Real estate sector is considered as the mainstay of the Indian economy and correctly so; as it contributes to 6.5 percent of the nation’s Gross domestic product (GDP) and employs over 50 million people making it as the second biggest employer in the country, after agriculture sector. Over the past few of decades, the sector has developed leaps and bounds and has attracted close to $25 billion in foreign direct investment (FDI). This number is expected to grow to $180 billion by year 2020.

Last year saw a silence in the real estate sector with investors looking for other opportunities to invest into. High interest rates, escalating property prices, rising cost of construction attached with economic slowdown and high inflation rate had pushed away the buyers. NCR was worst affected by this, narrowly trailed by Mumbai and Chennai. Jaipur emerged as the strongest over the past few years with some micro markets recording an appreciation of almost 65 percent year over year basis. Bangalore has also mounted strong chiefly because it’s an end user driven market. This year started on a positive note as most builders believe that buyers are back and a surprise rate cut move by RBI. With a change of guard at the centre and a buoyant attitude amongst buyers, all eyes will be on Mr. Jaitley to see what he has in store for the sector this budget session, as this will be the first comprehensive budget of this government.

What this sector desires?
>: Industry Status – How does attainment of industry status help? Amongst various other reasons, it’ll give developers access to funds at reduced interest rates and diminished insurance thereby creating housing more affordable.
>: Elimination of multiple taxes – Presently, home buyers need to pay service tax, VAT as well as stamp duty when buying flats. Government needs to ensure the quick passage of Goods and Service Tax which will help in substituting several taxes and help the consumers.
>: Real Estate governing body – This is the need of hour. This sector is valued at over $50 billion currently and anticipated to grow to over $200 billion by 2020. There is a big need for an apex body which will address the concerns and look into issues from this sector.

Mr. Mahipal Singh Raghav, CMD, MMR Group states that “To begin with, Industry Status has been a request that’s been put forward and ignored many times now. It’s a wonder how a sector that generates so much attention and revenue is still not recognized as an industry. This will give builders access to funds at reduced interest rates and reduced collateral thereby making housing more affordable. Also, currently, home buyers need to pay service tax, VAT as well as stamp duty when purchasing flats. The Government should ensure the quick passage of Goods and Service Tax which will replace numerous taxes and help the consumers. Finally, setting up a Real Estate Governing body is much required. There is a big need for an apex body which will address the concerns and look into issues from this sector”.

Mr. Kushagr Ansal, Director, Ansal Housing says “This time we are expecting the RBI to start cutting the interest rates possibly after the budget in first quarter which shall give them extra confidence on handling inflation expectations and stability in currency environment. There is a greater probability of start of rate cut cycle by RBI in the very first quarter this year which will definitely boost a number of sectors and progress corporate earnings from a medium to long term perspective. Moreover, government is expected to pay attention on the implementation of key reforms like GST and other bills that would ignite the investment cycle that will work in the favour as well”.

What customers need?
>: Reduction in home loans rates – Minister for Urban development and housing Mr. Naidu had stated that plummeting home loan interest rates would be his key focus area Financial institutions, developers and home buyers, are deeply anticipating the finance ministry’s nod to this.
>: Decrease in cost of registration of property – Stamp duty and Registration costs amount to 6 percent in most places, which is quite high. Decreasing the registration cost by a few basis points would greatly reduce the burden over the end customers. Alternative approach would be to adopt a slab based approach to register fee. However, stamp duty mainly comes under the jurisdiction of the state Government, an instruction from the centre to reduce the cost would definitely help.

Mr. Deepak Kapoor, Director, Gulshan Homz says “The three most important drivers for the real estate sector this budget will be; RBI’s interest rate cuts, decision on the land acquisition bill and execution of single window clearance system. Whole sector is atleast expecting the rates to come down so as to revive the market. There is a lot of demand in the market which is being held hard by the affordability factor and we are pretty hopeful that the RBI will bring about good news for interested buyers”.

Mr. Prithvi Raj Kasana, MD, Morpheus Group says “The government must focus on and ensure smooth operation of the budget session this year and try to pass as many bills as possible as the market sentiment will be determined to a large extent by how this session directs the way. Most eyes are set on the reduction of home loan rates so as to provide the required push for the sector and this budget; the chances are very high that the new government might get it done also”.

Mr. Rajesh Goyal, MD, RG Group believes that “One of the prominent reasons why people hesitate while buying property is due to the affordability factor. Even though the bank loans are easily available in recent times, owing to the Government policies, the high rates of Interest on these loans and thus huge EMIs cause reluctance among the home buyers. In the upcoming Union Budget we expect the Government to provide some relaxation in the home loan rates. This will help many in realising their dreams of owning a home by making the homes truly affordable”.

What the developers want?
>: Decrease the lending rate – Raising capital is a mammoth task for developers. The interest rate for builders from a bank can go as tall as 14 percent and on an average is about 12 percent and in fact; raising capital from other sources is more expensive than this. Reducing this rate of interest for builders will help in decreasing the cost of construction and in turn, bring down the cost.
>: Prolonged approval system – Developers need to get as many as 50 signatures from various Government officials to get a project rolling. Delay in getting those clearances is one of the prime reasons for delays in projects. Any effort towards reducing this, increasing transparency and rationalizing the process of getting clearances will positively impact the industry.
>: Regulating the cost of raw materials – A sudden rise in the cost of construction raw materials has enforced many builders to pause their projects in many parts of South India. The cost of cement has increased by over 25 percent and prices of few other materials have doubled over the last few years. The Government must regulate these prices for at least key raw materials like cement, iron, concrete, etc. by putting upper limits on their prices.

Mr. Ashok Gupta, CMD, Ajnara India Ltd. says “As India is gearing up for Make in India, the challenge greatly lies on the manufacturing industry. Over the next few decades, the construction industry will witness a massive growth globally and hence, raw materials such as cement, bricks, steel, concrete, etc. will be used in abundance. Therefore, we need to create a perfect balance between the demand and supply along with appropriate consideration for the environment. This immensely depends upon the costs of the raw materials used during construction process such as cement, iron, etc. This budget, the government needs to regulate the prices of these materials so as to curtail rising property prices”.

Mr. Rupesh Gupta, Director, JM Housing says “Markets are keen and waiting eagerly for the Union Budget 2015 to be presented in February. We have a very strong belief that the upcoming budget could be a make or break event; as this would be first full budget from the new government which has spent good enough time at the centre to plan out things. Hopes are high with the Finance Minister indicating start of second-generation reforms going forward. Real estate sector will greatly benefit from this budget if loan rates are decreased by RBI. This will create a positive sentiments wave in the market which will excel the demand greatly. Other important decisions to look into will be the single window clearance system and land acquisition bill”.

Mr. Arvinder Singh, MD, Agrante Realty Ltd says “The real estate sector has a long list of expectations; as this sector alone contributes more than 6 percent to the nation’s GDP.  Markets are keen and waiting eagerly for the Union Budget 2015 to be presented in February. Biggest challenges for the Government are infrastructure, decreasing the lending rate, reduction in home loan rates across the nation. Further, we expect that the upcoming budget should give developers access to funds at reduced interest rates and eliminate multiple taxes; thereby creating housing more affordable and in turn will help reduce the burden of the customers. Other important decisions to look into will be the single window clearance system and land acquisition bill”.


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