to address the issue of funding constraints faced by all stakeholders. The additional commitment to rural affordable housing is also a welcome addition, as is the recapitalization that allows banks to lend Rs.5 lakh crores.
Will the LTCG levied on equities may be contribute to having investors look at alternative assets in real estate is something that is left to be seen?
The initiatives on job creation and healthcare, while seemingly necessary, are aggressive and in need of strong execution plans to see a successful fruition. The incentives provided to senior citizens were a welcome move, as were some of the initiatives in education and a much needed improvement of teachers in the educational framework. While corporate tax at 25% for companies with a turnover of up to Rs.250 crores I am sure has been welcomed positively, the fiscal slippage is something to carefully consider.
Honey Katiyal, Founder, Investors Clinic
The setting-up of Affordable Housing Fund under the aegis of the National Housing Bank (NHB) with a massive thrust on infrastructure development are welcome moves. A program like RISE to revitalize revitalization of infra and education systems with an initial budget outlay of Rs 1 lakh crore will have a long-term effect on the real estate sector and our society at large. Just a few days ago, the government reduced the GST rate on affordable housing units from 12% to 8% and I believe that such reduction would also be extended to all the types of residential properties which are under-construction across the country.
NSN Murty, Partner and Leader- Smart Cities, PwC India
Government expenditure on thousands of projects initiated under Smart Cities Mission across India going has already created a large marketplace for private sector and is going to further translate into jobs at all level, better and efficient infrastructure and liveable cities for everyone.
Mr. M Murali, Managing Director, Shriram Properties
The Budget 2018 is more of a welfare budget – an ad mixture of populism and pragmatism. Moves like National Health Protection scheme benefitting 50 crore people is highly laudable and much needed one in a country like India, since long. The budget seems to focus on rural economy and agriculture this time with emphasis on generation of higher income for farmers. This is feasible as India is traditionally an agrarian economy.
With the Economic Survey suggesting that the economy should grow between 7 percent and 7.5 percent in fiscal 2019, we were watchful on the government’s stance on containing fiscal deficit –speculating whether country will stay on the course of fiscal consolidation path. It is welcoming that the fiscal deficit target for next fiscal would be 3.3% and target for 2017-18 will be 3.5%.
Announcement of dedicated affordable housing for priority sector fund is encouraging. But there is still a lot to be done to achieve the objective of Housing For All mission which has both social and economic benefits. The real estate sector was expecting much more from the Budget 2018, particularly under affordable housing segment. Government may have to revisit this area. However the out lay of 2.04 lac crore for 99 cities under smart city mission is heart- warming.
Another important aspect that has surfaced during this budget is the step towards elimination of crypto currency and focus on digital transformations which are welcome social moves. Having successfully implemented the fundamental structural reforms without minding the political cost, perhaps this may be the best budget without much tinkering into the system.
Mr Sharad Mittal, Head – Director, Motilal Real Estate Investment (MORE)
Focus on Affordable Housing – Govt. Focus on Affordable Housing and their endeavor towards “Housing for All” continues. Demand side was addressed in the pre-budget development when the GST was reduced from 12% to 8% on Affordable Housing Projects and for buyers under the CLSS schemes. Through this budget, the Govt. has tried to address the supply side by the announcement of an Affordable Housing Fund (AHF) through the National Housing Bank(NHB)
Corporate Tax Rate @25% – In a welcome news, the Govt. proposed to reduce the tax rates of corporates having an annual turnover of upto Rs. 250 Cr to 25%. This will cover almost the entire universe of housing projects and would be another tax relief for developers.
Circle Rates – One of the issues pertaining to the sector was that while taxing income from capital gains or any other sources in any transaction of immovable property, the higher of circle rate or consideration value is taken and the difference is counted as income in the hands of the stakeholders. The Budget proposed that there shall be no adjustment where Circle rates are higher by 5% of the actual sales consideration. This would be beneficial in areas which have seen price reduction but where the circle rates haven’t moved down parallely.
Mr Pakshal Sanghvi, Director, Sanghvi Realty
The budget was contrary to people’s expectations of being a populist budget as this is the last budget by the Modi Government before the elections in 2019. However, I personally feel that it is a good budget that has taken agriculture and rural areas into focus for economic development of the country. Real Estate as a sector was left out.
However, this budget also took one step towards granting real estate sector an industry status by setting up an Affordable Housing Fund. This effort will help realize the ‘Housing For All by 2022’ vision of our Honorable Prime Minister and slowly but surely grant the real estate sector an industry status.
