Real Estate Developers Present their views on Union Budget 2015
Every year, the Union Budget is awaited by all sectors of the economy, including real estate. On February 28, 2015, the Union Budget for 2015-2016 was presented by Finance Minister Arun Jaitley. The real estate industry had high expectations from the budget and to evaluate whether any of the expectations were met, Makaan.com team spoke to some real estate developers to find out their view, lets see what they have to say about it.
Mr Mohit Goel, CEO, Omaxe Ltd: The Budget 2015 has put a lot of emphasis on social security, infrastructure and skill development. However, the real estate sector continues to be deprived of any real measures to boost the sector and kick-start housing demand. No benefits on personal income tax front were given to encourage savings. However, the government has found other ways to spur savings, which might not necessarily result in any captive investment. The increase in service tax is another negative for real estate. The decrease in corporate tax may not result in investment. The Government’s vision on Housing for all by 2022 and Smart Cities needs more concrete direction. I believe that the measures announced today in the Budget will see a far reaching impact in the years ahead, but not immediately.
Mr Anubhav Jain, Director ,Group Silverglades: Even though Budget 2015 is pro-growth and pro-investments, there is lack of clear direction when it comes to the realty sector. We were hoping for concrete steps to increase the sluggish housing demand and revive the sector. The govt has announced its plan for 6 crore homes but has failed to lay down steps for the same. Increase in service tax and no change in interest on housing loans is a negative. Delay in GST implementation to next year is also a dampener.
Mr. Manish Agarwal, Managing Director, Satya Group & Secretary, CREDAI NCR: It is a progressive budget with nuanced, comprehensive and stabilized long term vision. The measures, such as reduction in corporate tax to 25% over 4 years, abolishing of wealth tax and government's committed to housing for all and make in India will aid realty sector substantially. With inflation target pegged at less than 6 per cent and individual savings set to increase through direct and indirect exemptions, the housing sector is sure to gain from it. The incremental social sector spending will translate into more spending. The commitment of government for investment in Infrastructure sector, particularly for semi-urban and rural areas will bode well in long term in filling the gap between urban and rural divide. While the target of GST introduction in 2016 is a positive sign, the increase in service tax will have negative. However Govt could have looked at increasing incentives on the interest paid on housing loan from the current levels. Last yet most important, government's commitment to "Housing for all by 2022" is quite visible and with a figure of 6 lakh units defined, it looks all the more clear. The tax pass through to REIT sponsor is a healthy sign for commercial segment.
Mr. Aman Nagar, Director, Paras Buildtech: It is essentially a balanced budget with more of long term undertone. The budget has sought to build a strong foundation for the growth of housing sector across the length and breadth of country. We are going to see a lot of action in rural areas and semi-urban areas post-budget which is good for the country. It has also addressed the worrying scenario of drop in savings and both direct and indirect measures will help in augmenting individual savings which is a good news for the housing sector. From the corporate point of view, the government has taken a courageous step by trimming corporate tax structure, doing away with surcharge on rich and has introduced measures to facilitate easy investment. Overall, a balanced budget which has established a fine balanced between social and corporate sector.
Mr. Anuj Goel, Executive Director, KDP Infrastructure: This budget scores both on short term respite as well as long term vision. On the one hand, it has created space through exemptions for more individual savings, on the other hand measures like a roof for each family by 2022, push for rural development, universal pension and security system will create secure and strong society. By reducing rate of corporate tax and introducing investor friendly steps, the government has certainly laid out strong foundation for double digit growth rate. For the housing sector, this budget has a lot of both direct and indirect provisions which will have positive impact and bring it back in green zone.
Mr. P. Sahel, Vice Chairman, Lotus Greens: Being a responsible member of realty sector, we welcome the Union Budget presented by Finance Minister Shri Arun Jaitley. It is a step in the direction of achieving the long-term Vision that has been articulated through a range of initiatives, such as Infrastructure development, Housing for All, DMIC, boosting real estate investments through REITs & INVits and the formation of an Expert committee for reviewing the multiple clearances for projects. However the proposal of increasing the service tax from 12.36 % to 14%, perhaps will lead to high construction cost due to increase in material & end-product cost. The emphasis given to overall infrastructural growth with massive investment outlays, such as allocation of Rs. 25000 cr. towards Rural Infrastructure, along with revitalising the PPP model, will spur a boom for the sector. The step to rationalize capital gain tax regime for sponsors of REITs & INVits will help channelize domestic & foreign investments. Also the declaration to introduce ‘Benami’ Property Transaction Bill could further ensure more transparency thereby creating a more professional environment in the sector. As a double digit GDP growth has been estimated by the government in the long run, this will create a positive business sphere for overall infrastructure & realty sector enhancing purchasing power of end users. Along with this the 6 crore houses by 2022 vision ‘A roof for each family’, clearly augur the Govt’s vision to strengthen the housing & overall realty sector. We would have also liked to see some enterprising incentives for Sustainable Development in real estate.
Mr. R.K. Panpalia, MD, Wave Infratech: Last year, the real estate sector got much-needed attention in the budget with crucial announcement such as pass-through of taxes for REITs, changes in FDI policy and tax incentives for end consumers. The Budget 2015 was balanced and has shown a roadmap for the infrastructure with an investment of Rs 70,000 crore which will certainly give a boost to ancillary industries such as real estate. Infrastructure was a high focus area in the budget, which will greatly impact the housing sector. The host of announcements such as allotting Rs.22,000 crores for housing development and Regulatory reform law for infrastructure development towards the development of a single window clearance are expected to change the general sentiment from being negative and neutral to being more positive. However, there were no announcements to grant an industry status to the real estate sector, which would have enabled the sector to raise debt from financial institutions and foreign institutional investors (FIIs) at a much lower rate thus partly relieving the liquidity crunch crisis and also passing on the lower costs to the end users.
Mr. Anil Kumar Tulsiani, CMD, Tulsiani Constructions & Developers Ltd.: We were expecting some big announcements from the government as this was the first budget presentations by the BJP lead government. However, budget did not have much for real estate sector. In fact, increase in service tax from 12.36 per cent to 14 per cent might affect the cost of raw material which in turn will increase the prices of homes. In a way this is detrimental to the vision of housing for all.
Mr. Dhirender Gaba, MD Fairwealth Housing: The announcement of Union Budget of 2015-16, has not given any expected relief to the real estate sector in terms of revival of the industry. The developers, buyers and the investors had been cooling their heels to the announcements of a much awaited pronouncements by the Finance Minister with regard to the reduction in the interest on home loans, apparent single window clearance, incentives for the affordable housing and the inherent encouragement literally to take a step to buy the property. To our utter shock and surprise the increase in the service tax from 12.36% to 14% the govt. has not only made the common commodities dearer in general but the property buying in particular. The budget is very disappointing particularly for the real estate sector. Although the blue print will throw a light comprehensively on the actual impact of the budget, but the expectation from the Union Budget 2015-16 to kick start the sector has failed. As a whole the budget in the larger perspective seems to be a vision budget in accordance with the ambitions of the PM to provide housing to all by 2022.
Mr. Manoj Gaur, MD, Gaursons India Ltd & President CREDAI Western UP: A very controlled budget which appeared to be cautious step by the government to not make big announcements. As of now real estate sector will not benefit at all from it and the demands of the sector are still unmet. What we fear is the probable increase in raw material cost which would not be good for the costing of housing. General people are already reeling under the high cost of homes, which are not in any way control of real estate developers, and this budget is a disappointment for people who were expecting rationalisation in prices of homes.