Real Estate Regulatory Bill gives more power to buyers to take on errant builders

The much-awaited Real Estate Regulatory Bill has now broken the last hurdle to become a concrete legislation when it was passed by the Upper House of the Parliament – Rajya Sabha on Thursday much to the relief of home buyers who now got a legal arm to protect their interests.

The Bill has various provisions which can protect the interest of buyers, who have remained mute victims for years due to irregularities in the real estate dealings by unscrupulous builders across the nation. The provisions of the bill now will make the developers accountable and also bring in the much-needed transparency in terms of dealings and quality of the products.

Indian real estate has so far been remained unregulated which has made many becoming fly-by-night builders to take advantage of the gullible home buyers. Big builders are now happy because this bill will regulate the industry and cut-to-size the small-time developers who account for more than 60 per cent of realty transactions in India.

However, certain developers did express their disappointment saying that the Bill did not take Government agencies, whose delay in approvals can impact on project completion schedule, from its purview. It’s now up the state governments to implement it with or without further amendments.

Let’s see what builders, analysts and industry organizations have to say about the Bill becoming a Law.

T Chitty Babu, National Chairman of CREDAI:

T Chitty Babu, while welcoming the Bill, said, “This will give a level playing field for developers and also regulate the approval process.” However, he said that the Bill has failed to bring an important stakeholder into its fold — the government agencies.

Explaining further, he told New Indian Express, There are four stake holders in the development of a real estate project - the developer, the financial institutions and the customer. The fourth stake holder, the government, has not been brought into the ambit of the bill. The government plays an important role in the approval process. Now we will have 58 windows and a door.”

Sunil Kanoria, president, ASSOCHAM:

Apex industry body ASSOCHAM said the Bill would to lead development of urban infrastructure,  help realise government’s vision of ‘Housing for every Indian by 2022’ and play a pivotal role in structural transformation of India’s economy.

“Apart from resolving key issues that are hampering the growth of the real estate sector, this bill will lead to institutional reforms in land acquisition, approval processes and taxation that are much needed to expedite development of affordable housing,” said Sunil Kanoria, president of The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

“Besides, it will also help in facilitating investments through FDI, REITs and other innovative real estate financing models will help attract long term funds from foreign and domestic investors,” Kanoria said.

Arvind Jain, Managing Director - Pride Group: 

The real estate regulatory bill has been long in the pipeline, and has now cleared all roadblocks and become a law. Various decision makers involved in it had been ambiguous about their stance towards this vital regulator, and as a result it remained pending. Now, it has finally received the green signal and is all set to revolutionize the Indian realty market. It will empower consumers by giving them confidence while making their real estate investments. It imposes strict regulations on how developers conduct their business, and underwent various redrafts aimed at doing this. It is very encouraging that the bill is now a reality. 

Kishor Pate, CMD - Amit Enterprises Housing Ltd: 

The real estate needed the Real Estate Regulatory bill more than any other single piece of legislation, even though GST, the Land Aquisition & Rehabilitation Bill, single window clearance and industry status are by now means of less importance.  The industry has been in express need of an apex body through which all concerns of consumers can be addressed transparently and efficiently. We will now see a radical transformation of the entire residential sector. Strict enforcement of project delivery timelines, verifiable construction quality and assurance of legal clearances will finally become a reality, and the consumer confidence which had all but evaporated will return. It is a most welcome development.

Anil Pharande, Chairman - Pharande Spaces: 

The Indian real estate sector has historically been unregulated and ill-organized. Unfortunately, the unorganized segment has so far represented the largest share of the market, and it is in this segment that consumers have in innumerable cases been held hostage to by unscrupulous practices of ruthless developers. The real estate regulatory bill was drafted with a vision to give clarity and assurance to real estate buyers via various strictures. Now that it has become an enforceable law, it will have a profoundly positive effect on how both domestic and global investors view Indian real estate. More importantly, it will give homebuyers a strong measure of assurance. 