The Finance Minister also mentioned about reducing the hardships faced in realty deals and addressed the anomaly under Section 43 CA to tax real estate transactions at their real value rather than the value arrived at by applying artificially higher circle rates. As per new announcement, if the circle rate does not exceed 5% of transaction value, no adjustment is required towards the capital gains on a real estate transaction. It will help in terms of some extra savings if there is parity between the market rates and the ready-reckoner rates. The five percent differential allowed from the ready reckoner rates will benefit the buyers at large. I feel that this is the right time for buyers who want to buy properties like these.
Mr Sundeep Jagasia, Managing Director, Shree Krishna Group
Key positives for Affordable Housing within real estate were, one being the dedicated fund for Affordable housing to be formed under National Housing Bank and the other was the inclusion of affordable housing loans under priority sector lending. Both these measures will increase the credit availability for real estate sector.
No good news for the housing industry as the much-awaited relief in GST and revision in home loan rates were left untouched. However, overall, due to focus on Housing For All 2022 and boost to rural infrastructure, the industry should prosper in the future.
Ashish R. Puravankara, Managing Director, Puravankara Limited
The Union Budget for 2018-2019 demonstrates an encouraging growth story for India. The pre cursor for Union 2018 for the real estate sector started with the notification of the GST council to extend the concessional rate (of GST) acquired under the Credit Linked Subsidy Scheme (CLSS) for Housing for All (Urban) Mission/PMAY effectively came into force as on 25th January 2018. This now brings the current GST at 8% instead of 12% for under-construction homes.
A robust road map for housing for all was laid during the budget last year such as infra status to affordable housing and tax holiday for affordable housing and now the establishing of a dedicated affordable housing fund under the National Housing Bank will give it a huge fillip too.
The extension of corporate tax rate of 25% to companies with the turnover up to 250 crore from just 50 crore till last year, will have a positive impact on the health of corporate India irrespective of any sector. With the focus on development in rural India, infrastructure augmentation, healthcare accessibility, education enhancement, employment benefits and smart city expansion, our country is gearing towards a stronger, healthier and brighter economy. We will be happy to contribute to our nation’s growth story and accelerate development and inclusive growth.
Mr. Sanjay Bhutani – CMO, Rivali Park, CCI Projects.
Union budget 2018-2019 is offering a major boost to the ever emerging real estate industry. Government’s initiative of allocating dedicated funds for the affordable housing scheme under NHB and One Crore houses under Pradhan Mantri Awas Yojana (PMAY) will prove to be a win-win situation for the supplier and the buyer alike. The real estate industry also welcomed the announcement of The Smart Cities Mission with government’s initiative to spend about INR 2,04 lakh crores to execute smart projects will be an added advantage for the Indian Property segment. The capital gains on immovable properties has brought about a positive atmosphere in the Indian Property segment.
Mr. Govind Sankaranarayanan, Chief Operating Officer – Retail Business & Housing Finance, Tata Capital
The Budget 2018 announcement seems to have struck a delicate balance between the populist demands and fiscal prudence, given the past year’s subdued economic growth. The world’s largest health care benefit programme could have dramatic and far-reaching implications for the health & insurance industries. The setting up of a dedicated Affordable Housing Fund reinforces the government’s commitment to this sector, which should also provide an additional fillip to the real estate sector and financial institutions supporting the government’s Pradhan Mantri Awas Yojna scheme. Overall, the various initiatives should generate rural incomes and create jobs which should ultimately result in consumption.
Mr. Tushad Dubash, Director, Duville Estates
Budget 2018-19 focus on infrastructure and the Smart Cities initiative is a positive move for the real estate sector and Pune in specific. The Smart Cities Mission is an ambition to develop 100 cities across India that would also harness the Information Communication Technology (ICT) capabilities. Pune comes under the governments Smart City initiative and the allocation of Rs. 2.04 lakh crore towards the listed 99 Smart Cities will serve well for Pune’s real estate market.
Pune’s real estate is one is the lesser impacted markets in comparison to the other key cities and have proved to be one of the more resilient markets in the country. Unlike other metros where buyers have demonstrated a strong preference for ready-to-move in apartments, in Pune there has been a steady skew to in terms of interest in under-construction projects. It is important to note that strong Real Estate have had a steady momentum in terms of inventory off-take and that the excellent infrastructural connectivity has definitely lent a positive slant to sustaining the current momentum especially in some of Pune’s micro-geographies which have withstood the onslaught of a decline in prices due to the impact of de-monetization, RERA and GST.
Combining Pune’s growing infrastructure along with the sustained demand will boost Pune’s real estate market further. Infrastructure is a growth driver for the country and the budgets focus on infrastructure and connectivity will have an impact on not only the real estate sector but the economy on the whole.
