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Budget 2016 a mixed bag for real estate, say experts

Posted by BrickAcres on March 1, 2016
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Budget 2016 proved to be a mixed bag for the real estate sector
“This Budget could have done a lot more for the real estate
sector. However,there were some positives.The fact that
the annual housing rent reduction limit has been increased from
Rs 24000 to Rs 60000 could lead to an almost immediate uplift
for rental housing across the major cities. This can also
potentially encourage the sentiment for home ownership in the
long run,” said Kishor Pate, CMD, Amit Enterprises Housing Ltd,
reacting to the Budget.

Also, first-time home buyers have been given the
benefit of an additional deduction of Rs. 50000 on home loan
interest for loans not exceeding Rs 35 lakh, where the value of
the house is no more than Rs 50 lakh. This will result in
improved home buying sentiment in smaller cities with lower
housing costs. An improvement in sentiment will also be seen in
the cheaper far suburbs of the metros.

“The housing sector will get a push from both supply
and demand side. The first time home buyers wi ll be encouraged
since they get an additional deduction of Rs 50,000 on interest
for loans up to Rs 35 lakh. In effect, it will reduce the cost
of loan which will boost the demand for housing in the budget to
mid segment. On the supply side, 100% exemption of profit for
developers and exemption from service tax for construction of
houses less than 650 sq feet will encourage supply in the
in the affordable housing segment,” said Shishir Baijal,
Chairman & Managing Director, Knight Frank India.

According to Baijal, REIT has finally got its due with
the abolishment of the DDT that was holding back asset owners.
This is a welcome move for the industry. There will be no road
block in launching REIT schemes any time now.

Also, infrastructure and rural development focus in
the Budget has been encouraging and is expected to give the
much-needed fillip to the real estate sector. “With massive
push in infrastructure (huge outlay for roads and railways and
developing smaller airports to improve regional connectivity)
and incentives to MSME, Make-in-India will get a further boost
that will benefit the real estate sector in the long run,” said
the Knight Frank India CMD.

Additionally, the government’s focus on digitization of
land records as spelt in the Union Budget is in the right
direction, especially in rural areas, which will render land
records free from encumbrances.

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