 

Anuj Puri, Chairman & Country Head, JLL India:

The passing of the long-pending Real Estate Regulatory Bill is an unequivocal victory for the Indian real estate sector. Its enactment as a law will almost single-handedly revamp the way the sector works across the board, from developers to end-users and investors, to lending institutions and government agencies involved in the buying and selling of property. It is by far the most decisive step the sector has taken towards transparency and reaching towards the kind of standardized processes, procedures and accountability guidelines that the industry requires to progress.

Harshvardhan Neotia, President, FICCI:

Commenting on the Real Estate Regulatory Bill, Harshvardhan Neotia, President of FICCI, said, “The passing of Real Estate Bill, 2016 in Rajya Sabha is a landmark step towards enhancing the credibility of construction industry by bringing in transparency and accountability in execution of projects. I hope this bill will put in place an effective regulatory mechanism that would safeguard the interest of consumers as well as provide protection against fly by night operators. The passing of bill should enable timely approval and execution of projects which will raise the confidence of consumers and also give a huge boost to the growth of real estate sector.”

Though this is a good beginning after a prolonged delay, the Real Estate Regulation and Development Bill becoming a Law, in a way would prompt buyers to go for purchasing homes without any apprehension of being cheated. This will help the sagging real estate sector to stand up to meet the increase in demand. Though there are still uncertainities like the appointment of regulators   in states and implementation in toto by state governments, the bill in the long term would provide the much-needed impetus to the sector's overall growth.

Also read the article in Press Release Point.

How Real Estate Regulatory Bill Can Help Revive Property Sector

Anil Pharande

The Real Estate Regulatory Bill has been waiting for a long time to be passed as a law. Though several new recommendations by various bodies were incorporated into the draft Bill and approved by the cabinet, it has still not been passed as an enforceable law by the Parliament. It is now high time that this happens - for several reasons

The changes which have been made in the original draft over time are quite progressive. For instance, a real estate developer must keep a minimum balance of 50% of the funds collected for his project in an escrow account. Before the Real Estate Regulatory Bill was drafted, the concept of creating an escrow account for a real estate project in which to hold funds for a project did not exist at all. In the absence of such a regulation, builders are at liberty to siphon off funds collected for their projects and use them to purchase more land or in the construction of other projects.

The Real Estate Regulatory Bill will make it compulsory for builders to ensure that at least 50% of such funds will remain reserved solely for the development of the project for which they were collected from buyers. To ensure that this actually happens, they will have to pay these funds into an escrow account within 15 days. While this is definitely a rule which will protect the interests of property buyers to some extent, it still means that builders can use half of the funds collected from buyers for other purposes.

This gives rise to a pertinent question - why would they want to do that? Isn't it in the builder's own interest to complete a project on time? Unfortunately, many developers don't look at it that way at all. The reason why they divert funds from ongoing projects is so that they can purchase land to build land banks, which allows them to showcase more projects on their balance sheets. Doing so makes allows them to raise more capital from banks or private equity funds, and also to give an inflated image of the size of their business.

There have been several other changes to the draft Real Estate Regulatory Bill, as well - each giving a clear message that the era in which developers could do whatever they want is going to be history once it is implemented. Not least among these important changes is that developers will have to register all projects which they are constructing within 3 months once the Bill becomes a law. If they fail to do so, they will be penalized to the tune of 10% of the overall project cost, and will have to bear an additional penalty of 10% and even face a prison term for any further delay to register their project.

The Real Estate regulatory Bill will also bring an end to developers' freedom to make changes in the original plans or structural designs of their projects once they have been registered. They will only be able to make any changes if they are able to get the signed approval of at least 2/3rds of those who have invested into the project. Projects which do not have completion certificates issued as yet are now also included, meaning that an even bigger segment of buyers will benefit from protection of their interests.

The current version of the Real Estate Regulatory Bill also has another noteworthy amendment in the fact that it now includes commercial office projects. In other words, investors who have plugged their funds into commercial office properties will also be protected by the Bill. Of course, the fact is that 85% of the Indian real estate market consists of the residential sector. However, this amendment is important because it will help the sector become more transparent in every respect, and not just in some segments. Real estate brokers and agents are now also included in the latest draft of the Bill, which means that will also be liable for legal action if they engage in any practices which are not in line with the new law.

