The Real Estate sector expected major announcements from the the Union Budget 2020 hoping to revitalise the understressed sector. NewsBarons presents the views and reactions of the leaders of the real estate sector on the impact of the Budget 2020 announcements.
Budget failed to announce much awaited economic stimulus to fuel kickstart of $5trillion economy: Dr Niranjan Hiranandani, NAREDCO
Marathon Budget 2020 has set a positively direction tone but failed to announce much awaited economic stimulus to fuel kickstart of $5trillion economy. It subsequently lacked incremental allocation inadequacies with over emphasis on fiscal prudence and inflation target. With economy in doldrums and acute slump in consumption, efforts on demand creation incentives went missing. The labor intensive real estate sector which had pegged hope on additional liquidity infusion, tax reforms and rental housing were overlooked in the budget. Any fiscal measure in sluggish real estate sector could have provided a fillip. Wherein, tax benefits extended to both homebuyers and Developers in affordable housing sector will encourage more launches in this segment. Also, abolishing of dividend distract and opening of International bullion market scores eyeballs for global investors to draw investment in Indian IFSC.
Budget has no direct impact on Real Estate: Ramesh Nair, JLL India
Focus continues on Infrastructure and revival of consumer demand, JLL rates Budget 3/10 for the real estate sector.
The Union Budget announcement today continues to focus on affordable housing and infrastructure, more specifically, urban infrastructure and logistics. However, we do not see significant impact on the realty sector.
Keeping in mind the limited fiscal room available to the Government, the focus of the Budget is to increase liquidity and enhance consumer demand through extension of benefits and simplification of personal income tax…
Budget missed any major announcement for easing liquidity in the real estate sector: Anuj Puri, ANAROCK Property Consultants
Budget missed on the ‘quick fixes’ the real estate sector needs urgently
Clearly, this was a ‘make or break’ Budget for the government with most sectors (including real estate) seeking concessions to boost consumption and investments. The government has lived up to the overall expectations in several ways. This Budget restores some of the lost confidence in the India growth story – and more importantly, within India Inc. – by laying emphasis on wealth creators.
Budget has provided the much-needed hope to the infrastructure and real estate industries: Anshuman Magazine, CBRE
The real estate industry also appreciates the allocation of Rs 35,600 crore for meeting the nutritional requirements of people across all age group.
Continuing its commitment for further strengthening the national infrastructure till the last mile, Finance Minister Ms. Nirmala Sitharaman today presented a progressive budget and touched upon every section of the economy. It is noteworthy that she stressed upon building on aspirational India in order to boost the standard of living; economic development for all; and building a humane and compassionate society.
No major announcement for accelerating growth: Shishir Baijal, Knight Frank India
The budget fell short of industry expectations.
With the economy in midst of a sharp slowdown, the Union Budget for FY21 was being awaited with high expectations to act as a growth booster. However, the budget fell short of industry expectations, with no major announcement for accelerating growth. Lowering of income tax rates with removal of exemptions, may not lead to any meaningful boost to consumption. As far as the real estate sector is concerned, the industry was hoping that the Government would come up with measures to boost housing demand.
Expected more for real estate sector: Surendra Hiranandani, House of Hiranandani
While the budget overall had measures directed towards boosting the income of people and enhance their purchasing power through tax relief, it has some specific measures for the real estate sector too. The budget announced the initiative to develop five new smart cities in collaboration with States in PPP mode. This is a welcome move and will enhance the real estate prospects. It strengthened the commitment to affordable housing, which is the government’s focal point for real estate. The previous tax exemptions for both homebuyers and developers have been extended for another one year. Personal tax relief across various income slabs will invariably increase
A step towards the growth of the country while taking the economy to the $5 trillion mark: J C Sharma, SOBHA Limited
The Union Budget 2020-21 presented by the Government was around the themes of aspirational India, economic development for all, caring society and ease of living. It is a step towards the growth of the country while taking the economy to the $5 trillion mark.