Mr. Prashant Solomon, MD, Chintels India and Hon. Treasurer, CREDAI NCR and Convenor of CREDAI National (Media and PR Committee)
The budget has several incentives for the rural sector, women etc but I would have liked the benefits of tax reduction to be wide spread with more income tax rebates for middle and salaried classes in order to increase disposable income and boost spending power that will help the economy and our sector grow in the long run. Though there are no major incentives for the growth of real estate industry the re-introduction of LTCG will help in growth of other investment avenues. Concessions in the budget towards the affordable housing sector and the setting up of an Affordable Housing Fund under the Pradhan Mantri Aawas Yojna, will help the realty sector ancillaries grow. Though most of the recommendations that we had made on behalf of the real estate industry have not been addressed, the move towards no adjustment to be made in a case where the circle rate value does not exceed 5% of the consideration is a welcome move.
Mr. Nagaraju Routhu, CEO of Hero Realty
We must appreciate the fact that the government is very serious on the mission of housing for all and in the same light we have seen some extremely positive announcements in the budget today. The setting up of a separate fund for affordable housing is a welcome move as it will enable an efficient supply of housing projects in the country. The government move of the 5% deviation from circle rates to remove hardship is not enough as in many cases; the actual deviation of circle rates to prevailing market is as high as 30%.
Mr. Sarjan Shah, MD, Group Satellite
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.
Mr. Abhishek Bansal, Executive Director of Pacific India Group
The budget this year is a boost to ‘Make in India’ initiatives and aimed at a progressive development of the rural economy and growth of the entire country. The focus on infrastructure, social inclusion and progress, education, agriculture and healthcare are steps in the right direction. Though there is not much in terms of addressing the problems faced by the realty sector but the move towards no adjustment in case of the circle rate not exceeding 5 % of sale consideration is a welcome move. Standard deduction for transport, medical reimbursement for salaried taxpayers and incentives for Senior citizens will help increase disposable income at hand.
Mr. T Chitty Babu, Chairman and CEO, Akshaya Pvt. Ltd
The much-awaited Union Budget is out today with many new announcements across sectors, and as expected, there is a huge boost to infrastructure with a slew of announcements related to the capacity addition to roadways, railways and airways network. The great boost to infrastructure investment will pave way for real estate developments in a big way. Secondly, the huge focus and funding towards the SME sector will enable employment generation helping boost the economy and addressing the needs of the youth. When it comes to real estate sector, the push given by the Government towards affordable housing is really appreciable and will help in realising the dream of ‘Housing for all 2022’.
The existing Government initiatives like land reforms, REITS, FDI in real estate, RERA, GST, Smart Cities, Housing for all 2022, infrastructure status given to affordable housing, subsidies for buyers and tax benefits for developers will prove to be beneficial if the Government is also able to implement most of it through single window approvals, in the coming years. We are hopeful that this will create many jobs and accelerate the growth of the infrastructure and real estate industry and also contribute to the ‘Make in India’ effort of the Government.
Mr. Rattan Hawelia, Founder & Chairman, Hawelia Group
The budget has more misses than hits. The government initiative to establish dedicated affordable housing fund will act as a stimulus for the real estate industry and will help create more affordable supply as well as drive demand from genuine end-users. However we look forward to work with the government initiatives towards housing for all in a proposition that’s win-win for all respective stakeholders as a whole.
Increased allocation for smart cities and the relaxation of income tax adjustment in case of difference of less than 5% between the circle rate and consideration for real estate acquisitions is a welcome change. However, disappointed with no changes in tax savings on home loans, income tax slabs or GST slabs, means no extra benefit to new home buyers. Budget has failed to address any subsidies for the construction industry that implies high cost-pressure while constructing budget housing project.
The need of the hour was to provide a positive boost and momentum to the struggling real estate sector which could have make a decisive difference and positive impact on consumers and the overall sentiments of the market.
Bhairav Dalal, Partner, Real Estate Tax, PwC India
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.
Surendra Hiranandani, CMD, House of Hiranandani
I would term it as a pro farmers budget with a slew of measures well directed towards improving productivity in agriculture. With the increase in MSP for crops, thrust on organic farming, doubling the expenditure allocated to food processing sector, liberalization of agricultural exports, creating state of the art facilities at food parks, push to fisheries and allied sector, measures for senior citizens, this budget truly focused on uplifting the life of the “aam aadmi”. The introduction of various schemes in these areas will certainly bridge the rural-urban divide in the future. The announcements in the areas of healthcare in particular are path breaking and will empower the poor and under privileged sections of the society.
While there was no direct benefit to the real estate sector from the budget, some measures announced will positively impact the sector. The announcement of a dedicated affordable housing fund in the National Housing Bank (NHB) funded from priority sector lending shortfall and fully serviced bonds authorized by the Indian government is a welcome move and could act as a catalyst in the government’s vision of “Housing for All by 2022”. The move to allow a variation of 5% between transaction value and circle rates for computation of capital gains will not impact transactions significantly in any of the metropolitan cities in India. The massive push for improvement in infrastructure, including significant capital expenditure for roads, railways and development of smaller airports will indirectly benefit the real estate sector in the long run.