Finally, the latest draft of the Real Estate Regulatory Bill permits customers with grievances to move the consumer courts, and does not position itself as their only legal recourse.

With all these positive amendments now in place, the Real Estate regulatory Bill is indeed a powerful means to make the chronically opaque Indian real estate sector more transparent. Once it becomes a law, people will feel more confident in investing into real estate, and this will result in the revival which everyone has been waiting for. This confidence will take time to become evident, but it will definitely come – and when it does, we will see massive changes on the ground.

Contributed by: Anil Pharande, Chairman - Pharande Spaces

Pradhikaran, PCMC emerges as Pune realty’s Hottest Growth Corridor

Anil Pharande, Chairman of Pharande Spaces, a leading construction and development firm operating in the PCMC area of Pune, speaks about Pradhikaran, PCMC, as Pune Real estate’s new residential property investment hotspot.

The Pune residential real estate boom, initially kick-started by the IT/ITeS industry, has brought about a lot of unregulated development. While property prices in Pune rose unrealistically, the city’s traditional ease of living and pleasant climate, which were previously its USPs, suffered. 

Hills and trees have been razed to accommodate the rapidly expanding concrete jungle that all but defines central Pune today. The town planning commission found itself impotent in the face of the development mania, which soon transcended all reasonable, sustainable boundaries.

Real Estate Woes In Central Pune

In Pune, infrastructure challenges have been increasing because of the ever-increasing population. This has also put escalating pressure on available land, resulting in the forced extension of the city limits.

The pattern of development has been decidedly mercenary and unplanned, with the only criteria being accessibility to existing and upcoming IT hubs. While the rise of Hinjewadi created increasing demand for homes in its immediate vicinity, places like Aundh soon witnessed a slew of projects by property developers. Similarly, property prices in Baner and Wakad rose so steeply that they finally corrected.

New Focus On Pimpri Chinchwad Municipal Corporation (PCMC)

As things stand now, central Pune no longer has an iota of its previous quality and ambience in residential property offerings. It is therefore not surprising that homebuyers are beginning to focus on the Pimpri-Chinchwad Municipal Corporation. This area has, in fact, emerged as the last outpost Pune’s previous residential property comfort levels.

The Pimpri Chinchwad Municipal Corporation first came into the limelight as an industrial area. However, it also has an advantage that central Pune does not – planned development. The growth of the real estate sector in the Pimpri Chinchwad Municipal Corporation is closely regulated by the PCNTDA, which works together with the PCMC to ensure planned and realistic growth.

Central Pune continues to suffer from pollution, depleting greenery, traffic jams, water and power scarcity, lack of proper infrastructure and unrealistic residential property rates. Meanwhile, Pradhikaran (the location that defines the PCNTDA) has been benefiting from sensible real estate development.

If one studies the demographical development of Pune real estate growth, it is evident that Pradhikaran is precisely where the city’s growth is headed in the North/North-Western direction. This is extremely significant in terms of long-term residential property investment.

The Importance Of Pradhikaran

In years gone by, the PCNTDA began to acquire land in the PCMC area so that planned development could take place in the future. This planning included the allocation of specific areas for industrial activity, residential property development, public parks, unobstructed spaces, shopping centres, office buildings, roads and utilities.

Water supply to all sectors was ensured by the construction of several mammoth water tanks, each with capacities of several million litres, before development was permitted in each sector. Once this was done, the PCNTDA made the developed land parcels available to property developers.

The PCMC master plan also provides for generous road widths, the likes of which are impossible elsewhere in Pune. This goes a long way in preserving one of Pradhikaran’s natural splendour and hygiene.

Because of these factors, and also because of the growth in the PCMC industrial belt, the last two years have witnessed a huge increase in demand for residential property in the Pradhikaran area.