The Government reiterated its commitment to the affordable housing segment. Continuing from the announcement made in the last Union Budget, the Finance Minister has proposed to increase the time line of additional deduction of up to Rs. 1.5 lakh for interest paid on loans taken for an affordable house from the present 31st March, 2020 to 31st March, 2021. Similarly, it has extended the date of approval of affordable housing projects for availing tax holiday on profits earned by developers from the current 31st March 2020 to 31st March 2021. These announcements will give a significant boost to the affordable housing segment, enabling both home buyers and developers to benefit from it.” By bringing down the income tax slabs for individual taxpayers, the Government has protected the interest of the tax payers. In addition to this, the Government has proposed to simplify tax regime by rationalising the exemptions. Under the new regime, substantial tax benefit will accrue to a taxpayer depending upon exemptions and deductions claimed by him/her.
Budget should have had second generation reforms for real estate: Lincoln Bennet Rodrigues, Bennet & Bernard Group
The Union Budget 2020 had very few measures for the real estate sector which is one of the major contributors to India’s GDP. Apart from the personal income tax relief and few sops for affordable homes, there have been pressing concerns in the real sector that have not been addressed. There was an urgent need to address the challenge of liquidity faced by the sector, especially after the NBFC crisis. The budget could also have revived the Input Tax Credit for housing sector to provide relief to developers and home buyers, where-in homes could have been made available at lower cost. Some of the other aspects that the government that could have been addressed in the budget are granting of industry status to the overall real estate sector and implementation of single window clearance. A key expectation was the restoration of income tax benefit on a second home which would have benefitted home buyers in a big way and also stimulated the real estate sector.
Going forward, we hope that the government takes more developer and investor-friendly initiatives for the betterment of the real estate market in the near future.
The budget sentiment is positive: Ashok Mohanani, EKTA World and VP NAREDCO Maharashtra
The budget focused more on Infrastructure upgrade of Chennai-Bengaluru and Delhi-Mumbai Expressway estimated to be completed by 2023. This will not only raise the skill development in the infrastructure sector but will also open new markets for builders along with residents. Proposing the development of 100 new airports to be built by 2024 under Uddan scheme will bring in NRIs to India and increase the investment in the country. To bring in indirect relief to the real estate sector proposal of spending Rs 100 lakh cr on infrastructure development in the span of five years is the biggest news for the sector keeping in mind the current state of huge crash crunch in the economy. With this the sector will be impacted towards expansion but the benefits will be observed in the later years. A support to the developers with the infusion of 22,000 crore to the Infrastructure Pipeline on the other hand setting a liquidity constraint on NBFCs and HFCs will be added in the future which will result in actions being limited and under the government jurisdiction. The new personal income tax regime for middle-class taxpayers by slashing the percentage to 10% from 20% is a big move and will eventually strengthen their buying power for investment in the real estate. The deduction of Rs 1.5 lakh for loan sanction with regards to affordable housing has been extended by one year which will minimally benefit both buyers and developers and give them some more time to pay back. The budget sentiment is positive and the funding has been spread across other sectors keeping a balance of inflation of the country.
The union budget predominantly focussed on revitalising the affordable housing: Kamal Khetan, Sunteck Realty Ltd
The union budget predominantly focussed on revitalising the affordable housing which is an attempt to revive the animal spirit in the real estate market. In order to meet the ‘Housing For All by 2022’ and stimulate homebuyer’s sentiment, there is a direct intervention through one year extension on exemption of additional interest deduction of Rs. 1.5 lakh for home buyers under the affordable housing sector. Additionally, extending the tax holiday on the profits of developers involved in affordable housing projects to March 2021 is a huge support to de-bottleneck issues surrounding the affordable housing segment. It will provide an impetus to the sector for creating more demand for MIG and LIG group of homebuyers. Moreover, 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.
