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Budget and real estate sector: Affordable housing to get big push from infra status

The FM also said that the National Housing Bank will refinance individual housing loans of about Rs 20,000 crore in 2017-18.

, ETMarkets.com|
Last Updated: Feb 02, 2017, 06.25 PM IST
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The FM also said that the National Housing Bank will refinance individual housing loans of about Rs 20,000 crore in 2017-18.
The FM also said that the National Housing Bank will refinance individual housing loans of about Rs 20,000 crore in 2017-18.
NEW DELHI: Beaten-down real estate sector got a boost after the Union Finance Minister Arun Jaitley in his Budget speech announced to give infrastructure status to affordable housing and encouraging investment in this segment offered tax benefits to developers sitting on completed but unsold homes.

In other developments related to real estate sector, the FM also said that the National Housing Bank will refinance individual housing loans of about Rs 20,000 crore in 2017-18.

Sachin Sandhir, Global Managing Director-Emerging Business, RICS said, “The Budget has partially addressed one of our long-standing demands of granting infrastructure status to the real estate sector by announcing infrastructure status for affordable housing sector. Needless to say this will incentivise real estate developers to focus on affordable housing which is where the maximum demand for homes lies. An industry status will help developers in accessing capital at lower costs.”

The announcement to abolish Foreign Investment Promotion Board will make it easier to get foreign funding through the automatic routes. “Tax free profit for five years for affordable housing developers will give more time to builders to finish projects,” Sandhir added.

The government also proposed to reduce the capital gain tax liability on immovable property to promote the real estate sector and to make it more attractive for investment.

Jaitley also proposed to complete 1 crore houses by 2019 for the homeless and those living in kutcha houses, while raising the allocation for Pradhan Mantri Awaas Yojana- Gramin from Rs 15,000 crore in 2016-17 to Rs 23,000 crore in 2017-18.

Kishor Pate, CMD, Amit Enterprises Housing said, “This move will help in addressing the housing needs of the homeless and those living in ‘kachha’ houses in the rural areas, and potentially help reduce pressure on urban areas if it is in conjunction with employment generation.”
No announcement was made by the FM related to any clarity on REITs.

Stocks reaction of Budget day
Reacting on the budget announcement, shaers of real estate stocks surged up to 20 per cent on February 1, 2017. The BSE Realty index closed 4.83 per cent up at 1,435.89.

Shares of Ashiana Housing surged the most 20 per cent, followed by Orbit Corporation (up 10.15 per cent), Ansal Housing (9.84 per cent), Ganesh Housing (up 7.88 per cent), Oberoi Realty (up 6.38 per cent) and HDIL (up 5.84 per cent).
On the other hand, Ansal Buildwell, Victoria Mills and CHD Developers dipped 3.65 per cent, 2.10 per cent and 1.85 per cent, respectively.

Expectations from Union Budget
The industry was expecting infrastructure industry status to real estate to make funds available at lower cost along with some clarity on REITs. Real estateindustry was expecting clarity on payment of stamp duty and registration charges while transferring or selling asset to a REIT in case of rental asset held physically by the owner.

The industry was also expecting a hike in exemption limit for interest on home loans from current Rs 2 lakh.

Also Read

Prestige to focus on affordable housing

Eastern Group to enter affordable housing sector

Offices, affordable housing keep realty afloat

Maharashtra Govt invites private builders to partner MHADA for Affordable Housing

Affordable housing gets further support as Budget extends tax holiday

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