The fact that a number of large international companies are operating in nearby Chakan has, in fact, been a primary criterion for the area’s development profile. These companies regularly deliver thousands of jobs at all levels, which has had a telling effect on Pradhikaran’s general economic status. Specifically, there has been a huge surge in demand for residential property there.

Pradhikaran’s expansion, which has been inspired by the Chandigarh model of controlled development, began with a few hundred acres. Today, the area speaks for about 7000 acres. Pradhikaran is continually seeing infrastructural enhancements on all fronts – including roads, water and electricity supply and digital connectivity.

Pradhikaran now boasts of massive integrated township projects that offer all the hallmarks of ambient, sustainable living. Apart from the high lifestyle quotient, the investment potential of these townships benefits from a magic mix of real estate market drivers. The presence of Tata Motors, Talawade, Hinjewadi, Chakan and the Pimpri-Chinchwad industrial belt add to the value of these townships, while the Mumbai-Pune highway and Expressway make it advantageously accessible to the financial capital of Mumbai.

No wonder that Pradhikaran is now being seen as both, the best option for first home buyers, and as the new residential property investment hotspot in Pune’s real estate market

For The Lack Of A Road…

Pune has an advantage by virtue of the fact that it has been able to add to its borders by means of surrounding villages. This has served to decrease the pressure on the central city and encouraged an outward growth pattern, writes Anil Pharande, Chairman – Pharande Spaces & Vice President – CREDAI (Pune Metro).

There are often comparisons made between the infrastructure of Mumbai and Pune. The popular consensus seems to be that both cities are equally challenged as far as supportive infrastructure is concerned. This is inappropriate for two reasons – one, Mumbai’s growth pattern has been very different from Pune’s. 

The city has evolved into the country’s financial capital, and the pressures on it are enormous and overwhelming, considering the fact that a significant part of it is an island that cannot grow horizontally to accommodate the growing real estate demands.

Pune, on the other hand, has an advantage by virtue of the fact that it has been able to add to its borders by means of surrounding villages. This has served to decreased pressure on the central city and encouraged an outward growth pattern. 

The challenges on Pune’s infrastructure – particularly its road network - have more to do with the speed of this growth. While there are various proposals for roads and road widening, these have to be translated into real time to be effective.

The pockets of infrastructural under-development are the result of both developers and the Government concentrating on existing growth areas and sidelining those with high future potential. It is a known fact that no area can grow in terms of residential, commercial and retail real estate unless the necessary infrastructure is first put in place.

This is quite a common phenomenon that is the result of the principle of fastest returns almost instinctually followed by both developers and the Government. Bangalore, for instance, was initially not well planned for radial expansion. The approach in this city was simple – where Information Technology projects went, residential projects followed. IT and ITeS, as business lines, are not dependent on a city’s CBD areas and can workably exist in areas where property prices are low.

Once such a project is established, residential, commercial and retail establishments follow. Since this kind of growth in no way follows a master plan, the result is haphazard pockets of growth. This naturally leads to the neglect of areas that have not been so favoured. The syndrome is also evident in the case of other industries such as manufacturing.

To identity another factor that has compromised Pune’s holistic growth in terms of real estate viability - the first masterplan for the city designated a much more progressive ‘roadmap’ for the city’s road network. However, even today, key roads leading to new growth areas are not being put in place with the speed necessary to ensure that these new areas have the requisite connectivity.

In comparison, the Pimpri Chinchwad Municipal Corporation (PCMC) has been proactive in terms of a proper road network. This explains why there have been such spurts in growth and corresponding real estate values in this region. Even within Pune, there were earlier precedents wherein languishing areas were given fast-paced infrastructure upgrades because of an new market catalyst. For instance, the Youth Commonwealth Games brought with them the fast-tracked enhancement of Baner Road and Pashan Road.

New Real Estate Mantra - Integrated Residential Projects

Land constraints, zoning laws and the budgetary considerations that govern property buyers in many areas often do not make the integrated township model feasible, opines Anil Pharande is Vice President - CREDAI (Pune Metro) and Chairman of Pharande Spaces.