Hoping that the tax relief across income slabs will increase the disposable income of the middle segment group for affordable housing consumption: Sandeep Runwal, Runwal Group
We welcome the new announcements made by the Finance Minister towards the affordable housing segment which is aimed at giving tax holiday to developers and extending the loan sanction date by one more year on profits earned. Although the last couple of years have been challenging, we are hoping that the tax relief across income slabs will increase the disposable income of the middle segment group for affordable housing consumption. Furthermore, incentives to attract foreign players in infrastructure should revive consumption in the real estate sector. We foresee the proposed initiatives might see a change in the fortunes of the real estate sector in the coming years.
The real estate sector had pinned high hopes on the Budget: Rajan Bandelkar, Raunak Group and President, NAREDCO West
The real estate sector had pinned high hopes on the Budget, as the sector has been reeling under pressure and is on the verge of collapse. The Budget has only two positive proposals for the sector viz. one more year of extension for approval of affordable housing projects for availing a tax holiday and extension of additional Rs 1.5 lakh tax benefit on interest paid on affordable housing loans. But the sector’s key demands such as allowing restructuring of loans, extension of a subvention scheme, raising the limit of Rs 45 Lakh for affordable housing, scrapping of capital gains on the sale of properties, extending the timeline of capital gains, are not met with. This core sector drives demand in ancillary sectors and creates employment opportunities, too. Not addressing the key issues will worsen the future and make the going unviable. The Government can still take immediate steps to bring the sector back on the track before it is too late.
We view this budget in positive light: Madhusudhan G., Sumadhura Group
We view this budget in positive light. The budget has provided fresh stimulus to the ‘Housing for All’ vision by extending additional corpus of INR 1.5 lakh tax benefit on interest paid on affordable housing loans by one year. Affordable housing projects are given a deduction which adds to a concession for real estate transactions.
The long awaiting single-window clearance and industry status for real estate are not addressed, however the developers expects the National Logistics Policy to be released by the govt soon, to help enable single-window clearance for projects.
The budget has also addressed the liquidity issue by informing that the Govt. will offer support by guaranteeing securities floated to enable liquidity support to NBFCs. A mechanism to provide liquidity to NBFCs and housing finance companies was also proposed.
Budget had had very little for the real estate industry: Anuj Khetan, Vijay Khetan Group
Aspirational India, economic development and a caring society were the three prominent aspects of the Budget 2020 by FM Nirmala Sitharaman that focused on the standard of living, job creation, infrastructure, increase in foreign investments and overall boost in the economy. Although, the budget failed to impress the markets, it had very little for the real estate industry too which contributes nearly 6-8% to India’s GDP. The Stock market will start to mount as FII’s will pour in their money soon. The Government proposing to remove DDT is an important step to boost investment. The announcement on the digital revolution will play a big role in delivering services to the people in India that aims to achieve seamless delivery of services through digital governance. The government will soon roll out the policy to enable the private sector to build data center parks throughout the country that will boost the commercial space. The announcement proposed to extend Rs 1.5 lakh benefit on interest paid on affordable housing loans by a year is a move to encourage the developers to invest more in affordable housing. Also, the tax holiday provided on profits earned by developers of affordable housing projects is a big relief to the sector. The funds allocated for infrastructure will give a much needed fillip to infrastructure development. The sector was highly expecting scrapping of capital gains on the sale of properties which could have provided a major relief both to the sector and consumers. Although the budget had very few things to cheer, the industry hoped for more in terms of reviving the market sentiments.
Real estate sector not discussed much during the budget: Kishore Jain, CREDAI Bengaluru
Hon’ble Finance Minister Nirmala Sitharaman in her Union Budget presentation, focused more on the infrastructure development by allocating INR 1.7 lakh crore. The government has taken many measures which will help fulfil the aspirations and vision of most of the sectors but the real estate sector has not been discussed much during the Budget. Measures on the repo rate deduction, GST rate reduction on construction materials etc. were not mentioned. Deduction on housing loans in affordable housing segment has extended by one year. The provision of tax holiday for the developers of affordable housing sector will further boost the segment. Also the concession provided to the real estate transactions will bring in more investment to the sector. The government did not announce schemes or policies to fulfil the promise of ”Housing for all by 2022″, within two years. Real Estate being one of the key contributors to the country’s economy, it is important to address the problems faced by the sector.