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Acche Din for Real Estate Sector in India with 2014 hope budget, claims CREDAI

The real estate industry which has been looking forward for rapid development and growth in the real estate sector and infrastructure space since the NDA government has taken over at the centre, gets a place of importance in this budget. The Confederation of Real Estate Developers’ Associations of India (CREDAI), the apex body for private real estate developers in India is confident that with liberal norms for FDI and tax incentives for the REITs , besides the focus on low cost housing, infrastructure development and the budget allocation of Rs. 7060 Crores for development or up gradation of 100 smart cities along with the promise to deliver ‘pucca’ housing for all by 2022 will bring “Acche Din” for the real estate sector.
Speaking about the budget Mr. C Shekar Reddy, National President, CREDAI said, “The budget unfolds some important initiatives for the real estate sector. Our demand for easing the norms for the FDI in real estate sector has been accepted by the FM in the budget and to encourage development of Smart Cities, which will also provide habitation for the neo-middle class, requirement of the built up area for FDI is being reduced from 50,000 square metres to 20,000 square meters and capital conditions reduced from USD 10 million to USD 5 million respectively with a three year post completion lock in. If these projects commit at least 30% of the total project cost to affordable housing, they will be exempted from minimum built up area and capitalisation requirements, with the condition of 3 years lock in. This will make more projects eligible for FDI funding and specially promote affordable housing segment.
Apart from this the Government is also looking keen to make REITs more attractive and has proposed making it a vital tool to attract and encourage investments in the sector by providing tax incentives for REITs have been proposed as requested by us. This will encourage retail investors participation in commercial real estate and provide a source of funding to the developers helping improve liquidity and encourage them to undertake more projects. However our long standing demand for an infrastructure status to the housing segment has not been granted, which is disappointing as it limits the access for bank and institutional funding to the real estate sector particularly the affordable housing”.
Mr. Reddy further added that “Finance Minister has proposed to allocate Rs. 4000 Crore via National Housing Bank to boost low cost affordable housing for urban poor and Rs. 8000 Cr allocation for development of rural housing. We are waiting for more clarity on how the funds would be used. If this allocation is for the interest subvention scheme as proposed in the BJP manifesto it will give a boost to affordable housing by increasing the eligibility of the people and increase the demand for such housing giving a boost to affordable housing. Morover the allocation of 7060 Cr is to develop or upgrade the existing 100 smart cities. Proposals such as allocation of Rs. 50000 cr for urban infra projects, development of Metro projects in cities with population of 20 lakh and above, setting up 7 smart industrial cities and steps for reviving the SEZs will trigger job creation and stimulate the demand for housing. Proposal for investment in national highways and state highways along with development of airports in tier I & II cities will further boost the infrastructure leading to industrial development and have a ripple effect on boosting the real estate sector.”
Adding to this Mr. Reddy said, “Though our expectations related to the personal taxation and exemption on interest rates have not been fulfilled, however the little change of raising the tax exemption limit by Rs. 50,000 and raising limits on exemption under section 80 C by 50,000 will add to the investible surplus in the hands of the common man backed by the increase in exemption on interest on Housing loans for self occupied houses to Rs 2 lakh from 1.5 lakhs under section 24 (b) would help improve the sentiment and stimulate the demand for housing.”
Overall Mr. C Shekar Reddy National President CREDAI commented that, “The budget has a vision towards shaping the future of the country and spreading the development across the board. The budget has given the real estate sector the due importance, although our long standing demand for infrastructure status for the real estate sector and an exemption of service for real estate projects is still awaiting the government nod.
Some of our other demands have been needed to and been incorporated in the budget. With the pro real estate stance taken in this budget and our meetings with the cabinet ministers before the budget we are hopeful that we can work closely with the government and get the desired response to other non fiscal requirements like streamlining of online approval process by eliminating all the NOC’s etc. However we at CREDAI are confident that the “Acche din” for real estate sector are definitely on the cards as the Government in the budget has given stimulus to the industry and infrastructure sector which will have a ripple effect on the Real Estate industry.”