When you are setting out to purchase the home you always dreamed of and saved for, you obviously wanted something more than just an orphaned, anonymous set of walls in some congested city center. The problem is that’s all that most residential projects in India offer these days.

There is a lot more to the perfect home than good construction, layout and fittings – a residential property needs supporting social and physical infrastructure to become a suitable home. Moreover, the beleaguered city dweller’s heart yearns for the sight of greenery, open spaces and fresh air.

After all, we want our children to grow up in better conditions than we possibly experienced at their age…

In Pune, integrated townships have been seen as the answer to these requirements. However, land constraints, zoning laws and the budgetary considerations that govern property buyers in many areas often do not make the integrated township model feasible. A more practical and feasible alternative is Integrated Residential Projects. 

What Are Integrated Residential Projects?

Like integrated townships, this more compact and serviceable model offers home buyers everything they need for a comfortable and healthy lifestyle. Children have enough room to play in, and both they and their parents are free from the stress, noise and pollution of central urban life. Such projects have schools, shopping and entertainment facilities, healthcare and easy access to public transport.

Also (very importantly) they are a boon to people who wish to live in a non-urban environment while attending to their jobs in the workplace catchments of the city. They get a dream location, excellent infrastructure and a lot more.

Residential real estate investors, on their part, can capitalize on the higher demand – and therefore the higher ROI (returns on investment) that such properties offer. The higher investment potential of homes in integrated residential projects stems from the fact that they are self-sufficient and self-sustaining. A direct outcome of this is that the resale value of such properties is as good as immune to market volatility. Because of the diversified nature of such projects, they represent a very low risk to property investors, even while they benefit from the larger upside potential despite low entry costs.

Unique Challenges For Developers

Builders who cater to the demand for integrated residential projects face quite few challenges. After all, they have to provide the advantages of integrated townships while having to forgo the considerable incentives that the Indian Government offers for the development of larger townships. Therefore, the initial capital required is extremely steep – right from land acquisition to the providing of physical and social infrastructure.

The integrated residential project concept is just beginning to emerge on the Indian real estate landscape. One of the areas where it has been successfully implemented is Pune’s sister city – the Pimpri Chinchwad Municipal Corporation. One of the primary reasons for the success of the integrated residential projects in the PCMC areas of Pradhikaran and Ravet is the fact that these are located very close to vital workplace hubs such as the MIDC and Hinjewadi, Pune’s software hub. This, coupled with the advantages of having ‘everything inside’, has contributed to the demand for homes in such projects.

For The Lack Of A Road…

 The challenges on Pune’s infrastructure – particularly its road network - have more to do with the speed of this growth. While there are various proposals for roads and road widening, these have to be translated into real time to be effective, says Anil Pharande, Chairman – Pharande Spaces & Vice President – CREDAI (Pune Metro).

There are often comparisons made between the infrastructure of Mumbai and Pune. The popular consensus seems to be that both cities are equally challenged as far as supportive infrastructure is concerned. This is inappropriate for two reasons – one, Mumbai’s growth pattern has been very different from Pune’s. 

The city has evolved into the country’s financial capital, and the pressures on it are enormous and overwhelming, considering the fact that a significant part of it is an island that cannot grow horizontally to accommodate the growing real estate demands.

Pune, on the other hand, has an advantage by virtue of the fact that it has been able to add to its borders by means of surrounding villages. This has served to decreased pressure on the central city and encouraged an outward growth pattern. The challenges on Pune’s infrastructure – particularly its road network - have more to do with the speed of this growth. While there are various proposals for roads and road widening, these have to be translated into real time to be effective.

The pockets of infrastructural under-development are the result of both developers and the Government concentrating on existing growth areas and sidelining those with high future potential. It is a known fact that no area can grow in terms of residential, commercial and retail real estate unless the necessary infrastructure is first put in place.

This is quite a common phenomenon that is the result of the principle of fastest returns almost instinctually followed by both developers and the Government. Bangalore, for instance, was initially not well planned for radial expansion. The approach in this city was simple – where Information Technology projects went, residential projects followed. IT and ITeS, as business lines, are not dependent on a city’s CBD areas and can workably exist in areas where property prices are low.

