While real estate sector is one of the major contributors towards India’s GDP, it has been suffering from liquidity challenges in the recent years. However, with new the Finance Minister set to announce the Union Budget 2019-20 on July 5, most stakeholders hope that she would pay special attention to real estate sector and would take corrective measures to get it out of the crisis.
Apart from relief in interest rates for the affordable housing segment, industry observers also expect single-window clearance and industry position for real estate projects.
Avneesh Sood, Director, Eros Group, feels the real estate industry, being a major contributor to the GDP growth, can assist the government in employment generation and hence may get the Finance Minister’s special attention in the upcoming Budget.
“The usual demand for single-window clearance and industry position for real estate projects, which should preferably be incorporated in the budget, are more tax break to homebuyers as well as investors. Both can help out the sector pull through from its liquidity woes to a large extent. Also from the builder viewpoint, the funding problem needs serious attention,” he said.
Sood added that the provisional budget in February did try to encourage investors and buyers, the upcoming budget should contemplate the introduction of housing bonds for the developer; provide low-interest rate construction funds, at least for affordable housing projects, for middle and economic class. Rajan Bandelkar, President, NAREDCO Maharashtra, feels that while the government proactively addressed most concerns of the real estate sector during the interim budget, there is still a need to give the new amends a finishing touch.
“We are highly optimistic about the union budget and are expecting the Finance Minister to take corrective measures that would ease out of the liquidity challenges the sector is grappling with. The Government must provide incentives to the bank to re-enable them to lend to the credible NBFCs or directly encourage the banks to provide financial support to the developers,” he said.
“We are hopeful of the government to reduce the rate of interest on home loans to 6.5% - 7% for affordable housing. Also, the buyers must be provided with 90% loan on the entire cost of the flat including stamp duty, incidental development, GST and other charges,” Bandelkar added.
While all stakeholders agree that the budget majorly requires addressing the key issues of high unemployment rate, financial sector challenges and the agrarian crisis, the crisis in the real estate sector deserves proper attention too.
Ashok Mohanani, Chairperson, EKTA World, feels that with “the looming slowdown in the economy”, and government searching for ways to give a fresh impetus to the sector, it should consider opening external commercial borrowings in real estate.
“This will see significant funds flow into our industry. This will help us tide over the current NBFC slow down as well,” he said.