With another year passing by and the date for Union Budget 2017-18 fixed for 1st February, all eyes and ears are now eagerly awaiting for this year’s Union Budget which is expected to offer relief to the majority of the population. Also, looking into the political angle of the same, it is no coincidence that the dates for the upcoming Uttar Pradesh elections have been planned just after the Budget announcement. Thus, it is quite evident that a populous Budget is on its way. One of the country’s largest contributor towards Gross Domestic Product (GDP) and employment generation, real estate sector, is extremely hopeful for a fruitful Budget 2017-18.

For the last couple of months, central government has been proactive in terms of providing relief to this sector, its stakeholders and the buyers. Passage of RERA and GST last year, recently concluded 50 days of demonetisation, affordable housing incentives by the Prime Minister on the New Year Eve of 2017 and the relief provided by several banks through lending rate cuts on the New Year day has provided much needed fuel to the realty sector entering into 2017. With such activity, hopes are high for a positive budget for the realty sector this time, if not directly then at least through indirect means.

Although, there are mixed reactions from the realty sector’s stalwarts and experts who somewhere believe that a balanced budget might be announced, where there will not be many benefits for the realty sector; but indirect announcements such as exemptions in tax slabs, etc. that might help the consumers to increase their purchasing power and thus, maintain the flow of money in the economy.

Industry Reactions and Expectations:

Avneesh Sood, Director, Eros Group

Government has already been very active for the realty sector since the Union Budget announcement for 2016-17 last year. Major incentives for both, developers and buyers was announced under affordable housing initiatives and rental housing. Very recently we even observed rate cuts by banks for the housing segment in general, where affordable category received even bigger boosts by the government. This time we are predicting the government to ease the taxation slabs and provide higher spending power to the consumers that will indirectly benefit the economy and the realty sector. Infrastructure will be a crucial side where the government might announce big projects and greater spending. This in return will allow the conversion of rural to urban regions, thereby promoting tier 2 and 3 cities to gain real estate momentum and increase job opportunities.

Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz

Housing for all and Affordable Housing have been the two major jargons of the government for the real estate sector, where work has been carried out diligently. Its time now to expand these concepts and increase the benefits for other segments of the population as well. At present, only the EWS and LIG segments have access to the PMAY benefits, and still there is a large segment of youth population which is in dire need of an abode at low cost, and they don’t fall under such categories. This Budget must focus upon providing such benefit to the masses and provide clarity over projects been covered under this scheme. Industry status for the realty sector has been long awaited and it would be a game changer for the sector if it is granted this time. Also, clarity over the slab of GST where the realty sector will fall is still uncovered. Overall, it is expected that Union Budget 2017-18 will be a common man’s budget where positive changes in the income tax structure is highly anticipated.

Ashok Gupta, CMD, Ajnara India Ltd.

We are projecting infrastructural development as the core aim of the government for this Budget. Huge amount for infra development may be announced this year as well especially for developing regions of the country falling under AMRUT scheme. Apart from that, GST’s proper implementation, relief on income tax, more incentives for digital means of transacting and promoting REITs and InvITs might be amongst the highlights from the upcoming Budget. No direct benefits for the sector are expected at this time, as recent rate cuts and affordable housing incentives have already been announced by the government. We might only witness the Budget providing indirect benefits to this sector that will act as a catalyst in the long run.

Dhiraj Jain, Director, Mahagun Group

This Union Budget, policies for allied industries such as steel and cement needs to be standardised as it indirectly affects the cost of housing units. Also, tax deduction limit for housing loans of Rs. 2 lakh is quite less especially for major Tier 1 cities where ticket sizes cross 1 crore in several cases. This limit can be looked upon along with reduction in stamp duty charges to allow higher savings. Finally, changes in the tax slabs are pretty much on the cards that will allow young working class to look upto real estate as an avenue for investment or even residing.

Pradeep Aggarwal, Chairman, Signature Global

Union Budget 2017-18 is expected to bring cheer to the masses in the country. We have just witnessed banks reducing lending rates and the government also promoting affordable housing for EWS and LIG categories by providing special interest rate reductions. This year’s budget will focus upon improving infrastructure in the country in order to bring smaller regions into the limelight. Making changes in the income tax slabs will allow higher savings and better spending capacity for the public, thus allowing people to look at real estate as an attractive avenue for residing and investment purpose.

Ashwani Prakash, Executive Director, Paramount Group

This year’s budget might not offer much to the realty sector directly as the government has already been offering benefits and incentives during the course of year 2016. Last year itself, a lot has been delivered by the government for the budget housing segment and infrastructure of the country, and this year too infra segment might receive the biggest chunk. Although, single window clearance and industry status is an urgent need of this sector in order to provide the much needed impetus on a larger scale. With RERA and GST to become operational this year, it is imperative that single window clearance is announced across the country.

