Going by the initial response, Finance Minister Arun Jaitley’s “balanced” and “controlled” Budget for 2015-16 has got thumbs up from the real estate sector. The fact that there are no big-ticket announcements directly impacting the sector has disappointed many but the overall, long-term vision in Jaitley’s exercise has come in for applause from the industry.
The following are the reactions received by Realty & More from some prominent players in the industry.
Manoj Gaur, MD, Gaursons India Ltd & President, Credai Western UP, has said, “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.”
Manish Agarwal, MD, Satya Group and Secretary, Credai NCR, said, “It is a progressive Budget with nuanced, comprehensive and stabilised long-term vision. The measures, such as reduction in corporate tax to 25 per cent over four years, abolishing of wealth tax and Government’s commitment to ‘Housing for All’ and ‘Make in India’ will aid realty sector substantially.”
According to AnujGoel, 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.
Goel said, “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.”
Aman Nagar, Director, ParasBuildtech, said, “”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.”
According to Anil Kumar Tulsiani, CMD, Tulsiani Constructions & Developers,”We were expecting some big announcements from the Government as this was the first Budget presentations by the BJP-led 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”.
In a strong reaction, SanjeevVarshney, MD, Prop Leverage, said, “For real estate sector there is no hope in the Budget. We expected steps from the Government that would act as a boost for the sector. However, the cautious Budget left everything in open and now the hopes are still alive from the next year’s Budget. As on the ground, we are facing a lot of queries for price reduction in real estate but this Budget left us speechless when it comes to reduction of prices in real estate.”
David Walker, Managing Direction of SARE Homes, said, “We are enthused by the reduction of the corporate tax and MAT as it will help operations of corporations. The Government’s move to rationalise the capital gains regime for REITs and InvITs, however, will be beneficial for the commercial realty space. Budget once more falls short of meeting the expectations of the real estate sector, mainly the residential housing segment.”
MR Jaishankar, CMD of Brigade Group, said, “It is a good growth-oriented Budget, with special emphasis on infrastructure, Swacch Bharat, introduction of pension schemes, curbing black money and improving ease of doing business. But as far as Housing industry is concerned, there is no special encouragement inspite of ‘Housing for All’ vision. To that extent for our industry, the Budget is disappointing.
Dubbing the Budget disappointing for the real estate sector, Supertech Chairman RK Arora, said, “Although the Finance Minister in his Budget speech has announced construction of twocrore houses in rural India and four crore houses in urban areas, no concession either for homebuyers or for the developers has been given in the Budget.” He said, “The Budget disappointed the real estate sector with proposal to increase service tax from 12 per cent to 14 per cent. The proposed increases in service tax alongwith increase in excise duty, are bound to result in inflation and overall recession in real estate and other segments.”
According to Kishor Pate, CMD, Amit Enterprises Housing Ltd., “The Budget has fallen short of expectations and not delivered on many of the expected counts. It has not provided any direct relief for the common man. It has not increased personal income tax deduction limits, nor has it provided any relief for home loan borrowers.”
In a major move, Pate said, “The Finance Minister has removed wealth tax altogether and replaced it with a new Super Rich tax applicable only to assets worth above Rs. 1 crore. This means that for the majority of Indians, there will no longer be a tax on property ownership and that only super-luxury homes will be taxed. This is a big relief for the Indian middle class.”
Om Chaudhry, Founder & CEO, FIRE Capital and Chairman, Astrum Value Homes, said, “While intent has been restated in terms of ‘Housing for all by 2020’, no specific steps have been taken in this Budget. The increase in service tax will increase construction costs and make homes costlier.”
Dhirender Gaba, MD Fairwealth Housing, Fairwealth Group, said, “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 per cent to 14 per cent, the Government 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.”
P Sahel, Vice Chairman, Lotus Greens, said, “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 and end-product cost. 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 and 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 and overall realty sector. We would have also liked to see some enterprising incentives for Sustainable Development in real estate.”
Ravi Saund, COO, JMS Buildtech Pvt Ltd, said, “This budget was aimed for synergising the basic issues pertaining to human development and economic welfare. As the developers community we anticipated a constructive road map that would resolve the stumble blocks in the path of real estate development. Apart from 70, 000 crore disposable funds for the infrastructure sector, ‘Benami’ property transaction bill to tackle black money transaction in real estate and deferred GAAR implication was the share of pie for real estate sector. It was therefore evident that the current budget does not hold much in the platter for real estate industry.”
