No fo­cus on re­alty in bud­get?

POST BUD­GET The fo­cus of the cur­rent bud­get has been on im­prov­ing ease of liv­ing

HT Estates - - FRONT PAGE - Nam­rata Kohli ht­es­tates@hin­dus­tan­times.com

The fo­cus of Union Bud­get 2018-19 is on “health­care, ed­u­ca­tion and so­cial se­cu­rity” in the words of the Fi­nance Min­is­ter, Arun Jaitley. He clearly spelt the mo­ti­va­tion of this year’s bud­get as ‘Ease of Liv­ing’ with con­tin­ued push for af­ford­able hous­ing but there wasn’t much to cheer about for the real es­tate sec­tor.

The real es­tate sec­tor’s long­pend­ing de­mand of re­ceiv­ing “in­fra­struc­ture” sta­tus and sin­gle win­dow clear­ance for all real es­tate projects found no men­tion. Nor were the uni­form stamp duty or re­duc­tion in GST rates con­sid­ered. From home buyer’s per­spec­tive, ad­di­tional re­lief on stamp duty and reg­is­tra­tion could have been re­duced or merged with GST to ex­pe­dite the de­ci­sion of home buy­ing.

There was sus­tained thrust for af­ford­able hous­ing af­ter ac­cord­ing it “in­fra­struc­ture” sta­tus in Union Bud­get 2017-18, and re­duc­ing the GST from 12% to 8% bythe GST­coun­cilas­apre­cur­sor to this year’s bud­get. There was an an­nounce­ment on cre­ation of Af­ford­able Hous­ing Fund un­der the Na­tional Hous­ing Board - this will al­low bet­ter ac­cess to cap­i­tal for such de­vel­op­ments in ur­ban and semi-ur­ban ar­eas. As many as 51 lakh houses in ru­ral ar­eas are to be built in 2018-19. Ac­cord­ing to Bhairav Dalal, Part­ner - Real Es­tate Tax, PwC In­dia “Af­ford­able Hous­ing con­tin­ues to get pref­er­en­tial treat­ment to­wards achiev­ing the vi­sion of “Hous­ing for all” by 2022. Cre­ation of the Af­ford­able Hous­ing Fund will cer­tainly ease the fund­ing gap.”

In­fra­struc­ture was red hot as the Fi­nance Min­is­ter pro­posed the re­de­vel­op­ment of over 600 rail­way sta­tions, com­ple­tion of 9,000 kms of high­ways, de­vel­op­ment of the sub­ur­ban rail­way net­works in Ban­ga­lore and Mum­bai, as well as im­prove­ment of re­gional con­nec­tiv­ity with UDAN ex­pected to con­nect 56 un­served air­ports and 31 un­served he­li­pads in the coun­try. Anuj Puri, chair­man Anarock prop­erty con­sul­tants lauded the re­gional air con­nec­tiv­ity scheme to con­nect 56 un­served air­ports as “good news for busi­ness growth and of­fice space de­mand in smaller cities, with a nat­u­ral spinoff de­mand for hous­ing on the back of job gen­er­a­tion.”

With size­able al­lo­ca­tions to the rail and road sec­tors, the Bud­get clearly rec­og­nized the in­fra­struc­ture sec­tor as agrowth driver. Ac­cord­ing to An­shu­man Magazine, CBRE – “An­nounce­ments in al­lo­ca­tion for in­fra­struc­ture and road and high­way de­vel­op­ments of over 9000 kilo­me­ters, air­port de­vel­op­ment to in­crease ca­pac­ity by­five times as well as 600 rail­way sta­tion de­vel­op­men­twill cre­ate op­por­tu­ni­ties for de­vel­op­ments around these lo­ca­tions. Fur­ther gov­ern­ment con­tin­ues to fo­cus on the ‘Bharat­mala’ to de­velop 60,000 kilo­me­ters of roads fur­ther al­lows for de­vel­op­ment of new lo­ca­tions.”

Smart cities was on agenda as the bud­get laid em­pha­sis on ur­ban de­vel­op­ment by al­lo­cat­ing Rs2lakhcrore to­wards the 99 short­listed cities un­der the Smart Cities project, and im­prov­ing ur­ban in­fra­struc­ture un­der AMRUT.

In­dus­try in­sid­ers said that the real es­tate in­dus­try though not a di­rect ben­e­fi­ciary may gain ‘in­di­rectly’, with vast in­vest­ments in smart cities and in­fra­struc­ture. Ac­cord­ing to Jaxay Shah, Pres­i­dent, CREDAI Na­tional – “More than these di­rect mea­sures, how­ever, it is the deeper eco­nomic logic of the Bud­get which is the ma­jor boost for hous­ing and real es­tate. The pub­lic in­vest­ment in in­fra­struc­ture in the ru­ral ar­eas, agri­cul­tural mar­ket­ing, smart cities and ur­ban con­nec­tiv­ity, mul­ti­ply in­vest­ment prospects for real es­tate sec­tor.”

