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The real estate industry, which had pinned high hopes on the Union Budget for revival of the liquidity-starved sector, welcomed some of the proposals of Finance Minister Arun Jaitley, but said there was no clarity on development of 100 smart cities.
It said the document also lacks serious incentives to boost the key sector. In the first full-year Budget (2015-16) of the NDA Government, Jaitley proposed to rationalise the capital gains regime for the sponsors exiting at the time of listing of units of REITs and InvITs and also announced creation of six crore homes to meet the Centre's 'housing for all' vision. Budget 2015: Complete Coverage
"Overall the Budget's direction is positive with several macro factors making way for a better economic regime. However, with three consecutive bad years for real estate that left developers and other stakeholders gasping for fresh air, the expectations were high.
Unfortunately, the Budget has not given them anything to cheer about," Knight Frank India Chairman and Managing Director Shishir Baijal said.
"The Budget announced the Government's intention to build six crore houses towards the 'Housing for all by 2022' initiative. Specific details on this subject, however, were not elaborated on and neither was any light shed on the Sardar Patel Urban Housing Mission in terms of fund allocation, funding instruments and entities, exact timelines and project locations, among other factors," CBRE South Asia Chairman and MD Anshuman Magazine said.
Gera Developments Managing Director Rohit Gera said, "though the Budget is positive, it has completely ignored the residential real estate market and there is a total lack of any push for the housing sector.
We had hoped for increased deduction towards home loans amongst other things to give an impetus to the industry."
"Given the prevailing indirect taxes, stamp duty, borrowing costs for both buyers and developers, the industry was hoping for some serious incentive given the significant housing shortfall, but it was one big miss. However, the industry is hopeful in the course of the year the Government will make some announcement in this regard," Gera said. Embassy Office Parks Chief Executive Mike Holland said: "Indications that tax pass through on REITs will be implemented is welcomed.
We will await and review the detail but if the understanding is correct, this has the potential to stimulate the REIT market in India which can release lower cost capital, increase liquidity and stimulate the next phase of enhancement of India's urban infrastructure."
"The Budget is positive and balanced. The proposal to rationalise capital gains tax regime for REITs is a welcome step. Also, the reduction in corporate tax will lead to higher investments in the realty sector," Omkar Developers Director Gaurav Gupta said.