One of the concerns is the inability to meet the fiscal deficit in spite of surpassing the divestment target. New measures adopted for reducing the deficit might push up the yields leading to higher interest rates for both corporates and households. Investors in particular will not be pleased with Long Term Capital Gains on sale of equity and mutual fund investments. We could see some flight of capital from equity to the real estate class on the back of this move. The salaried class too stood to gain very little as the standard deduction of Rs 40,000 will provide nominal benefits to them.
We had certainly anticipated more for the real estate sector which is the second largest employment generator in the economy after agriculture. It seems the entire focus of the government was on the latter while undermining the importance of real estate to the economy.
Mr. Amarjit Bakshi, Managing Director, Central Park
After laying the foundation for a more robust and organized real estate sector, we anticipated the government to further reinvigorate the industry by way of lowering the GST rates, allowing single window clearance and affording an industry status to the real estate sector. These changes would have contributed positively to hasten the recovery of the industry which is today one of the largest employer and contributor to country’s GDP.
Having said that, the Government’s continued focus on affordable housing with an establishment of a dedicated fund will further propel the realization of Pradhan Mantri Awas Yojana (PMAY) which aims to bring more people under the ambit of inclusion. Greater focus on developing the infrastructure layout by way of increased budget allocation for highways, acceleration of rural roads construction is a welcome move as it will drive greater socio- economic development around these regions.
Dharmesh Jain, Chairman and Managing Director, NIRMAL
This year has been rife with changes for real estate sector, starting with demonetization moving onto to RERA and eventually GST. Early industry predictions underlined the eminent slow down as a result of said fluctuations. The sector had to take a step back in order to understand, align and action in accordance. Although demonetization had an intense almost immediate effect amongst the supply side, demand has been steady, gradually picking up in the past months. Furthermore, the demand for office and retail spaces has remained strong. Both segments have witnessed stable and rising rentals across cities. Although the residential section did see setbacks initially, they have begun to bounce back.
Most developers have found it in their best interest to focus on existing inventory. PE Inflows have been the boost required to uplift the sector. Newer announcements during and post the course of the budget, like exemption of Dividend Distribution Tax on special-purpose vehicles have opened ways for REIT sector in India thereby anchoring professional real estate management. Lastly, the infrastructure status for affordable housing has provided the necessary tax relief to developers alongside other incentives. Taking all these into account, we are predicting a promising phase for Indian real estate in the coming months.
Sachin Bhandari, CEO, VTP Realty
With real estate being a major focus owing to the infrastructure development and housing for all initiatives by the Government, the Union Budget 2018 announced today did have some interesting inclusions. In fact, prior to the Union Budget being broadcasted, the Government had declared reduction of GST to 8% for all houses qualifying under credit link subsidy scheme under PMAY. This itself shows the Government’s keenness and commitment to make Housing for All a reality by 2022. Funds have also been allocated by the government for building 37 lakh houses in urban areas. These project the Government’s sanguine outlook towards the realty sector which is very encouraging for us as a business and also as consumers.
Out of 100 smart cities, 99 have been identified and Government announced budgets for development of various projects in these cities. The Finance Minister further announced that the Centre will create a dedicated affordable housing fund in collaboration with the National Housing Bank. For companies like ours, which have MIG and Affordable House offerings, this is a great opportunity to play a role in the development of India and contribute our bit in making our country one of the largest economies in the world. Government’s initiative to focus on both rural and urban housing will further help in accelerating the growth of real estate in our country.
Manju Yagnik, Vice Chairperson of Nahar Group
One of the key ask for last year was for a budget that acted as a catalyst for the salaried employees which is rightly reflected this year. Standard deduction of Rs 40,000 allowed for transport, medical reimbursement for salaried tax payers is a welcome reform. With a special focus on Infrastructure and urban development we will see a continued thrust with Rs.50 lakh crores towards infrastructure, Rs.11, 000 crores towards the Mumbai metro and a focus on the warehousing and logistic segments, and the development of commercial land around the railways, to name a few.
However by having least focus on the real estate sector, developers will face a financial challenge in the current real estate scenario. Keeping in mind that 99 cities are selected for smart cities project with an outlay of Rs 2.04 lakh crore, the infrastructure is certainly help in boosting the overall economy. With the introduction of dedicated affordable housing fund under National Housing Bank, the lower segment of the society will definitely have a secured financial decision. As the budget also rightly highlights the creation of insttitutions in the architecture and urban planning we definitely are here building a skilled India.
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