REALTYSECTORHAILSTHEUNIONBUDGET201718

ThemuchawaitedUnionBudget201718hasbeenfinallyannouncedandhasscored
highintermsofimpressingthecountrymen,withtherealtysectormakingthemostoutofit.
ThisbeingthethirdextensiveBudgetpresentationbythecurrentgovernment,andfirstafter
therecentlyconcluded50daysofDemonetisation,thegovernmentwasobservedtobepro
activeintermsofofferingincentivesandrebatestothepeople.TheNewYearEveof2017
sawincentivesannouncedfortheaffordablehousingsegmentwhichwasfollowedbythe
banksdeclaringlendingratereductionsverynextday.Teasersaboutpositivechangesinthe
personalincometaxstructureweremakingroundswellaheadoftheBudgetdaytoo.By
grantinginfrastructurestatustotheaffordablehousingsegment,reducingthetaxrateforthe
initialslabandbigplanslaidfortheinfrastructuraldevelopmentofthecountry,thisUnion
Budgethasexpresseditsroadaheadfortherealtysectorofthecountrywhichwillnowbet
biginnearfuture.Aspredicted,acommonmansBudgethasbeenpresentedandthisis
expectedtobringaboutatransformationintheeconomy.

KeyEconomicHighlights:

CPIinflationdroppedto3.4percentfrom6percent.

Tradedeficitdroppedfrom1percentoftheGDPto0.3percentoftheGDP.

FDIincreasedfromINR1.07lakhcroreto1.45lakhcrore.

Forex$361Billionwhichisequivalenttosustain12monthsofimports.

GDPstableat7.3%.

RevenueDeficitstandsat1.9%

KeyHitsfromtheBudget:

InfrastructureStatusaccordedtoAffordableHousingalsoredefiningtheunitsizesof
30sq.mtr.and60sq.mtr.frombuiltupareatocarpetarea.Projectsinthedirect
municipalitiesofthefourmetropolitanstobeconsideredfor30sq.mtr.capping,
restallregionstohavethecappingat60sq.mtr.foraffordablehousing.

Affordablehousingprojectstobeawardedacompletiontimeof5yearsfromlaunch
asagainsttheprevioustenureof3years.

Developerstogetoneyearstimetopaytaxonnotionalrentalincomeoncompleted
unsoldresidentialinventory.
 Taxbenefitstothemiddleincomegroupprovidingtaxratecutsof5%forpeoplein
theincomeslabofINR2,50,000toINR5,00,000.AdditionalreductionofINR
2,500forpeopleearningINR3,00,000annuallymakingtheirtotaltaxcomponent
zero.ReductionofINR12,500allowedonthefinaltaxfiguresofremainingslabs.

IncomeTaxrateforMSMEswithturnoveruptoINR50croresreducedto25%from
theearlierrateof30%.

PradhamMantriGramAwasYojnatobuild1crorehousesby2019.INR23,000
croresallocatedforthisfinancialyearcomparedtoINR15,000croresinthelast
financialyear.

PradhanMantriGramSadakYojnaallocatedfundsofINR19,000croreswhichwill
cumulativelyamounttoINR27,000croreswiththecontributionfromstates.

INR64,000croresallocatedforHighwaysagainstlastyearsINR57,676crores.This
wouldalsoinclude2,000Kmsofcoastalconnectivitywhichhavebeenidentified.

AtotalofINR3,96,135croreshavebeenallocatedtowardsinfrastructure
developmentwhichisthehighestinhistory.

AirportsinsmallertownstocomeuponPPPmodel.

FDInormstobefurtherliberalisedandonlineapplicationtobeenabledforFDI.FIPB
tobeabolished.

KeyMissesfromtheBudget:

Industrystatusfortherealestatesector.

SinglewindowclearancesystemnotyetoperationalPanIndia.

Nochangesintheexemptionlimitforincometax.

Nochangesinthesavingsorinvestmentscap.

Nocushionforthereductionintherateofinterestonloansborrowedbydevelopers
forbuildingprojects.

Nomajorbenefitsannouncedforthealliedindustrieslikesteel,cement,iron,sand,
etc.thatserveasthebackbonefortherawmaterialneedsoftherealtysector.

IndustryReacts:

AvneeshSood,Director,ErosGroup
ThegovernmenthasyetagainpresentedaBudgetthatwillbringaboutacheertothemasses.
Fromfavourablechangesinthepersonalincometaxstructuretoheavyinvestmentplansfor
theinfrastructurealongwiththeaccordingofinfrastatusfortheaffordablehousingsegment
andsomuchmore,realestatesectorissuretodirectlyandindirectlybenefitfromthisbudget
inthenearfuture.Amongstthebigdecisions,anoutlayofalmost4lakhcrorehasbeen
plannedforinfrastructuraldevelopmentacrossthecountry,notaxforearnersuptoINR3
lakhayearandnopropertytaxfordevelopersonunsoldinventorytilloneyearafter
completioncertificateisissued.Withsuchannouncements,weareprojectingthedemandfor
budgethousingtomultiplythatwillalsoallowapositivedriftinthemomentumfortherealty
sector.

