India's property sector gains in Jaitley budget
MUMBAI // India’s property sector is set to be one of the key beneficiaries of the federal budget, according to analysts.
“This has been one of the path-breaking budgets with far-reaching changes especially for the real estate sector,” said Shishir Baijal, the chairman and managing director of Knight Frank India.
“This has come at a time when the beleaguered sector has been looking at measures to boost the sentiments.”
As well as steps to boost the affordable housing segment, including granting it infrastructure status to improve access to cheaper financing, there were a number of other announcements on Wednesday that are expected to have a positive effect on the real estate sector.
“Increased focus on infrastructure especially construction of new roads, improvement of existing roads and coastal connectivity will go a long way to benefit the real estate sector,” said Mr Baijal.
India’s real estate industry has been hit hard by the government’s demonetisation move in November, its ban on 1,000 (Dh54.66) and 500 rupee banknotes to tackle the country’s problem with black money.
Property sales and launches at the end of last year plunged to the worst level since the global financial crisis, causing a 226 billion rupee loss in the industry’s fourth quarter, said Knight Frank last month.
Rebates on individual taxes unveiled in the budget could help increase disposable income and “might help spur consumption and also have a positive impact on demand for housing”, said Anshuman Magazine, CBRE’s chairman for India and South-east Asia.
“The government has also been accommodative of the concerns of the real estate sector,” he said. “The relaxation on long-term capital gains, joint development agreements, tax rebates for builders will help reduce their tax liability.”
Arun Jaitley, India’s finance minister, in his budget also announced the abolition of the Foreign Investment Promotion Board, a bureaucratic agency that was complicating the process for foreign direct investment (FDI). This is expected to benefit the property sector.
“While a clear policy outline is yet to be revealed, this is another positive step to liberalise FDI policy framework and ease regulatory hurdles in attracting investments,” said Mr Magazine.
Developers were upbeat on the budget but they said they want the government to make the process of securing clearances for projects much easier for them. “A major impediment to real estate development in India remains the approval process,” said Surendra Hiranandani, the chairman and managing director of the House of Hiranandani, a luxury developer.
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