The budget for financial
year 2014-15 has ushered in a number of positive changes for India’s
beleaguered real estate sector. The sector, which has been reeling under the
twin impact of slowdown in demand and high interest rates, got a boost in the
budget that clarified tax status of REITS, allocated a sizeable 7,060 crore
rupees for construction of 100 smart cities, gave tax sops on purchase of
houses and eased the norms governing flows of foreign direct investment
into projects.
Despite fiscal constraints,
the budget has raised the rebate on interest paid on home loans by Rs.50000=00
to Rs.2,00,000=00 per annum while exemption under section 80C has been raised
to Rs.2,00,000=00 from Rs150000=00. This
means that while home buyers can now claim additional deduction of Rs.50000=00
on interest payment under Section 24, they can also adjust additional principal
repayment of Rs.50000=00 on their home loan under Section 80C. These incentives
are likely to boost sentiment in the housing sector and spur serious buyers to
purchase properties. Given the government’s commitment to fiscal consolidation,
we now expect the Reserve bank of India to gradually cut interest rates if
headline inflation rate remains stable. This will only further give a
fillip to the real estate market as cost of loans comes down.
The budget also paved the
way for launch of REITS in the country as it announced pass through tax status
for the instrument, which now addresses the issue of double taxation. The
introduction of REITS will allow real estate companies to sell their commercial
projects, list them as investment trusts and give them an alternate source
for capital mobilization. SEBI is now expected to soon come out with detailed
outlines on REITs, and their launch is expected to bring in more transparency
in the sector.
The budget has announced an
initial outlay for 100 smart cities. We now expect the government to come out
with details soon and that will allow real estate companies to be a part of
this mega project. To facilitate FDI into smart cities, the size of projects
has been reduced from 50,000 sqm to 20,000 sqm while the minimum investment limit
has been halved to $5 million.
A beginning has also been
made in the area of low cost housing, with the budget setting aside 4,000 crore
rupees under National Housing Bank and slump development included in the list
of CSR activities of corporates. This is in line with the government's vision
of providing housing to all by 2022 with India currently needing 25 million
more dwellings. Thus, the scope for low cost housing is immense.
With just less than 45 days
since the National Democratic Alliance government assumed charge, it’s a path
breaking and holistic budget. While acknowledging positive announcements
made in the budget, we now hope that real estate sector, which alone
contributes about 6.3 per cent to GDP, will be given industry status.
Increased activity in the
real estate sector will have a multiplier effect on the economy and we may see
days of good growth and prosperity in the India’s Economy.
SG Estates is developing
number of Group Housing Projects in Vasundhara, Raj Nagar Extn. and Govindpuram.
SG Oasis and SG Homes in
Vasundhara are located at prime location of Vasundhara and at distance of around
4.5 kms from Vaishali Metro Station and are under construction.SG Impression
Vasundhara is successfully delivered and occupied.
SG Grand in Raj Nagar Extn.
SG Impressions 58, SG Impressions Plus are successfully delivered and fully
occupied.
SG Benefit in Govindpuram is
under construction.
SG Estates offers
residential units in the range of Rs.25 Lacs-1 Cr.
To know more about us,Please visit - www.sgestates.in
To know more about us,Please visit - www.sgestates.in
Gaurav Gupta
Director
SG Estates Ltd.
