Realty Industry Expect Reforms in Upcoming Budget

Bangalore: The budget 2011-12 has offered different kinds of amenities to the real estate sector which did not do much favor to the developers and neither the housing sector was given any importance, reports Anuradha Ramamirtham & Rajiv Dogra of Economic Times.

Dhaval Ajmera, Director of Ajmera Realty & Infra India stated that even today the real estate sector in India is going through problems like sluggish economic growth, high interest rates and delay in decision-making process.

But, the real estate industry expects some positive response in the budget 2012-13. The realty industry also expects the RBI’s intervention to control inflation that has affected the industry at large. If RBI controls the interest rates an affordable housing is possible.

Shailesh Sanghvi, Director, Sanghvi Group of Companies cited that "We expect revision in tax for affordable housing projects in order address the acute housing shortage in the country”. He added by saying that, if houses are quoted at affordable prices then banks will be able to provide loans at reasonable interest rates.

Ajmera further stated that "The budget should look forward to extending the existing benefit of Section 80 IB (10) of the IT Act for developing affordable housing as the country is still in a huge shortage of tenement,” reports ET.

Previous year, for affordable housing, 1 percent interest rate rebate was offered for the cost between 10-15 lakh. Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India stated on this note that the rebate scope should be enlarged and improved to include a wider price band of budget housing to improve the falling reaction in the housing sector.

Moreover, the real estate industry is expecting to get an industry status as the real estate sector contributes 5 percent to India’s GDP. Manju Yagnik, Vice-Chairperson of Nahar Group quoted that "Granting the real estate sector an industry status should be acceded to in the forthcoming budget as this would enable it to have access to organized funds from banks and financial institutions. In addition to getting easier and cheaper finance, the industry status would bring in a much deserved discipline in this sector, especially when the government is giving priority to mass and affordable housing projects," reports ET.

Developers are facing problems to launch new projects because of limited funds and high construction cost. The real estate industry is looking forward to the Finance Ministry to relax the norms on FDI and ECB. On this note Puri cited that "Relaxing norms for repatriation of FDI in real estate is the need of the hour. Currently, it is not possible for foreign investors to repatriate real estate investment proceeds for a period of three years, which is hampering investment flow into India. The market environment needs to be rendered more investment-friendly," reports ET.

Yagnik further quoted that "we hope that the Budget 2012-13 would bring about appropriate reductions in their tax rates, to the delight of home-buyers who are already burdened with high interest rate for housing loans”. Reports ET.