DeepakKapoor,PresidentCREDAIWesternU.P.&Director,GulshanHomz

AnnouncementofinfrastatusfortheaffordablehousingsegmentintheBudgetwillopenup
newavenuesforthedevelopersplanningtoofferbudgethousingunitsandwillmakeiteasy
andcomfortableforthemtogetfinancefromlendingagencies.Affordablehousing
developerswillnowbeeligibleforvariousgovernmentincentivesandsubsidies,wherethis
infrastatuscouldalsomeanthatthegovernmentmightcomeoutwithlandparcelsforsuch
developmentinfuture.Withthebasicslabofincometaxnowreducedtohalftheeffect,
peoplewillhaveaccesstohigherdisposableincomewhichcannowbeutilisedforsavingand
investmentpurposes,whererealestatewilllookattractive.Also,topromoteforeign
investmentinthecountry,FDIisplannedtobeliberalisedfurther.

RakeshYadav,Chairman,AntrikshIndia

Thepopularityandacceptanceofthisbudgetwasclearlyvisiblefortherealtysectoraswe
sawtherealestatestocksdrivingthedayinthesharemarket.Thedecisionofgrantinginfra
statusfortheaffordablehousingsegmentalongwiththerebateinpersonalincometax
announcedbythegovernmentwillprovokethedeveloperstoshifttheirgearsanddevelop
affordablehousingprojects;whichisnowsuretomeetthedemandaswell.Onemajorissue
facedbyvariousbuildersacrossthemajorTier1citiesofthecountryistheinventorypileup.
Thetaxbreakupofoneyearpostthereceiptofthecompletioncertificatefortheproject,for
theunsoldstock,offersaslightbreatherforthebuilders.Overall,thisbudgetlooksquite
favourablefortherealtysectoranditsbuyersinthelongrun.

RajeshGoyal,VicePresidentCREDAIWesternU.P.&MD,RGGroup

Asanticipated,apopulousbudgethasbeenannouncedbythegovernmentwhichwillallow
theyounggenerationtosavemoreandinvestfurther.Thisbudgetsawthegovernment
offeringseveralbenefitstotherealtysector,atthesametimemissingoutonafewimportant
decisions.Singlewindowclearancesystemisstillnotimplementedacrossthecountrywhich
ishamperingthedeliveryscheduleofthedevelopers.Amongstthemajorhits,thecriteriafor
affordablehousinghasbeenchangedfrombuiltupareatocarpetareabasis.Thiswillallow
affordablehousingsegmenttolookmorelucrativeforboth,developersandbuyers.Withthe
incometaxrebateforthefirstslabandaffordablehousingincentivesinplace,wewillnow
observetheyouthofthecountrylookingoutatrealtysectorasanavenueforinvestmentor
residing.

AbhishekBansal,ExecutiveDirector,PacificGroup

Withtodaysbudgetannouncement,theaffordablehousingsegmentandtheretailindustry
willseethebiggestboom.Themomenttaxstructureissimplifiedandrelaxed,thespending
powerofpeopleincreasesandthisspendingisdirectlycontributedtowardseithersavingsor
investments.Although,theyoungearningageinIndiaisexpectedtospendandinvestmore
ratherthansave,thusretailindustrywillwitnessincreasedfootfallintheupcomingfinancial
year.Realestatesectorontheotherhand,willbenefitfromtheaffordablehousing
developmentandhence,developerswillnowbeeagertoplanaccordingly.Buyersinterest
willnowshifttowardslowbudgethousesastheseunitswillnowcomewithareducedprice
tagwiththedevelopersgainingaccesstoeasyfinancefromlenders;wellsupportedbyrecent
ratecutsandannouncements.

AshokGupta,CMD,AjnaraIndiaLtd.

Withamammothbudgetinvestmentplanfortheinfrastructureofthecountryannounced,
variousuntappedregionswillgainconnectivitywithmajorcities.Thisdevelopmentwill
furtherbroadentheavenuesforrealtydevelopmentacrossthecountry.Affordablehousing
hasyetagainbeentheprimetargetofthegovernmentasitlookstofulfilthedreamof
housingforall.Withtheinitialtaxslabrelievedandinfrastatusannouncedfortheaffordable
housingsegment,upcomingprojectlauncheswillwitnessmajorityofaffordableprojects.Ina
nutshell,thisbudgetwillprovideamassivethrusttoIndiasrealtysectorwhichhasbeen
pickinguppacegraduallyovertheyears.

AshwaniPrakash,ExecutiveDirector,ParamountGroup

UnionBudget201718waslikelytogivesomerespitetotherealtysectoranditwashighly
expectedthatthissectormightgetindustrystatusthisyear,butthishasnothappened.
However,theFMhasstilltakenanappreciablestepingivinginfrastructurestatusto
affordablehousingandincreasingthescopeofthesame.Thedecisionofincreasingthe
periodofcompletionforaffordablehousingprojectsfrom3to5yearsisalsoawelcome
move.Reductionininterestratesforhomeloansisalreadyinplace,relaxationinthe
individualtaxlimitwouldalsoencouragethehomebuyerstocomeforward.
PradeepAggarwal,CoFounder&Chairman,SignatureGlobal

Drivenwiththeviewtoprovidehousestoallataffordablerates,governmentsmovetogrant
infrastructurestatustotheaffordablehousingsegmentinthecountryalongwiththe
relaxationespeciallyinthefirstslabofthepersonalincometaxwillnotonlyspurgrowthin
theconstructionofaffordablehousingbutalsoenhancethedemandforthesame.Asthe
disposableincomeincreases,peoplewillbeinclinedtoinvesttowardsproperty.Withthe
lendinginterestratesloweredandpurchasingpowerincreased,wewillwitnessasteeprisein
affordablehousingdemandacrossthecountry,whichwillnowbewellmetwiththe
upcomingsupply.