Union Budget 2017: Dream budget for affordable housing

Union Budget views real estate sector heads,


Shubham Jain, MD – JP Infra

‘Boost to Real Estate in the budget will fuel growth in the Housing Sector’

This year budget clearly shows bold initiative being taken by the finance minister to lift up the sagging sentiments and this should pay given that the housing segment has been elevated to the stature of the Real estate with a record allocation of Rs. 3,96,135 crore.

The Real estate industry is likely to see an increase in the demand in the wake of new policy announcements including the FM’s announcement of 1 crore houses to poor by the year 2019, the aim of 133km.road per day under ‘Pradhan Mantri Gram Sadak Yojana’ construction of 500 rail stations and new metro policy.

Overall, I believe this budget should help us in bringing back the growth which has had the temporary effect of demonetization.

Sunil Mishra, Chief Strategy Officer, PropTiger.com

This budget has been cautious albeit balanced for the real estate sector. One of the standouts for the real estate sector was definitely the affordable housing segment being granted infrastructure status. Housing for All by 2022, is not just a dream but a necessity for a country like India that’s urbanising at a rapid pace. The move to measure the areas in affordable housing projects – 30 sq mts. for the projects in municipal limits in the 4 metros, and 60 sq mts. for the rest of India, on carpet area as against the earlier built-up area, will translate into homes that are 30 per cent larger. This should amplify the interest of developers further, to build more affordable projects, thereby, increasing supply. 100% deduction for profits, for affordable housing projects which earlier needed to be completed in three years, now have to be completed in five years; will bring relief to developers plagued by approval issues. A one year tax break for unsold inventory that has received the CC, will bring some relief to developers. The move to abolish FIPB, indicates further liberalisation of the FDI policy, something that the finance crunched sector would welcome. Long-term capitals gains tax benefit which could be availed after three years, can now be availed after two years, which would please investors and home buyers alike. The new Metro Rail Act which is to focus on innovation, and the government’s decision to focus on MMTS, would augur well in creating connectivity for peripheral locations – something that’s a must if developers and buyers are to be incentivised for investing in emerging locations

Rahul Nahar, MD, XRBIA Developers

It’s a dream budget for affordable housing. Infrastructure status will transform the sector much like deregulation did to telecom in the 1990’s. A 100 million houses across India is now a reality and we shall lead the supply train.

Kishor Pate, CMD – Amit Enterprises Housing Ltd.

The Budget has announced that 1 crore rural houses will be created by 2019, and the outlay for rural housing under PMAY is Rs. 23000 crores from the previous Rs. 15000 crores. This will help address the housing needs of the homeless and those living in ‘kachha’ houses in the rural areas, and potentially help reduce pressure on urban areas if it is in conjunction with employment generation

The total allocation for infrastructure is a whopping Rs. 396135 crores in 2017-18. This is very good news for the real estate sector, as the correlation of infrastructure with real estate growth is a well-established fact.

Affordable housing has finally been given infrastructure status. This will mean cheaper loans for developers of budget housing and significantly boost the Government’s target of Housing for All by 2022. The Affordable housing has seen a significant change in the Government’s existing scheme, with the qualifying size requirements now changed from built-up area to carpet area of 30 sqm. and 60 sqm. for projects within the municipal limits of the large 4 cities.

On the all-important front of personal income tax, the existing tax rate for incomes between Rs. 2.5 lakh to 5 lakh has been reduced to 5%, and taxpayers in other categories will also save Rs. 12,500. While this will definitely boost the overall consumption story, it unfortunately will not have any significant impact on housing demand. However, the FM did indicate that lending rates are likely to come down in the wake of the demonetisation move. A decline in interest rates would have positive implications on housing demand.

Anil Pharande, Chairman – Pharande Spaces.

Project completion timelines for affordable residential projects have now been increased to 5 years, which comes as a relief to developers of such housing as it will allow them more time to sell their inventory.

The Budget has focused on improving rural connectivity through higher kilometres road construction per day. Also, railway stations redevelopment has received a shot in the arm, with 27 stations to be allocated in the current year. This will help connect more areas and create new development corridors. It has also announced that the PPP mode will be used for select tier 2 airports, and a relaxation of AAI Act for commercial usage of land. The Government will also announce a metro rail policy for implementation and financing of such projects, which will generate additional employment and therefore interest in home purchasing.

With five tourism zones to be established via Special Purpose Vehicles (SPVs), we will see an increase in tourism to the focus areas, with a direct boost to hospitality. It will also increase appetite for second-home investors focused on the tourism-related rental income in these areas.

The Government has announced that 250 proposals for electronic manufacturing worth 1.2 lakh crore have rolled in. Obviously, this has a direct potential correlation to employment generation and therefore demand for housing in and around the identified manufacturing nodes.