Experts feel government ignored quick fixes that could have helped the industry, currently affected by the economic slowdown
Vinod Sampat
Real estate players were left disappointed with this year's Union Budget, as no short term benefits seemed to be in sight for the industry.
The government's focus on development of infra projects, means that real estate might see benefits only in the long run. "But the need of the hour was to actually break the vicious cycle of economic slowdown that has adversely impacted the real estate market in the last few years," said Pankaj Kapoor, managing director of Liases Foras. "Our statistics have shown that nearly 13 lakh housing stock remains unsold in the country, of which 7 lakh fall under the affordable housing category. In the Mumbai Metropolitan Region alone, a total of 2.83 lakh stock, which includes one lakh affordable homes, remains unsold," explained Kapoor.
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Madhan Nahar, practising chartered accountant, said, "In the new tax regime, the housing interest component from the monthly EMI, deducted towards housing loan that was exempted until now, is believed to be one of the 70 lists exempted under the Income Tax Act. This is a bad sign for those looking for investments in the housing sector."
According to Dr Niranjan Hiranandani, president, NAREDCO, the Budget has set a positive tone, but failed to provide the much-needed economic stimulus to kick-start the $5 trillion economy. "The labour-intensive real estate sector, which had pegged its hope on additional liquidity infusion, tax reforms and rental housing, was overlooked in the budget."
Kamlesh Dhruv, a developer who constructs affordable houses under M/s Dhruv Residency in Wangani, said the budget was not favourable, as his company was "already facing liquidity crunch in the market". "The flats I am selling in the affordable segment range from R11 to R17 lakh, but due to banks' stringent scrutiny of homebuyers' loan applications, loans are getting rejected, which is impacting the flat sales. As many as 40 loan applications for my project have been cancelled."
Senior property lawyer, advocate Vinod Sampat added, "While the government is talking about affordable housing, nothing is being done to aid flat purchasers."
Ramesh Prabhu, founder of Maharashtra Housing Societies Welfare Association (MahaSEWA), also called the Budget "poor". An exception, he said, was made for cooperative societies, where the "tax has been proposed to be reduced to 22 per cent, as against 30 per cent".
Anuj Puri, chairman of Anarock Property Consultants, in a statement said, "The Budget misses on the 'quick fixes' the real estate sector needs urgently and focuses on long-term vision."
13 lakh
Unsold housing stock in the country
A few positives
. Affordable housing continues to be the government's focus for real estate. The previous tax exemptions for both homebuyers and developers have been extended
. Personal tax relief across various income slabs will invariably increase disposable income at the hands of the middle class, and boost their consumption capabilities
. Alternative segments get boost: Instead of giving direct benefits to residential real estate, the FM laid more focus on alternative segments within real estate, such as warehousing, data centres, schools, hospitals, etc
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