As the Finance Minister Nirmala Sitharaman presented the first Union Budget for the current fiscal year 2019-20 attempts were made to address the problems of all crucial sectors of the economy with real estate being no exception. From increased focus on infrastructure, Foreign Direct Investment (FDI), lowered corporate tax to significant impetus to the affordable housing sector, numerous declarations were made. However, there are still some concerns of the developers that were left unaddressed. Let’s take a look at the reactions of the industry stakeholders on the recently announced Union Budget 2019-20.
Sakshi Katiyal, CEO- Home&Soul
Proposals like new reforms in rental housing to maintain a cordial relationship between the landlord and the tenant will help in augmenting the real estate scenario in India. The announcement of Rs 1.5 lakh additional tax benefit and the development of more affordable houses for both rural and urban poor is expected to fillip the real estate market of the nation. Moreover, a proposal to boost RRTS, metro expansion and Transit-Oriented Developments (TOD) will not only enhance infrastructural developments but will also foster the development of commercial and retails hubs in and around these regions.
Rakesh Yadav, CMD, Antriksh India Group
India is committed to becoming a $3 trillion economy with a significant focus on the development of robust infrastructure, digital economy and job creation. The liquidity crisis of NBFC was also given due diligence in this edition of the Budget. The other vital reforms that will impact the real estate industry include the further development of the ‘Affordable Housing for all’ initiative, with an allocated fund of 4.83 lakh crore sanctioned for the construction of 84 lakh houses under PMAY. Also, NRI investment is expected to surge with the reformation of rental laws, the introduction of newer amenities and deductions in the home loans for the affordable housing sector.
Niranjan Hiranandani, President NAREDCO & MD, Hiranandani group
The Union Budget has provided a much-needed boost to the housing and infrastructure sector. The government’s proposal to invest more than Rs 100 lakh crore for infrastructure over the next five years is a welcome move. Liquidity crunch, which has been a significant concern for the industry, has also been addressed to a certain extent in this Budget. Overall, the Union finance minister has ensured that expectations of all the sectors varying from agriculture, infrastructure, and education to even the minor sector like fisheries and Bamboo cultivation are adequately met.
Amit Wadhwani, Co-Founder, SECCPL
The liquidity crisis of NBFC was given due diligence in this edition of the Budget, with the Government allowing FII’s and FPI’s to invest in their debt papers alongside a one-time, six-month partial credit of Rs 1 lakh crore to PSB’s for the purchase of high-rated NBFC assets. This shall be a positive step in resolving the liquidity crisis faced by NBFC’s in the recent past and will increase the lending activity, as well as the sustained flow of capital for them.
Surendra Hiranandani, Founder & Director, House of Hiranandani
On many fronts, this is a favourable and bold budget for the real estate industry. A massive boost to infrastructure will not only benefit the realty sector but also help other industries and would create substantial employment in the economy. The government’s focus on infrastructure development of tier II and III cities will also augment real estate prospects in these cities. While the government has taken several concrete measures, it was expected that the government would impart industry status to the sector, which would enable developers to cut capital costs and pass on the benefits to consumers. Single-window clearance has also been a long pending demand from the industry. Moreover, there was a significant expectation of a reduction in GST rates to a single, standard rate, instead of multiple rates of taxes which has been unaddressed by the government.
Abhilash Pillai, Partner, Cyril Amarchand Mangaldas
The FM has announced to set up extensive freight corridors across the country. The proposal will undoubtedly boost the warehouse industry. Additionally, there is a plan to introduce new Manufacturing, Repair and Operate (MRO) industry. This will indeed increase the demand for industrial/ commercial real estate assets. If the local sourcing norms are further relaxed, as proposed in the Budget, enhanced foreign investment can be expected in the Single Brand Retail business.
Nesara, Executive Director, Concorde Group
The Union Budget has delivered on the government’s agenda to pursue a strong reform roadmap. A substantial thrust on affordable housing in the second phase of the PMAY scheme, shall revive sentiments in the realty sector. It is heartening to note that the Finance Minister is committed to the rural and urban housing targets. The proposal to allow additional tax deduction of Rs 1.5 lakh on interest on housing loans, shall boost retail interest in real estate. Along with these, the government’s proposal to overhaul the tenancy law shall be a critical step in introducing newer models of leasing that shall empower the lessee.
Tanuj Choudhry, Chief Business Officer & Board Member, HomeLane
The government's decision to extend the lower corporate tax benefit to a large number of companies is laudable since it will help many companies in improving their liquidity. The measures to ease the scrutiny from the Income-tax department by the introduction of e-verification for investors will also be helpful to many budding businesses. It is also reassuring that measures have been taken to carry forward and set off losses for start-ups and increase the period of exemption of capital gains arising from the sale of residential house for investment. However, we were hopeful that the government would abolish Angel Tax, which remained avoided.
Abhishek Goenka, CEO & CFO at CoWrks
It was a budget with many differences. On the positive side, there was more focus on strategic initiatives, such as no charges on fund transfers, tax deduction on loans for EVs, interchangeability of Aadhar and PAN and the various measures on easier KYC. On the flip side, there has not been an adequate emphasis on fiscal discipline, and the approach of a sharp increase in tax rates for the rich as the only revenue enhancement measure is unimaginative. It is also disappointing that the corporate tax rate has not been reduced across the board.