How­ever the big­gest take­away in Union Bud­get 2018-19 was for the health­care sec­tor with the idea of uni­ver­sal health­care be­ing in­tro­duced, with noth­ing spe­cial for real es­tate. Ac­cord­ing to Dr. Ni­ran­jan Hi­ranan­dani, Na­tional Pres­i­dent Naredco– “The one thing that touched my heart more than my mind was the idea of go­ing to­wards uni­ver­sal health cov­er­age for 50 crore peo­ple. This was un­prece­dented and I am proud to see what the gov­ern­ment is as­pir­ing to do- a first in world his­tory, not just In­dian his­tory.

How­ever when we look at our very own real es­tate sec­tor in con­nec­tion with the Bud­get- I can only say “Oh my God, we have missed the bus.” Naredco had many ex­pec­ta­tions, says Hi­ranan­dani “es­pe­cially be­cause we have a tar­get to achieve in a given time frame. But let’s dis­tin­guish between ex­pec­ta­tions and con­cerns which are sacro­sanct which ‘at the min­i­mum’ need to be ad­dressed and I am stat­ing only those here. One is that the real es­tate sec­tor needs to be given an in­fra­struc­ture sta­tus. Ad­e­quate con­ces­sions need to be given such as bring down GST to 6% across the board, all seg­ments of hous­ing, rather than apiece­meal con­ces­sion to just af­ford­able hous­ing, at least till the time ob­jec­tive of PM “Hous­ing for all 2022” is achieved. To­day there is far greater in­cen­tive to in­vest in stock mar­ket ver­sus real es­tate, as in­vest­ment in the lat­ter comes with the bur­den of all kinds of taxes.

The other point raised by Naredco was about cir­cle rates. Says Hi­ranan­dani, “We feel that sec­tion about cir­cle rate -where if you sell prop­er­ties at a rate less than the cir­cle or the ready reck­oner rate, you are pe­nal­ized for it - needs to be­scrapped, done­away with and thrown into the river, be­cause it does not suit the buyer, the seller or the prin­ci­pal ob­jec­tive of ra­tio­nal­iz­ing prices.” Be­sides, there is a con­cern about tax on va­cant flat. “Cur­rently if there is ava­cant flat, one is charged a tax as no­tional rent. How can the GoI pro­mote the con­cept of cre­at­ing sur­plus hous­ing stock amongst de­vel­op­ers with a sec­tion that con­flicts with the ob­jec­tive of cre­at­ing sur­pluses?”

Fi­nally, it’s not re­quired for ev­ery­one to in­vest into buy­ing a house. In US more than 50% of the peo­ple stay on rent. There is an im­per­a­tive need to pro­mote rental hous­ing.”

Curb­ing cryp­tocur­ren­cies was also an­nounced this Bud­get. Says Anuj Puri, “There was con­jec­ture that cryp­tocur­ren­cies would find their way into In­dian real es­tate, as it has in de­vel­oped coun­tries, ef­fec­tively be­com­ing the ‘new black money’ in the sec­tor. With the Gov­ern­ment com­mit­ted to tak­ing all nec­es­sary steps to elim­i­nate the use of cryp­tocur­ren­cies in In­dia, peo­ple who were look­ing at them as a get-rich-quick route will have to look at tra­di­tional as­set classes and in­vest­ment routes again.

Over­all, in­dus­try in­sid­ers felt that the de­mand and sup­ply dy­nam­ic­sof real es­tate sec­tor got no fil­lip.

“There has been a si­lence in the bud­get on stim­u­lat­ing main­stream real es­tate de­mand,” says Shishir Bai­jal, man­ag­ing di­rec­tor, Knight Frank In­dia“The sec­tor grap­pling with the re­forms-driven new or­der has been bereft of any mean­ing­ful in­ter­ven­tions that could have been achieved through the bud­get.”

There was ex­pec­ta­tion of re­lax­ation in tax rates. Ac­cord­ing to Ramesh Nair, coun­try head, JLL In­dia – “The sec­tor which has been reel­ing un­der pres­sure post the func­tional re­forms of RERA, Be­nami Prop­er­ties (Pre­ven­tion) Act, Bankruptcy and In­sol­vency, was ex­pect­ing some big ticket an­nounce­ments to re­vive it. The sec­tor ex­pected to see some mea­sures to in­fuse de­mand with re­lax­ations in key tax rates like 80C, 80CC and 24B which have not been ad­dressed.”

To sum­marise, the bud­get was, as Anuj Puri de­scribes, bal­anced but not a boon for the real es­tate sec­tor.

WITH SIZE­ABLE AL­LO­CA­TIONS TO THE RAIL AND ROAD SEC­TORS, THE BUD­GET REC­OG­NIZES IN­FRA­STRUC­TURE AS A GROWTH DRIVER

MINT/FILR

The sec­tor’s long­pend­ing de­mand for a sin­gle win­dow clear­ance for all projects found no men­tion in the bud­get

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