Financial reforms
Developers and home buyers have great expectations of financial news from the budget. Reforms such as income tax benefits and reduced interest rates top the list. IT exemption limits are always a big concern for the middle class. Kanchana Krishnan, Director-Chennai, Knight Frank (India), says that since most home purchases are funded by loans, softening interest rates would create demand in the housing segment. A. Shankar, National Director, JLL, agrees, and asks for an increase in exemption limit to Rs. 3 lakh to create more disposable income and savings and increase purchasing power. He adds, “IT deduction under Section 80C from Rs.1.5 lakh to Rs 2.5 will boost savings.”
Chandan Jain, MD, Vijay Shanthi Builders says lowering borrowing costs is crucial. “In real estate, raising capital has always been a matter of concern. We hope for a considerable reduction in the interest rate,” he says. Dr. R. Kumar, Director, Navin Housing and Properties, asks for abolishing the Rent Control Act and for fiscal incentives and tax exemptions for rental income. “Stamp duty, registration charges, service tax, local government fees and other extra charges should be removed,” he adds.
Land reforms
Escalating land prices and the shortage of quality land parcels are a major concern of developers. Experts are hopeful the budget will include measures to regulate land pricing. Shushmul Maheshwari, CEO, RNCOS, says, “Developers must get land in strategic urban locations for developing affordable housing. An agency to coordinate the efforts of various stakeholders should be set up.” Lowering guideline values will also be investor-friendly, says Navin’s Kumar. “Providing incentives to urban redevelopment projects by permitting higher FSI is needed. However, increasing FSI alone without reducing land prices will result in higher land prices. Land pooling for private players in the affordable housing segment is on our wish list,” he says.
Faster approvals
As Knight Frank’s Krishnan says, “It is important to bring in a regulatory mechanism and simplify approvals. Developers need an online single window approval system and deemed approval for residential projects, subject to certain norms. Adds Kumar, “The removal of Environmental Impact Assessment (EIA) for residential projects, except in ecologically sensitive areas, will speed up projects.” He also stresses on the need for digitisation of maps, coastal regulation zones, and airport restrictions, and introducing e-governance for all approvals, revenue records and registration processes.
Manufacturing revival
The manufacturing industry needs revival. “This will provide scope for utilising suitable properties for industrial and manufacturing facilities and will create jobs and increase disposable incomes,” says Shankar.
Industry status
Granting the realty sector ‘industry’ status has been on the wish list for a long time. Says Jain of Vijay Shanthi, “It will attract huge foreign direct investment and will result in faster project completion. It will considerably reduce the cost of projects and will benefit home buyers.”
REITs
The industry needs better clarity on REITs. “Until the government brings in changes to overcome tax hurdles, REITs cannot be effective. The need to hold REIT units for more than 36 months to qualify as long-term capital assets may discourage investors. The budget must address this and fast-track the process,” says Krishnan.
Skill development
As Navin’s Kumar says, “Mass skill development to increase the pool of skilled workforce is important.” There is a need to set up schools and institutes that can train professionals in the construction industry, which will increase jobs, improve building quality and reduce costs