Rishi Jain, Managing Director, Jain Group
One of the prime agenda of the new FM and indeed the Modi 2.0 government is to make housing affordable and make only affordable housing. The developer fraternity needs to understand and appreciate the same. The writing on the wall is that super-rich, and those in the highest tax brackets should not expect any sops and in fact, should cross-subsidise the poor. The government is not Anti Rich, but they expect the wealthy individuals and corporations to be pro-poor.
Sanjay Jain, Managing Director, Siddha Group
The budget seems favourable for both the real estate developers and the homebuyers. Tax rebates and interest on housing loan in the affordable housing sector will attract end-users. Rental housing promotion is another advantage to the industry. I am delighted with the better credit tenure by NBFCs as this will benefit the real estate developers. The housing sales are also anticipated to grow with the increase of carpet area limit.
Hiral Sheth, Marketing Head, Sheth Creators
The major highlight of the budget was the proposal of the additional tax deduction of Rs 1.5 lakh on interest paid on home loans taken up to March 2020 for the purchase of an affordable house valued up to Rs 45 lakh. This move is expected to benefit the homebuyers on a large extent and will bring the fence-sitters back into the market. The Government’s support to the NBFC sector will also address the liquidity crisis which has spread its wings from the past year. Moreover, the reforms to promote rental housing will provide a much-needed boost in the Government’s vision of Housing for All.
Jose Braganza, Joint MD, B&F Ventures (P) Ltd
The proposed tenancy law will help the tenants, as well as the landowners, establish clear rules. Apart from this, the buyers are also going to benefit from the government’s announcement to build 1.95 crore affordable houses under the PMAY scheme. Since affordable housing is the need of the hour in our country, the added deduction in interest paid on home loans taken up to March 2020 is a positive move. This will significantly benefit the developers.
Rajan Bandelkar, President, NAREDCO Maharashtra
The allocation of 100 lakh crore towards infrastructure development will see an outburst of new satellite cities, ultimately making way for new land parcels and housing developments. Overall, the budget addresses the key concerns of the sector and, looks promising to achieve the target of 5 trillion dollar economy.
Ashish R. Puravankara, Managing Director, Puravankara Ltd
The budget reflects that the government is steadfast in its ‘Housing for all’ goal. Multiple initiatives that bode well for the economy and the real estate sector are Rs 100 lakh crore investment in infrastructure and the continued focus on affordable housing. The proposal to get RBI as a regulating authority of housing finance sector would also benefit the industry with improved governance and credit access. All of this could potentially have a domino effect on job creation, which is one of the pressing issues for the nation at the moment.
Gaurav Gupta, Director Omkar Realtors & Developers
The first Union Budget announced under the re-elected government was inclined and focused towards affordable housing. Additional income tax exemption on affordable housing up to 45 lakhs is a good step by the Government. The move will not only encourage first-time homebuyers to make quick decisions but will also increase residential sales. Overall, the announcements are expected to cause some momentum in the beleaguered real estate sector.
Vinod Rohira, MD & CEO Commercial Real Estate and REITS, K Raheja Corp
Real estate is highly driven by sentiment, and the budget is crafted to be a stepping stone in the right direction. The budget will fuel growth and investment towards agriculture and infrastructure, which in turn will drive employment and stability, right at the base of the country’s population. The announcement will create a viral effect and will positively impact GDP growth, which will then boost the economy.
Samyak Jain, Director, Siddha Group
The Union Budget announced with the aim of Nation’s growth will bring in a quick boost to the real estate sector as the Government has decided to continue its focus on making housing more affordable for large population along with the promotion of affordable housing. The Government’s imperative step on additional income tax deduction of Rs 1.5 lakh on interest paid on home loans benefits the home buyers will bring in the fence-sitters back to the market. Additionally, the proposed tenancy law will help the tenants, as well as the landowners, that will enable streamlining of the Indian rental market. Further, the move taken to enhance the infrastructure and connectivity will not only favour the realty sector but also help other industries and create employment opportunities.
Ashok Mohanani, Chairman, EKTA World and Vice President, NAREDCO Maharashtra
The Union Budget 2019-20 has shown a clear focus on resolving the housing crisis in the country by announcing an investment in welfare schemes and proposals for interest deductions. Also, investment of Rs 80,250 crore for the up-gradation of roads is a much-needed move that will help in improving the infrastructure of the country. Housing deficit, especially for the LIG and MIG sector, has been a matter of concern, and the proposal of constructing 1.95 crore houses under PMAY will help address the same. The overall sentiment will get a boost and will infuse cheer in the market as the minister has announced a further reduction in the interest rate from Rs 2 lakhs to Rs 3.5 lakhs for the affordable housing segment. We are expecting a fresh influx of demand and an exponential rise in sales this year.
Tushad Dubash, Director, Duville Estates
The Union Budget 2019-20 will ensure the all-round growth of the economy and boost the country’s GDP. The Government’s proposition on several reforms for rental housing will benefit tenants and owners alike. The modern tenancy reform will help reduce reluctance to rent, enhance the supply of rental homes allowing transparency during the agreement. The announcement made on additional income tax deduction of Rs 1.5 lakh on interest paid on home loans will boost the affordable housing segment.