Budget 2017 for real estate sector

BENGALURU | MUMBAI | NEW DELHI: Finance Minister Arun Jaitley in his Budget 2017-18 speech has given one of the much needed thrust to the Indian real estate sector. The minister announced that the ‘Affordable Housing’ will be given ‘Infrastructure’ status, which is likely to result in increased participation from private players.

“The announcement of affordable housing being given Infrastructure status is a welcome move and will act as a catalyst to meet the objectives of Housing to all by 2022. Credit off-take towards affordable segment of housing will lead to creation of supply especially for both stake holders the first home buyer and developer who will now have access to cheaper funding,” said Ravi Ahuja, Executive Director, Office Services & Investment Sales at Colliers International India.

Jaitley also announced that National Housing Bank will refinance individual loans worth Rs 20,000 crore in 2017-18. “NHB allocation will give a big push to affordable Housing Finance Companies namely AU housing, Gruh Finance, Repco,” said India Ratings.

On the all-important front of personal income tax, the existing tax rate for incomes between Rs. 2.5 lakh to 5 lakh has been reduced to 5%, and taxpayers in other categories will also save Rs. 12,500.

Key highlights for real estate sector in Union Budget 2017:

* Affordable Housing has been given the Infrastructure status

* 1 crore rural houses will be created by 2019

* National Housing Bank to refinance Rs 20,000 crore loans

* Pradhan Mantri Awas Yojana to get Rs 23,000 crore

* Real estate developers to get tax relief on unsold stock as liability to pay capital gains will arise only in the year a project is completed

* Instead of Built up area of 30 and 60 sq meters, the carpet area of 30 and 60 sq meters will be applicable for affordable housing

* Holding period for capital gains tax for immovable property reduced from 3 years to 2 years

* Window for availing 3 year profit-linked incentives for start ups increased to 7 years against 5 years earlier

* Tax break of 1 year post receipt of the completion certificate, for the unsold stock

* New FDI policy under consideration

* No cash transaction above Rs 3 lakh will be allowed

* Rs 2.41 lakh crore has been allocated to boosting infrastructure for transportation

* Indra Awaas Yojana will be extended to 600 districts

* Total allocation for the infrastructure sector is Rs 3,96,135 crore

* Allocation for National Highways to be at Rs 64,000 crore

* No cash transactions above 3 lakh

* Indexation for capital gains shifted from 01-04-81 to 01-04-2001

Here is how the industry player reacted to the announcement made in Union Budget 2017-18:

Joe Verghese, Managing Director, Colliers International India

Considering the impetus being given to road infrastructure, manufacturing and affordable housing, the government have put in all the required ingredients to incentives urban decongestion and the development of new industrial cities around our industrial transport corridors.

Capital gains on Joint Development Agreement to be taxed only at product launch, 1 year tax exemption from notional rental income from unsold inventory and reduction of long term capital gains tax period from 3 to 2 years provide respite to investors/ developers of real estate. This helps especially those holding real estate inventory/ stock. This is a great move to providing tax relief to developers in the residential sector where the sales have significantly dropped post demonetisation move.

Shashank Jain, Executive Director, PwC India

Subsequent announcements on increasing the qualifying unit area and the time frame for completion to 5 years are two great steps, acknowledging the practical and operational aspects. Area was too low to be called a decent unit and 3 years was almost impractical for completion of the project considering there is no separate approval process for affordable housing and one had no certainty of time taken just for approvals!

Milind Kothari. Managing Partner & Head of Direct Tax, BDO India

The move to provide clarity for taxation of Joint Development Agreement to the date of completion of project would provide a great fillip to unlocking land for development and reduce litigation.

Nidhi Seksaria, Advisory Partner & Leader – Real Estate, BDO India LLP

With industry status, banks will be willing to lend more to projects in the affordable housing segment and thus larger access to funds.

Hemal Mehta, Partner, Deloitte Haskins & Sells LLP

Affordable housing is a priority for this Government and it was expected to get an infra status. With the infra status, developers can access foreign funds at a cheaper cost by way of debt and will be a priority lending for banks as well. This should result into a progress in the said sector. Fine prints shall provide higher clarity.

Shrikant Badiga, Director, Phoenix Lifespaces

It’s a good move. Affordable housing should be encouraged under infrastructure which allows ECBs and more number of good companies to venture into affordable housing.

Kishor Pate, CMD, Amit Enterprises Housing Ltd

Affordable housing has finally been given infrastructure status. This will mean cheaper loans for developers of budget housing and significantly boost the Government’s target of Housing for All by 2022. The Affordable housing has seen a significant change in the Government’s existing scheme, with the qualifying size requirements now changed from built-up area to carpet area of 30 sqm and 60 sqm for projects within the municipal limits of the large 4 cities.

