#Budget2017: Market Looks Promising, Expects Further Acceleration
The year 2016 was of self-regulation for the real estate sector. During this year the sector collectively decided to focus on delivery of under-construction projects rather than new launches. Full of ups and downs in sector, 2016 pushed the developers towards due responsibility and answerable for commitments. As the year came to a close, the market looked promising with a remarkable delivery of projects, either partial or complete and this is expected to continue in 2017.
While the sector is ready to put its best foot forward, it has high expectations of further acceleration from the upcoming Union Budget 2017-18.
The government should recognise real estate as an organised industry and assign it a status. In India, real estate is the second largest employer after agriculture and is slated to grow at 30 per cent over the next decade. The real estate sector comprises four sub sectors — housing, retail, hospitality and commercial. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors supporting the economy.
We have not seen a single REIT listing till date because of the presence of multiple and complicated tax slabs. Until tax hurdles are removed, developers hesitate in adopting the model. The government should identify the competence of REITs to perk up market conditions for the real estate sector and eliminate the policies constraining their growth. The realty sector is also expecting reasonable tax slab for real estate and should be encouraging for new players too.
Industry is also seeking for single-window status for project approvals. From environment clearances to all other certifications, it takes several months to get the project to the ground after buying land. Until the builders get a single window system, the entire process of approvals and clearances will continue to delay their projects and then possession.
Easy funding and low interest
Suffering due to a cash crunch and higher interest loan from banks, housing should be provide easy funding and after Demonetisation it could be possible. For achieving a target of Housing for All 2022, special funding is need of the hour. If this is to become a reality, they will need to provide a tremendous amount of incentive for the real estate sector so that homes become more affordable and get produced much faster to meet the goals.
RERA will be implemented soon and after this the real estate market is expected to be more clean and clear. Home buyers will be more confident and developers will be responsible for commitments. At this point of time, some moral boosting decisions can push the sector on right track.
Higher tax deduction limit
The government should increase the tax deduction limit for housing loans, especially for first time home buyers across India. The current limit of Rs. 2 lakh is insignificant, given the ticket sizes in cities like; Mumbai where most houses are priced at Rs. 1 crore and above. Also, tax concessions on house insurance premiums could be introduced to encourage end-users to insure their homes. Similarly, the tax exemption limit for individuals should be increased to some extent to encourage them for investment.
Special funds for incomplete project
Govt. can bring another relief for home buyers if they infuse some fund for stalled projects under special category so that the home buyers can get their homes. Although it needs strong willpower and commitment but can play a huge role in a recovery of sentiments related to the industry.
The article is authored by Ashudeep Batra. He is the Executive Director of Exotica Housing. The developer has a strong hold in real estate with projects in Ghaziabad and Noida. It has delivered four projects and has one project that is under construction.