The real estate industry has been watchfully waiting for the Union Budget for 2015-16 to be announced on February 28.
Public and Private Partnership schemes, lightening the tax burden on developers, addressing the issues of affordable housing are some of the main areas where the Real Estate sector wants Finance Minister Arun Jaitley to focus this time.
In an exclusive interview with Reema Sharma of Zee Media Group, Dr. Naresh Bharde, Chairman & Managing Director Excellence Shelters Pvt. Ltd. said that the government should address the concerns of both buyers and developers in the upcoming Union Budget.
Q1. What is the expectation of the real estate sector from Union Budget 2015?
The industry expects Finance Minister to announce the following:
Reduction of multiple taxes: The Budget will be closely watched for its approach on taxation which includes different taxes which any consumer needs to pay while purchasing any flat/house. Thus a relaxation in these would definitely boost the purchasing power of consumers.
Diminish the cost of borrowing: In real estate industry, raising capital has always been a matter of concern. Be it bank or any source, raising capital has always been exorbitant. Realty sector is hoping for a considerable reduction in the interest rate.
Standardize cost of building materials: It has been observed that ‘inflation’ has been one of the leading factors in capital appreciation of properties in Indian real estate industry. The fluctuations in the cost of construction materials (like cement, iron, concrete, etc.) have many a times lead to the forceful property price rise. The government should announce some measures to regulate the prices of these materials by putting upper ceilings on their prices.
Seeding in new investments: Making way for the newer investment in the sector by clearing the backlog of pending projects for new investment to come in is also highly anticipated.
Q2. What are your expectations on Single window clearance of realty projects?
The real estate market in India has been largely unorganized in terms of its processes and integral legal system. There has been no central regulatory body and each state has its own set of norms and approval processes. However, with the announcement of the Union Budget 2015 around the corner, we are expecting a speedy single window clearance of realty projects.
Q3. How do you see Ordinance on the land acquisition? When do you expect the bill to come?
The decision to implement ordinance path has offered a relaxation in terms of time period offered for the regulation of unused lands. As per Section 101, the time period after which a piece of un-utilized acquired land is to be returned to its owner has been amended, thus made flexible. Prior to this, the law stated that if any acquired land has not been utilized after five years, it should be returned. However, with ordinance coming into the action, the provision has been amended from ‘period of five years’ to ‘period specified for setting up of any project or for five years, whichever is later’ which clearly hints that any individual/company now with un-utilized acquired land can keep it for the period that it laid down for setting up the project, even if it is crosses the timeline of five years.
Q4. What are your expectations for affordable housing segment? What should government announce to boost this segment?
Indian real estate industry has been through a roller-coaster ride in the past few years. With FDI allowance in real estate sector by a new government, we are positive about the future of the sector. The definite plans of building smart cities across the country with an allocation of Rs 7,060 crore in the budget towards it and redeveloping other small cities is surely a sign of a booming real estate industry in the near future. Moreover, the relaxation and friendly policies for investors is a clear sign of attracting investments from big investors and NRI investors as well. Not only this, the open FDI policy will bring in opportunities for cheaper capital for smaller projects as well, improving quality and delivery of low cost and affordable housing projects. Additionally, other provisions like - reduction in built-up area and size of projects will also permit mid-sized and smaller developers to be a part of FDI and thus boost affordable housing in the country.
Q5. The Real Estate (Development and Regulation) Bill is awaiting Parliamentary approval. What do you have to say?
With a series of positive steps taken towards the Real Estate sector, we are optimistic about the judgment pertaining to the Real estate regulatory Bill. We are expecting 2015 to be a turnaround for the real estate industry and if the Bill comes out as per the industry expectations, it will definitely bring in good transparency in the system, will provide assistance in FDI and wipe out difficulties in raising capital from banks and other financial institutions. Moreover, for buyers, protection will be extended to them from non-credible players and fraudulent practices.