Boost for realty players

Much on expected lines, though this year's budget does not unveil any big bang measures to give a giant push to the beleaguered real estate. Yet, it aims to revitalise the economy, triggering investments through a series of reform measures. It also seeks to spur infrastructure and boost affordable housing, to provide a sigh of relief to the sector.

In the absence of any largesse and quick fix solutions, the budget may look disappointing, but it is perfectly in line with the government's philosophy that real estate should grow on the strength of the economy and follow the path of long-term, sustained and inclusive growth.

As the trigger to start the investment cycle has to come from public spending, the budget has rightly focused on spending on basic infrastructure construction through multi-pronged strategy. To boost supply, it provides 100 percent service tax exemption for affordable homes with sizes up to 30 sq.mts in metros and 60 sq.mts in non-metros.

On the demand side, the budget has provided additional rebate of Rs.50,000 per annum on housing loan interest for first time home buyers in affordable segment, with loans not exceeding Rs.35 lakh and property value not exceeding Rs.50 lakh (though it is on the lower side in metros to realize full potential).

The hike in the limit of deduction for rent paid under Section 80 GG of IT Act, will positively impact rental demand for affordable housing. The exemption of real estate investment trusts (REITs) from Dividend Distribution Tax (DDT) will also give a fillip to affordable housing.

Considering that rental housing can play an important role in the success of "Housing for All", the budget has provided a much needed boost to it by hiking the HRA limit from Rs.24,000 to Rs.60,000 crore per annum for rented accommodation. Since liquidity crunch has been the biggest bane of real estate sector, it was expected that the budget will address this crucial issue.

With this year's budget, the government carries forward its reform process to boost realty, that started with liberalising FDI norms to boost affordable housing, allocating huge funds for urban infrastructure projects, reviving SEZs and bringing housing for economically weaker sections and slum redevelopment under CSR to provide impetus to low-cost housing.

The provision made in this year's budget for digitization of land records will improve transparency, thereby boosting the confidence of property buyers and investors. This will also expedite the process of land acquisition, thereby checking delivery delays and cost escalation.

The announcement to set up 300 "Rubran" clusters, is another positive reform to boost realty. The budget has, however, partially addressed the issue of introducing single-window system to check long delays in project approval due to multiple authorities by bringing amendments to the Companies Act, 2013, and revamping existing procedures and processes through tech intervention.

The government is quite serious and focused on getting two crucial reform bills of Real Estate Regulation and Development Bill and GST bill (currently stuck in parliament) passed, in order to introduce single, uniform tax regime and empower property consumers and investors by providing a fair deal by setting up regulatory authority.

In sum, it is a positive budget that is set to boost the sentiment of the real estate sector. Though the sector reeling under a slowdown, had hoped for much more relief, yet, there is enough on the platter to induce home buyers and developers, taking real estate forward on road to revival and sustained growth.