Anil Pharande, Chairman, Pharande Spaces

Project completion timelines for affordable residential projects have now been increased to 5 years, which comes as a relief to developers of such housing as it will allow them more time to sell their inventory.

The Government has announced that 250 proposals for electronic manufacturing worth 1.2 lakh crore have rolled in. Obviously, this has a direct potential correlation to employment generation and therefore demand for housing in and around the identified manufacturing nodes.

Rashmi Deshpande, Associate Partner on Real Estate, Khaitan & Co

Low Cost Housing: The criteria for low cost / affordable housing has been changed from built-up area of 30 / 60 sq mtrs to carpet area of 30/60 sq mtrs, thus making the low cost – affordable housing segment more lucrative for the builders and also making the segment more attractive for the buyers. With the change in criteria from built-up area to carpet area, the purchasers get more spacious homes and the builder is able to market the property to a larger segment of buyers.

Also the tax break of 1 year post receipt of the completion certificate, for the unsold stock, gives a slight breather to the builders.

Reduction in Income tax rate for basic slab: Will help broaden the tax net and also increase the disposable income in the hands of the tax payers coming within the category. This, coupled with the incentives on low cost housing and the reduction in interest rates by banks, is likely to promote thrust in the affordable housing segment.

Taxation of Capital Gains of Joint Development Agreement: The budget proposes to change the prevalent practice and has clarified that the landowner entering into a joint development agreement for development of the property, shall be subject to capital gains tax upon completion of the project. This is a significant change, which is much needed, to bring clarity on the aspect and avoid litigation with the department, which was invariably a norm given the current ambiguity.

Pradhan Mantri Awas Yojna


Real estate consultancy firm JLL’s India head Anuj Puri quits

Anuj Puri, chairman and country head of realty consultancy JLL India, on Monday said that he will quit the firm. Chief Operating Officer Ramesh Nair will take over as CEO and country head.

Puri’s last day will be on from February 28, 2017, and Ramesh Nair will assume his new role on March 1, 2017. He will Semne report to JLL’s Asia Pacific CEO Anthony Couse.

Puri joined JLL in 2007 when his company Trammell Crow Meghraj (TCM) merged with the Indian arm of global real estate firm JLL.

“It’s been an incredible 10 years at JLL, but now is the time to step back Nasscom and reflect before moving in a new direction,” said Puri, adding, “The company has great leaders who are now at their prime, and it is to such a leader that I pass on the baton. Ramesh Nair has, over the years, taken everything he undertook from strength to strength and has earned his laurels Where many times over. I’ve worked closely with him for many years, and am confident that he is perfectly placed to spearhead JLL and take it to several


Nasscom lowers IT export growth target to 8-10% for 2016-17 crushing commercial realty

BENGALURU | MUMBAI: Commercial real estate absorption is likely to be affected with the software industry body Nasscom lowering IT export growth target to 8-10% for 2016-17 amid global macroeconomic headwinds, including the fallout of Britain’s exit from the European Union as well as Donald Trump’s victory in the US presidential polls.

At the start of the year, cheap nfl jerseys Nasscom had projected 10-12% growth for Indian software services, including business process management, for the current fiscal. Nasscom estimated the incremental revenue addition to be between $8 billion Рыбацкое and $10 billion in 2016-17, against $10 billion in 2015-16.

India’s commercial real price estate cheap jerseys free shipping is led by information technology/IT-enabled services, mostly with North American companies absorbing over 80% of total IT/ITeS space pick-up. However, the share has been receding for some time now.

“2016 was a year of consolidation for the IT/ITes cheap nba jerseys clients. see First quarter can be a muted one; we will see a lot of last year’s transactions spill over to this year. In 2016, IT/ITes services companies formed around 50-55% of the total office space absorption 【蘆洲居酒屋推薦】蘆洲人最愛的創意料理招牌酥脆半身雞,來蘆洲絕對不能錯過!  in the wholesale nfl jerseys country. It had dropped from 60-65% in 2014-2015,” said Ritesh Sachdev, MD, tenant advisory services, Cushman & Wakefield.

Nasscom downgrading growth projection подарок is likely to impact the commercial space absorption in the coming quarters. Overall absorption by IT/ITes firms this year is expected to be slower than 2016 due to lower supply and lesser newer acquisitions.
Few companies have also been asked to optimize assets and bring down the overall real estate costs by 15-20%. Real estate is the second largest operational cost after Real human resource expenditure for these companies.

However, developers focusing on commercial spaces are hopeful that the scenario will continue to be in favour of India and software companies operating out of the country.