Commenting on the same Gaurav Mittal, Managing Director, CHD Developers Ltd, said, “The decision to facilitate a funding of Rs. 70,000 crore will boost the development of infrastructural sector which will further beef up the growth rate of real estate sector as a whole, introduction of Benami property transaction bill to narrow in the unscrupulous funding activity is a great move to augment the industry status, further contribution of REIT exempted from capital gains and GST implication by 2016 thereby, adding another feather in the cap for this sector intending to attract more offshore investment. However collating all the measures discussed today is a poised Budget centered around holistic development of the economy as a whole”
According to 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.”
Neeraj Gulati, Managing Director, Assotech Realty Pvt Ltd, said,“Today the maiden budget of NDA government laid the down the economic road map for the current fiscal year which focus around sentiments of the housing and construction sector that will witness an improvement. However from real estate stand point it is quite inadequate, that the long held demands which was expecting more sops to boost domestic demand and reduce borrowing costs, have not been addressed in the current budget, apart from contribution of REIT exempted from capital gains and 70, 000 crore grant for infrastructure development and GST implications by 2016. Affordable housing will definitely continue to be an area of focus. The overall objective was to narrow the gap between rural and urban divide and create a harmony in holistic development as the economic indicators projects to freeze the fiscal deficit to 3 % in the next three years with a target growth rate of 7.4 % GDP is highly appreciated to augment the trajectory growth path.”
Anil Mithas CMD, Unnati Fortune Group says, “Although Budget 2015-16 doesn’t bring any fireworks to the Indian realty sector as was expected by the industry, but announcements like 8-8.5% GDP growth forecast for the next fiscal year, housing for all by 2022 and allotment of Rupees 70,000 crore for Infrastructure development, will keep the market sentiments high towards the Indian Real Estate sector in the coming months.
Mithas added, there is a proposal to rationalize capital gains regime for Real Estate Investment Trusts (REITs) and to permit foreign investments in Alternative Investment Funds (AIFs), without giving clear details about the proposals. It seems that the government is committed to making it easier for foreign investors to invest in AIFs and planning to ease the norms for Foreign Direct Investments (FDI) and Foreign Portfolio Investors (FPI).”
Aman Singh Gehlot, Director, Ambience Group, said, “This year budget has few incentives for real estate sector such as revised taxation rules for RIETs, monetizing of Gold, and tax free infrastructure bonds, and these incentives will create a regular cash flow for the already cash starved sector. The budget also includes proposals for developing 2 crore houses in rural and 4 crore houses in urban areas thus aiming to achieve housing for all by 2022. This will also create added opportunities for the housing Sector. Overall, acknowledging positive announcements made in the budget, we now look forward to real estate sector, the second largest to contribute to GDP after agriculture, be given a preferential industry status which has been pending due for long.”
RK Panpalia, MD, Wave Infratech, said,“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.”
Sanjay Malhotra, Chief Financial Officer, Emaar MGF,said,“We believe the budget clearly shows the focus of our Government towards sustainable growth, investment in infrastructure, employment generation and skill development. The roadmap to where we want to be has been well defined. Corporate tax regime has been given a clear direction of reduced tax rates balanced by rationalising exemptions over the next four years. The focus is to have a stable and non adversarial tax regime. Deferring GAAR by two years and making it prospective thereafter is a welcome step. We also welcome Government’s focus on housing for All by year 2022. The removal of some of the tax deterrents for Funds and REITS are steps in the right direction.”
According to Anubhav Jain, Director ,Group Silverglades, said,“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.”
According to Sam Chopra, Founder & Chairman, RE/MAX India, “We are glad to see that the government has allowed foreign investment in Alternative Investment Funds (AIFs), a category of pooled-in investment vehicles for real estate, private equity and hedge funds. With this initiative, it is a win-win situation for the developers and investors of our country.
Since the government has also proposed to raise the investment in infrastructure to Rs. 70,000 crores, it will be a big boost to new initiatives like “100 Smart Cities” and “Housing for All” that have been introduced. Also, the introduction of new and more comprehensive Benami Transactions (Prohibition) Bill will be a good move to curb the domestic black money.”