Ramesh Nair, CEO & Country Head, JLL India
The union budget announcement today did not have any direct impact on the real estate sector. No changes in Income Tax sops or other direct measures that influence the sector. The demand and supply dynamics of real estate sector get no further intervention.
The sector which has been reeling for a while was expecting some big ticket announcements to revive it. This was from the perspective that real estate greatly contributes to the three E’s – Economy (by contributing 7.7% to GVA), Employment (15 million job creation over 5 years) and contribution to Exchequer. The functional reforms of RERA, Benami Properties (Prevention) Act, Bankruptcy and Insolvency have created a more transparent and accountable sector. The expectations to receive from direct benefits from the budget was high.
The real estate sector’s long standing demand of getting an ‘industry’ status has once again not found mention. Further there was no concessions for ECB for real estate. The sector expected to see some measures to infuse demand with relaxations in key tax rates like 80C, 80CC and 24B which have also not been addressed. Aspects like single window clearances, uniform stamp duty or reduction in GST rates on real estate were not mentioned either. Like the GST, single window clearance and stamp-duty could also been brought into a centre-state ambit to be implemented with states towing the line with incentives and benefits upon implementation. We understand that states’ will be consulted as part of centre – state dialogue to come to a consensus.
We see some strengthening of the affordable housing sector in the form creation of Affordable Housing Fund under the National Housing Board. This will allow better access to capital for related developments in urban and semi – urban areas. Announcements in allocation in infrastructure and road and highway developments of over 9000 kilometers, Airport development to increase capacity by 5 times as well as 600 railway station development will create opportunities for developments around these locations. Further government continues to focus on the ‘Bharatmala’ to develop 60,000 kilometers further allows for development of new locations.
Alternatives have seen credible mention in the budget with Healthcare and Education being direct beneficiaries. While Senior living, by virtue of improvement in saving capacities of senior and super senior citizen, may also get a boost.
The government continues to stress on transparency by making multiple provisions towards the same with mentions of block chain technology for digital economy, further integration of Jan Dhan to mainstream economy, facilitating raising of bonds and 142 cities receiving investment rating.
The government has focused on creating long term programmes for inclusive growth. They have clearly spelt the motivation of this year’s budget as ‘Ease of Living’. This budget, seen in the light of yearlong announcements, is only a continuation in the process of reforming the economy.
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