Once such a project is established, residential, commercial and retail establishments follow. Since this kind of growth in no way follows a master plan, the result is haphazard pockets of growth. This naturally leads to the neglect of areas that have not been so favoured. The syndrome is also evident in the case of other industries such as manufacturing.

To identity another factor that has compromised Pune’s holistic growth in terms of real estate viability - the first masterplan for the city designated a much more progressive ‘roadmap’ for the city’s road network, while the second one is decidedly sotto voce on these. Also, key roads leading to new growth areas are not being put in place with the speed necessary to ensure that these new areas have the requisite connectivity.

In comparison, the Pimpri Chinchwad Municipal Corporation (PCMC) has been proactive in terms of a proper road network. This explains why there have been such spurts in growth and corresponding real estate values in this region. Considering how much the authorities have already achieved, it is distressing that certain pockets in the region still show signs of infrastructure deficit.

A continuing area of concern in this regard is the lack of adequate road connectivity between certain key areas of the PCMC and areas such as Talegaon. Because of the massive potential for industrial and residential development in and around these areas, they have seen most of the road construction initiatives. In the process, road connectivity from these locations to some of the most important growth areas of PCMC has been largely ignored.

Paradoxically, the areas referred to as Phase 2 in the PCMC development plan hold the highest potential for real estate growth. Thanks to the availability of large land parcels at relatively lower prices, residential and commercial realty development has picking up rapidly in areas such as Moshi. In the meantime, Moshi has become a hotbed for property investments because of the International Convention Centre being jointly developed by the Maratha Chamber of Commerce and the PCMC.

Despite this, there is still no sufficient road connectivity between Phase 2 and the larger industrial hubs. This is going to prove to be a huge stumbling-block for the overall growth of the region. The lack of a suitable road network means that people living in areas like Moshi face difficulties in reaching their workplaces in these employment clusters. This issue must be addressed on a priority basis. A city like PCMC must do everything in its power to ensure that its growth pockets are not isolated from each other.

The potential of this key area apparently lacks recognition of its inherent future value. A closer look at its promise for the PCMC real estate market would very likely cause a more fast-paced development of its road network.

There are earlier precedents in Pune, wherein languishing areas were given fast-paced infrastructure upgrades because of an upcoming market catalyst. When the recent Youth Commonwealth Games loomed closer, the enhancement of Baner Road and Pashan Road were put on the fast track.

In the same manner, it is not unreasonable to anticipate that the planning authorities will take cognizance of the fact that PCMC’s Phase 2 is extremely important, and that it must at all costs be enabled with the requisite road connectivity.

Developers term Budget as ‘tepid’ and ‘lackluster’ for real estate

Though the union budget 2013 has disappointed the real estate industry, there is something to cheer about for the first time home buyers as the finance minster proposed a tax relief of Rs one lakh for the first year for a loan amount upto Rs 25 lakh.

According to the budget proposal, a person taking a loan for his first home from a bank or a housing finance corporation upto Rs. 25,00,000 will be entitled to an additional deduction of interest of upto Rs. 100,000. However, this provision is only for the first year and with a carry-forward benefit of the unutilized deduction to the second year. 

The proposal is expected to promote home ownership and give a fillip to a number of industries like steel, cement, brick, wood, glass etc. besides jobs to thousands of construction workers.

Other proposals related to real estate or construction industry are:  Setting up of the Urban Housing Fund by the NHB with an allocation of Rs. 2000 crore that will infuse liquidity for urban housing, thereby boosting demand.

The additional allocation of Rs. 14873 crore to JNNURM towards public road transport will help make lagging real estate locations more viable in the long term.

The TDS of 1% to be charged on the transfer of immovable property is an obvious move to curb speculation and bring about improved reporting and accountability in high-value immovable property transactions. Considering that the TDS is to be charged on the gross transaction value rather than net gains, sellers will have a cash-flow impact in situations where the sales are at a loss or at zero/negligible gains.

