Budget Bites

Mr. Ajay Aggarwal, Managing Director, Microtek Infrastructure
“We were not expecting any significant announcement to push growth in the real estate sector as interim budgets are not meant for that. A quick look at major announcement says that respite on duty for construction sector and allocation for the Urban Housing Fund are something to cheer about. We are now looking forward to budget by the next government for the clarity on the policy front.”

Dr. Anil Kumar Sharma, President, CREDAI NCR
“The interim budget seems to have overlooked the suggestions forwarded by the real estate developers. Apart from some respite in duty for construction sector and Rs. 2000 crore for the Urban Housing Fund Allocation, the budget was silent on the issues presently being faced by the real estate sector. The respite in interest rates and taxes could have helped the FM to meet the target GDP growth as the real estate sector is one of the leading growth drivers today, however, an interim budget has its limitations”

Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield
P Chidambaram presented UPA-II’s last (interim) budget proposals today. In our view, the government’s estimates on fiscal deficit and GDP growth signify an improvement in macro economic factors. Chidambaram said that the fiscal deficit will be contained at 4.6% of GDP. He also stated that fiscal deficit must be targeted at 3% of GDP in 2016-17. GDP rate in Q2 and Q3 in FY14 is estimated at 5.2% at least. These statistics are encouraging. However, the government listed food inflation and sluggish manufacturing data as laggards. He stated that fiscal consolidation, growth revival and revitalizing the manufacturing industry should take precedence and be the core focus, going forward.
While these are the right noises, the interim budget did not spell out exactly how some of these issues can be tackled. Further, the interim budget 2014 was a disappointment for the real estate sector, in that, it did not take any measures to spur depressed housing sales and ease the financial woes and liquidity crunch of the long suffering sector. There was a mention made of the need to address urban decay and ensure that cities continue to be the growth drivers of the economy; however, no specifics were given. Similarly, though the importance of the manufacturing sector on the adverse impact of its decline were focused on, in the end besides the generous tax cuts for the automobiles and mobiles, there were no positive measures announced. The speech urged the RBI to focus on price stability and growth; we keenly await RBI’s response to this in the next monetary policy. Post election, we expect that the new government will overhaul taxation guidelines that will directly benefit home buyers and implement specific policies that would lead to employment generation and demand creation to boost the real estate sector on the whole.

Amit Mavi, Managing Director of BOP
The controlled inflation and the subsequent expansion of the economy is anticipated to ease off the key policy rates in the forthcoming policy reviews, thereby signaling softening of the interest rates, which is going to be a welcome move for the real estate industry. The sales figure of residential stock is likely to improve as the affordability improves. This year a lot of developers are expected to offer possession which will help the buyer to be more decisive and consider options with increased seriousness.
The focus of the government still continues on the housing and urban development sectors as envisaged from the allocations of Rs 6,000 crore in the ministry of housing and poverty alleviation and the highest share being allocated for rural development amounting to Rs 82,202 crore of planned expenditure, along with the focus on infrastructure.
The announcement of 8 national investment and manufacturing zones and the approval of 9 projects along the DMIC is a welcome move. According to BOP Research, these locations are gearing up for rapid development and will pave the way for the emergence of new real estate corridors which will be catering to the growing needs to the urban agglomerations along the industrial corridor. Such locations will unlock the potential of the land mass which will be instrumental in various real estate assets.
The Union Budget of the new government of the 16th Lok Sabha is expected to address the issues of the real estate bill and the chart a constructive path for the FDI and REITS.

Rajesh Goyal, MD, RG Group

The interim Budget announced by the Government came with a disappointment amongst the developers. We were expecting some relief in terms of decrease in interest rates on home loan and some clarity on regulatory bill when to be applied and whether some changes have been made as per the suggestions given by real estate industry but there has been no such announcement made. In my view, we all have to still go through this ongoing liquidity crunch and wait for more few months for some good hope for the sector.

Alok Tyagi, CMD ATN Group
The issues for real estate sector are more critical and were expected to be overlooked by the financial minister. No such relief was given to the home loan interest rates and nothing has been said about the introduction of REIT’s in 2014 which might had resolved some issues of liquidity crunch in the sector. The current slowdown may continue for few more months till we have the actual budget by the new government after Loksabha elections.