Vikas Bhasin, MD, Saya Group

For the real estate sector, government is already moving on the right track with timely announcements and policy implementations taking place at a decent pace. Post demonetisation and with the banks reducing lending rates, the government is leaving no stones unturned to achieve its target of Housing for all by 2022. It is important though to reach out to all the possible audience segments and not only the weaker sections of the society. Rebates on income tax, clarity over GST and RERA, easing norms for FDI, making route for REITs and InvITs easier and passage of the long awaited land acquisition bill should be in plan for the upcoming budget session 2017-18.




      As the final day of the previous calendar year arrived, entire nation was waiting for the late evening when our Honourable Prime Minister Narendra Modi was to address the nation. Since his address on 8th of November last year, when demonetisation of large currency was announced, everyone was under the impression of what new policy might get implemented on the New Year Eve of 2016. During the address, Prime Minister this time announced some New Year gifts for the public that received a cherry on the top when several leading banks in the country slashed its lending rates by almost 0.9 percent or 90 basis points.

Both the news now carry heavy weightage for the realty sector of our country which has high hopes from 2017. “Moving into 2017, it will be the year of affordable housing segment and now especially with the government announcing incentives for this segment’s prospective buyers and banks reducing lending rates, we will now witness more launches of affordable housing projects than any other segment in the realty sector of India”, believes Pradeep Aggarwal, Chairman, Signature Global.

During the address, two new housing schemes were announced citing the fact that there are still millions of people who don’t own a property either due to affordability factor or high interest rates which subsequently increases the EMIs. For the urban poor, in 2017, a rebate of 4 percent and 3 percent would be provided on home loans upto Rs. 9 lakhs and Rs. 12 lakhs respectively. Also, for the new housing or extension of housing taken up on 2017, a rebate of 3 percent would be provided on home loans extending upto Rs. 2 lakhs. PM Modi further added that the number of houses being built  for the poor under the Pradhan Mantri Awaas Yojana (PMAY) in rural areas was being increased by 33 percent. “With announcements such as these, we are inching closer towards fulfilling the dream of building 2 crore affordable housing units for the urban poor by 2022. When lending rates are reduced, it allows the market to create fresh demand, and in this case, developers across the country will focus on developing affordable housing units which will be supported by reduced lending rates, and gladly accepted by the buyers”, explains Vikas Bhasin, MD, Saya Group.

Adding further, Kushagr Ansal, Director of Ansal Housing points out that, “Since the affordable housing and housing for all missions have come up, developer lobby across the country has shifted its gears towards developing budget houses majorly. Almost 50,000 units are getting ready to be delivered by 2022 in Gurgaon itself; and across the country, this number is multiplying at the rate of knots. This in the long run will allow the country to meet the demand against the shortage of budget homes and allow everyone to get a roof over their heads.”

Speaking about the announcement of banks reducing the lending rates, Pradeep Aggarwal adds, “Banks reducing the home loan rates by upto 90 basis points is in general a great news for the sector ahead of Union Budget 2017-18. Most of the people begin property purchase planning around the budget period so as to get clarity about their financial year ahead. This in turn will allow demand for housing to increase this year that will help the realty sector to gain momentum. Affordable housing segment will reap out the highest benefits as a result of extra cushion provided by the government’s recent decision.”

Several leading banks in India have cut down tremendously on the lending rates. For instance, State Bank of India (SBI), reduced its marginal cost of funds based lending rates (MCLR). For SBI, the new rates are 8 percent against 8.90 percent for one year loans, 8.10 percent and 8.15 percent respectively for two year and three year maturity. For other few banks, one year MCLR stand at 8.45 percent against 9.15 percent for Punjab National Bank (PNB), 8.65 percent against 9.30 percent for Union Bank of India (UBI) and 9.15 percent against 9.30 percent for IDBI Bank. Consequently, home loan borrowing has also come down drastically, signalling a boost to housing demand for near future. For example, women borrowers of SBI an avail home loan at 8.60 percent and 8.65 percent for others, thereby saving a decent amount on the EMIs.

“With the government’s announcement of rebate on lending rates along with the banks providing rate cut cushion to the public, affordable housing segment is the biggest gainer of all. Citing the example of the lowest rate in the market at present, 8.60 percent; affordable housing prospective buyers will be basically borrowing now at 4.60 percent or 5.60 percent for loans upto Rs. 9 lakhs and Rs. 12 lakhs respectively. EMIs for this category has fallen by almost 40 percent, which will enhance the demand for housing amongst the buyers”, elucidates Dhiraj Jain, Director, Mahagun Group.

“Its just the beginning of a rate cut cycle in India. Banks at present are carrying high volume of liquidity due to the 50 days of demonetisation. It was well forecasted that rate cuts will begin soon. RBI’s next policy review is due in February as well as the Union Budget 2017-18. Hopes are high for more rate cuts in near future which will further ease the pressure off the economy and allow greater spending. This high purchasing power will result in people opting real estate as an avenue for returns as well as residing, as even interest rates on deposits are decreasing, thus making them less lucrative. In a nutshell though, realty sector is on a track of growth well-supplemented by such initiatives”, concludes Rajesh Goyal, Vice President CREDAI-Western U.P. & MD, RG Group.