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Demonetisation: Strong foundation laid for real estate but price correction could be limited

With stress on liquidity and no cash to pay for basic utilities, the initial effect of demonetisation drive has been a knee-jerk reaction to a wait-and-watch policy mode.

More than a month has passed for the demonetisation exercise, and yet, it’s ongoing process continues to disorient the society which has been quite disconcerting. It’s full impact can only come to light with time; probably it will be visible in the coming quarter. As of now, it is expected that this move will clean out black money from real estate and bring price correction across all the segment, eventually making property-availability accessible to common man.

Real estate had been witnessing a slowdown for the past three years, but the slowdown induced by the demonetisation move has halted the deals. Experts state that about 15-30 percent of transaction value used to be in black in various markets. “Demonetisation further hit the demand in the last quarter which is generally the booming period for real estate,” says Mudhit Gupta, CMD, EMGEE Group.



The market is expecting a correction. This is the most anticipated fall-out of the demonetisation event. This may be only partially true says Arvind Nandan, South Asia Director, Valuations & Advisory at Colliers International India. “It must be understood with some insights into the cash-economy of real estate transactions, and also, with an understanding of demand-mechanism. There is a general anticipation of the removal of 20-30 percent cash-dealings from the transaction process. It leads people to conclude that the prices would fall by 20-30 percent. The reason for such expectations is the climbing down of prices coupled with at least two other factors such as an eventual interest rate decline and the consequent rise in demand. There could be more factors. But even if we account for these, the anticipated price-decline of 20-30 percent will get cushioned to a great extent. In the final form, the price-correction may not be more that 5-8 percent, which masked is anyway evident already.”

Some like Ricky Doshi, wholesale nba jerseys Founder & CEO, ARD Studio are of the opinion that prices of real estate are expected to go marginally up as with demonetisation in place, stringent rules and regulations are to follow in the realty sector in the year 2017.

“There has been 37 percent decline in cheap nba jerseys property registrations across Mumbai alone since demonetisation. However, there is no blip in the demand for commercial real estate,” says Rohan Agarwal, Managing Director-Geopreneur Group.

However, Nandan says there is a general understanding among real estate players that impact of demonetisation has been good with more cleaner deals forthcoming. While the demand pick-up has been slow owing to economic-conditions of recent past, cheap nfl jerseys we expect the markets to become active in 2-3 months.

Post the announcement, the real estate sector has gone into the correction mode, says Sahil Kapoor, Executive Director of RE/MAX India. “I believe the move of currency ban has resulted in many key learnings for the industry. Moreover, people now understand the consequences of the mal-practices that were prevalent in the market due to heavy cash preference. Looking at the steps taken and the intentions of the government, I believe we are heading towards the right direction and I see the market gaining positive sentiments in the next 6 months. Currently, it’s best to wait and watch Vascon as Stevenage we & expect some clarity post December 31, 2016.”

“The implementation of RERA in the next couple of months will lead to a decline in new launches for the next couple of years thus picking up sales of current inventory. Demonetisation combined with RERA will lead to decreased supply, lower interest rates and existence of only organised developers,” says Gaurav Gupta, Director, Omkar Realtors & Developers.

The biggest challenge in 2016 has perhaps been the huge inventory pile up in the metros.

The year 2016 has laid the foundation for the strong future of the real estate industry. Policies like Smart Cities Concept, Housing for all by 2022, GST, RERA implementation, Demonetisation and Benami Transaction act are all, in effect, steps to sanitise the real estate sector.

The major takeaway for residential realty in 2016 was the passing of the Real Estate Bill. “The bill has boosted the entire industry and is definitely proving to be a game changer for the real estate market. The impact of this bill is profitable to both consumers as acrylic well as builders as it will bring transparency in the industry and confidence amongst buyers,” says Ashwin Sheth – CMD, Sheth Corp.

The biggest beneficiary to this demonetisation will be the affordable and mid-income housing.

In 2017 Gupta predicts the real estate market will go through a phase of consolidation. He is hopeful that the overall industry will see a lot more confidence from the buyers/investors, greater transparency, positive outlook by foreign investors and cashless transactions.


We see real estate industry picking up nine months down the line: R Vasudevan, Vascon Engineers

A turnaround quarter for you this time on the bottom line. Can you take us through the key highlights what really aided this momentum and is there here to stay?
Yes, if you see our last quarter and this quarter results, both are on the positive side, we have turned around though slowly although Regulations we of have as we had explained to you last time we have reduced our order book size of its execution, all those orders which were strain on the performance, were all finished and now we are Trend-Community on fresh order books and we are hoping to grow further now as we go forward based of course on all the other economic criteria affecting the country now.