The rate of abatement on homes and flats of above 2000 square feet or costing Rs. 1 crore and above has been reduced from 75% to 70%. Effectively, this translates into an increase in service tax outflow, which means that luxury housing will now become even more expensive.

Referring to the budget proposals related to real estate sector as ‘moderately encouraging, but tepid for the Indian real estate sector’, Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India, said, “We did not expect this budget to be a game-changer. The realities of the Indian economic situation need to viewed in context with the factors that drive it, not least of all the global economic situation. There is no escaping the fact that the business which comes to India from the European Union and the US has a trickle-down effect on key economic drivers in India, and the Finance Ministry does not control these factors. The Union Budget can only hope to address factors within its control.”

Developers too termed the budget as “unimpressive” and “lackluster” for real estate point of view, as the sector was expecting more sops from the budget.

Reacting to the budget, Kishor Pate, CMD - Amit Enterprises Housing Ltd, Pune, said, “It was not an impressive budget, especially for real estate. While the additional income tax deduction of Rs.1 lakh for home loans up to Rs. 25 lakh taken by first-time home buyers is positive, the fact is that it will not benefit the growing middle-class who are looking for centrally located homes with at least two bedrooms. Another disappointment was that there were no encouraging news in terms of personal tax slabs. Some relief for individual mid-income tax payers would have been some incentive for considering home ownership. We are happy that infrastructure has been given greater importance and allotments by the Budget and do hope that it will mean that some of the pending projects will now begin to take off.”

Denouncing the budget as ‘lackluster’ Anil Pharande, Chairman of Pharande Spaces & Vice President of CREDAI (Pune Metro), said, “The Finance Minister has taken a cautious approach in this budget, which is on the whole well balanced and in tune with the current economic requirements. Real estate has not received much of a boost overall, which was a dampener. The provisions for budget homes will not be sufficient to create more demand, and high-end homes have become even costlier because of the increased service tax. The additional allocation for JNNURM to make more buses available will prove to be a boon for many emerging areas which have been suffering from lack of accessibility. On the whole, it is a balanced but lackluster budget.

Overall the budget did not meet the expectations from developers, occupiers and investors in the real estate industry as it did not address their concerns on MAT and DDT taxation on SEZs, recognition as an industry/infrastructure sector, steps to reduce the input costs and encourage more investments in real estate, which is one of the largest employment generators, says Sanjay Dutt, Executive Managing Director- South Asia, Cushman & Wakefield.

“Given the limited scope that the Finance Minister had, the introduction of an additional interest deduction on interest of upto Rs. 1 lakhs for loans of upto Rs 25 lakhs bought by first time buyers is a very welcome move. First time buyers in the affordable segment are the most vulnerable and, given the high mortgage interest and inflation rate regime that has prevailed since sometime time, they needed to be protected and encouraged. This move along with the 50% increase in funding allocation for rural housing loans and the new allocation for urban housing are measures that will help the affordable housing sector to  gather momentum and develop at a greater pace,” Dutt added.

 

Industrial Corridors

The Finance Minister, P Chidambaram in his Budget speech today said that the Delhi-Mumbai Industrial Corridor (DMIC) project has made rapid progress. Plans for seven new cities have been finalized and work on two new smart industrial cities at Dholera, Gujarat and Shendra Bidkin, Maharashtra will start during 2013-14.

“We acknowledge the support of the Government of Japan. In order to dispel any doubt about funding, The Government will provide, if required, additional funds during 2013-14 within the share of the Government of India in the overall outlay for the project,” he said.

The Department of Industrial Policy and Promotion (DIPP) and the Japan International Cooperation Agency (JICA) are currently preparing a comprehensive plan for the Chennai Bengaluru Industrial Corridor. The corridor will be developed in collaboration with the Governments of Tamil Nadu, Andhra Pradesh and Karnataka.

The next corridor will be the Bengaluru Mumbai Industrial Corridor on which preparatory work has stared, the minister announced.