Balanced but Budget not a boon for realty: Developers

GURUGRAM/NOIDA: The real estate sector, which had pinned hopes on the Union Budget for getting industry status and a reduction in GST, is not quite singing praises of the government. Its only solace is the government's continued push for affordable housing.
While the developers have termed the Budget as a "balanced" one and not a boon for the real estate sector, aggrieved investors waiting for the delivery of their homes, say it will have very little or no impact on their plight.

Ravish Kapoor, director of Elan Groups, said the government introduced many reforms like RERA and GST to the sector last year. "This year, we were expecting some more reforms. But the Budget has not given much reason for the real estate sector to smile," he said.

According to Pushpender Singh, managing director of JMS Buildtech, a cut in GST rate in the Budget would have provided the extra boost to the sector. "Change in capital gains tax for equity could accelerate the shift of preference from equity to other investment assets like real estate. This Budget seems to be heading to have minimal direct impact on the real estate industry," he said.

However, Sumit Berry, managing director, BDI Group, welcomed a dedicated Affordable Housing Fund that was announced in the Budget and the government's proposal to construct as many as 51 lakh houses in rural India in 2018-19. "These are the right moves towards achieving the vision of housing for all by 2022 and this is also expected to create opportunities for the real estate sector," he said.

Some developers also expressed happiness that the government has finally addressed the anomaly under Section 43 CA to tax real estate transactions on their real value rather than the value arrived at by applying artificially higher circle rates.

"As per new announcement, if the circle rate does not exceed 5% of the transaction value, no adjustment is required towards capital gains on a real estate transaction. It will help in terms of some extra savings if there is parity between the market rates and the ready-reckoner rates," said Anuj Prui, chairman of ANAROCK Property Consultant

"Cities which are not under the heavy influence of real estate investors and where prices are rational may benefit from this announcement," he added.

"While we welcome the move, it would have been better to do away with this provision entirely as in many places, the market prices are way below the circle rates . The Budget announced the Affordable Housing Fund under NHB which will further catalyse investments in this sector," said Pankaj Bajaj, president, CREDAI-NCR.

But "much to our disappointment", industry status and single window clearance system could have been the biggest game-changing reforms for real estate sector, which were not even mentioned in the budget, said Kushagr Ansal, president, CREDAI-Haryana.

But homebuyers are pessimistic. "The real estate sector is in doldrums, especially in the NCR. The budget will have limited or no impact on the existing projects which are stuck," said Nayantara Prasad, an investor. "It is unfortunate that NCR is full of examples. Buyers are cheated," said Renuka Kulkarni, another homebuyer.