[ecis2016.org] With the demonetisation drive severely affecting real estate sales across the country, we look at whether there is any room for the government to provide sops in the union budget 2017-18, to lift the home buyers’ mood and market sentiments
Many within the Indian real estate fraternity, privately admit that the government’s demonetisation drive, has done more damage to the real estate business than even the Lehman Brothers crisis. “The sector has suffered badly, due to the demonetisation and our business is going through its worst cycle. While the recent interest rate cuts are welcome, my concern is about the larger interests of the business.
You are reading: Can budget 2017 compensate for demonetisation’s impact on realty?
Can the government compensate the real estate business that has been hit by demonetisation, with a home buyer-friendly budget?” questions a developer in Gurgaon, requesting anonymity. While this remains to be seen, the fact remains that the budget is being presented immediately after the demonetisation’s hard hit on the realty sector. It is, hence, being viewed as a budget that will either provide major relief or more tough days ahead.
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2017: A year of positive reforms
Kaizad Hateria, brand custodian and chief customer delight officer, Rustomjee Group, maintains that the real estate sector is optimistic about the upcoming budget. Real estate contributes 12% to the GDP – the second largest, after agriculture and also supports more than 150 ancillary industries. So, any challenge to real estate, is a challenge to the economy and any opportunity for the sector, is an opportunity for the economy, he states. “2017 will be a year of positive reforms. This year, we will see the effects of demonetisation (aimed at cutting out black money), the real estate regulatory authority being formed, GST being introduced (which will simplify taxes) and finally the implementation of new development plans. All of these, will lead to more transparency, reliability and timely development and thus, benefit the consumers at large,” says Hateria.
Why the government may not be able to compensate for demonetisation’s impact
While pointing out that demonetisation has impacted sales in the real estate sector, Parth Mehta, managing director of Paradigm Realty, demands that there should be some measures in the upcoming budget – for example, a cut in the tax rates for middle-income groups, which will give extra money in people’s hands. “Reduction in stamp duty rates, can also give some relief. Government approvals should be executed appropriately and single-window clearances have to be introduced,” he adds.
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Analysts suggest that with interest rates coming down sharply at the very beginning of 2017, the demand for end-use home buying will rise, in 2017. This would, hence, be an ideal time for the budget to focus end-user home buyers, they say. A crucial point, however, is that the state of Indian economy, may not allow the union budget to compensate the real estate sector for the hit that it has taken from demonetisation. Developers and home buyers, nevertheless, remain hopeful.
The impact on demonetisation on Indian real estate
- Demonetisation has hurt the Indian economy in general and the real estate sector in particular.
- Housing sales have come to a standstill and new launches have stopped.
- Recent interest rate cuts, have not shown any sign of increased market transactions, so far.
- The union budget can provide for reduced interest rates and encourage home buying.
- However, the ground realities of the economy and job market, may discourage sops for the housing sector.
(The writer is CEO, Track2Realty)
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Source: https://ecis2016.org
Category: Lifestyle