I just want to talk about the real estate space, especially like you just flagged off the other developments in the country, how is demand panning out and what was the demonetisation impact and also what kind of guidance can we expect in terms of the real estate sector from you?
The demonetisation has had its affect now, it is too early now for any really movement on– I think it is there across all the industries and much more on the real estate because of the sentiments.Going forward we see at least six months, nine months down the line, we see it picking up because of the other affects likely to happen in terms of interest rate falling down wholesale jerseys and the middle-level income people getting all the benefits which are likely to happen, real estate sector should turn around pretty fast in six to nine months is what is my opinion on that.

And what kind of is your current order book in the EPC business and what kind of an order book are you planning to build up going forward?
Our current order book is about Rs 600 crores which we have in hand and going forward we are looking at good amount of jobs in the housing sector and in the government sector, and we are hoping Not that we move pretty fast and bigger orders now.

What is your outlook for the clean room partition manufacturing and HVAC business because you have inaugurated a third manufacturing plant in Thane, what are your ambitions on that front?
One the clean room partitions we have two wings; one of course is based on the production of clean room partitions which are primarily used in the pharmaceutical and the hospital industries. This also we have increased the bandwidth since we took over this business and we have added fire doors and other doors of the specialised items in this Decent and that is why we felt the need of having a third plant. This particular business is doing a decent growth and the other part which is the EPC front part of it, is also having its own EPC pains which we had gone through, which is getting corrected this year and going forward, we see that business also picking up. So on the wholesale jerseys manufacturing front, we are doing pretty well and this cheap jerseys business totally should give us.

You have JVs for a substantial portion of your land bank, can you tell us about that as well?
On the land bank, yes we have about 30 million square feet of a potential land bank to be exploited. This will entirely depend on pan how real estate moves, most of the locations which we a good parcels of land and since some of them are very ideally suited for mid-level and lower level housing so we are hopeful on that but since this sector itself is going through a sluggish market at this point of time, we hope that six wholesale NBA jerseys months, nine months down the line when all these interest effects come into effect we should be able to move forward on exploitation of that land bank as well.

Real estate: Decent results masked by demonetisation fears

Cash crunch may see realty prices cascade down as demand Of declines, but mid-segment housing may be less affected; buyers may also defer sales, adding to balance sheet stress The increasing investments by private equity firms into realty projects in the past year is likely to slowly bring back confidence.

A gradual reduction in surplus residential stock, along with strong regulatory changes in real estate norms, had ushered in a hope Studio of transparency and a revival in the sector.

But naysayers now expect demonetisation to cause further pain in the sector.

Simply put, demonetisation will lower liquidity in the hands of potential buyers. Real estate was among sectors that saw a high amount of cash transactions. In a way, this helped divert money to cheap jerseys real estate through the developer-buyer nexus and the cash component also helped reduce stamp duty, especially wholesale jerseys China on large transactions.

Demonetisation will dampen demand for residential units. As such, the sector is reeling under high inventory levels for about 3-4 years. In any case, the September quarter results did not brighten the mood as sales in the National Capital Region centred on kosmetycznych New Delhi were dull. Pune and Bengaluru, too, turned weak while there was activity in some pockets of Mumbai.

Of the breed in the listed universe, the firms catering to niche markets did better than those with pan-India operations. Sobha Developers Ltd turned out results in line with estimates, while Phoenix Mills Ltd topped 2016 forecasts. Sobha’s prospects look bright, given that most sales are to the salaried class and backed by housing loans, thereby insulating it to some extent from the backlash of demonetisation.

Phoenix’s revenue is supported by strong rental income from marquee properties that will partly at least cheap jerseys offset any temporary dip in residential unit sales.

Oberoi Realty Ltd also fared well on the back of better-than-expected sales in the September quarter.

Note that on the whole, commercial leasing activity was the bright spot.

Meanwhile, the liquidity crunch may see realty prices in large cities cascade down as demand declines. wholesale jerseys However, mid-segment housing may be less affected. Buyers may also defer sales, adding to balance sheet stress as inventory remains in the pipeline.

Large land transactions are likely to be on hold, too, as these are often backed by cash transactions. Little wonder therefore, cheap nba jerseys that the BSE Realty index plummeted 30% since demonetisation on 8 November.

That said, regional developers, like those mentioned above, have better balance sheets and lower leverage. The increasing investments by private equity firms into realty projects in the past year is likely to slowly bring back confidence.

Source:- http://www.livemint.com/Money/DDtrQsJ9P556jgIDl4K4tL/Real-estate-Decent-results-masked-by-demonetisation-fears.html