Real Estate Newsletter – January 30 to February 3, 2017

FM announces measures for promoting affordable housing and real estate sector
Making the Scheme for profit-linked income tax exemption for promoters of affordable housing scheme announced last year more attractive, the Union Finance Minister Arun Jaitley proposed a number of changes while presenting the General Budget 2016-17 in Lok Sabha. Jaitley said that instead of counting the built-up area of 30 and 60 sq.mtr., it will be the carpet area of 30 and 60 sq.mtr. of the houses that will be counted under the scheme. He also said that the 30 sq.mtr. limit will apply only in case of municipal limits of 4 metropolitan cities while for the rest of the country including in the peripheral areas of metros, limit of 60 sq.mtr. will apply. The Finance Minister also proposed to extend the completion period of the building of the houses after commencement under the Scheme from the present 3 years to 5 years. Read More

Magicbricks posts strong 43% YOY growth in Q3 revenues
MagicBricks announced strong Q3 performance, posting an impressive growth of 43% on Rs 37 crore of Q3 revenue. The company also reported YTD FY’17 revenues of Rs 96.6 crore. The company stated that these figures are online revenues from operations and do not include any group company revenues. “While there has been short term pressure on the pace of growth post demonetisation, the impact was offset by a series of initiatives across product innovation, traffic growth, channel initiatives and partnership alliances,” the company said in a statement. Read More

National Housing Bank to refinance Rs 20,000 crore loans in FY18
The Union Minister for Finance and Corporate Affairs, Arun Jaitley said that affordable housing will now be given infrastructure status, which will enable these projects to avail the associated benefits. The National Housing Bank (NHB) will refinance individual housing loans of about Rs 20,000 crore in 2017-18. Thanks to the surplus liquidity created by demonetisation, the Banks have already started reducing their lending rates, including those for housing. Read More

Infocus

Announcement of infrastructure status to affordable housing is a welcome move: Alok Sanghi, Sanghi Industries Ltd
For the third consecutive budget, the focus of Government is on boosting infrastructure spending. However, this year Government has also put greater emphasis on areas like agriculture, rural sector, education, fiscal discipline and tax reforms. The announcement of infrastructure status to affordable housing is a welcome move, which is likely to provide support to overall real estate industry and allied industries like cement and steel. Allocation to Pradhan Mantri Gram Sadak Yojana and Pradhan Mantri Awas Yojana-Gramin is also likely to boost cement consumption. Increased allocation of roads and improved coastal connectivity for effective multi-modal logistics will improve transport efficiency and reduce costs. Proposals for skill development under Skill India are likely to improve job prospects. Read More

Budget focuses on developing multimodal infrastructure rail, roads, ports, airports and waterways
Affordable housing being given Infrastructure status is a welcome move and will help in the Housing to all by 2022 mission – it is a big and positive move for developers, banks and housing finance companies. Special funds under Pradhanmatri Awas and refinancing by NHB will help more developers to enter the sector and to boost affordable housing for a large number of home buyers. The one year rental tax relaxation for new properties with occupancy certificates will help developers use the year to sell off the stock which can be held as stock in trade. The taxation on vacant residential property is likely to bring down the number of vacant housing units across the country by unlocking them for rental housing. Read More

Giving the Affordable Housing Sector Infrastructure status will propel growth in the segment: Parth Pande, Finance Buddha
On reduction of Taxes on MSME: The MSME Sector is the bed rock of all large economies and is the biggest employment generator in the country, reducing the Income Tax for them is a great step as it should help in their growth and will ultimately lead to more investments from the sector and more employment creation thereof. On Housing: Giving the Affordable Housing Sector Infrastructure status will propel growth in the segment and lead to higher consumption. This will also lead to growth in the Affordable Home Loans Business where a lot of players have taken positions and new lenders have emerged. Exciting times ahead for Affordable Housing and Affordable Home Loans players. Read More

Great push for housing for all vision and will also benefit the first time buyers: Ssumit Berry
This announcement is a landmark for the real estate sector which will open new avenues for the affordable housing segment. We welcome and appreciate this decision of government, it will help the sector get various benefits of infrastructure sector which was a long time demand of the realty industry. The new measure will reduce costs for developers and attract more investors. It is great push for the housing for all vision and will also benefit the first time buyers. Read More

We welcome govt decision to bring affordable housing in the infrastructure sector: Pankaj Bansal
We welcome the government decision to bring affordable housing in the infrastructure sector. Also, definition of Affordable housing changed to make it more practical to build and market.  Now, we can expect focus on building more affordable housing projects, also Rural Housing will get big push. The borrowing costs for the home buyers has already come down significantly. Time period for Long Term Capital Gain is reduced by 33%, with new base period. Many have been deferring their decisions to buy homes. Read More

Budget 2017 has provided relief to both developers and investors: Ravish Kapoor
By granting infrastructure status to affordable housing, which was a long-time demand from the industry, the Budget 2017 has given a relief to both developers and investors. The cost of the developers will go down and attract the investors. The Finance Minister Arun Jaitley brought affordable housing under infrastructure sector, extending benefits to the people investing in building low-cost homes. Read More

Union Budget 2017-18 is a pro-growth budget and a step in right direction: JC Sharma
The Union Budget announced is a pro-growth budget and a step in the right direction. We, at Sobha, welcome it whole heartedly. The focus on affordable housing is laudable, as it has been accorded the infrastructure status which will have many ripple effects. Government’s proposal to take into consideration the carpet area of 30 and 60 sq. metres instead of built-up area of 30 and 60 sq. metres (as was the case earlier) of the houses is a welcome step, whereby 30 sq. metres limit will apply only in case of municipal limits of 4 metropolitan cities, while for the rest of country, including the peripheral areas of metros, limit of 60 sq. metres will apply. This will allow developers to plan their future projects within the 60 sq. metre carpet area, which will boost the housing sector immensely. Read More

Why Indian Real Estate attracts only a marginal share of the global capital inflows
It makes for a telling revelation that considering the 11,500 developers under the CREDAI (Confederation of Real Estate Developers’ Associations of India) umbrella, the number of developers who have consistently delivered projects across all three phases of the Indian residential real estate cycle over a 11-year period stands at a measly 124. In percentage terms, it comes to just 1% and starkly exposes the lack of depth in India’s realty market. These stats also reinforce the justification behind recent policy-level interventions such as RERA [Real Estate (Regulation & Development)] and demonetisation. The sector definitely needs a shot of corporate governance and better industry practices. Read More

Expect more favourable provisions towards affordable housing: M Murali, Shriram Properties
At the very outset, I can say, we can expect a very progressive and development oriented Budget 2017-18 aligning with the various radical and transformational reforms, which we have witnessed in the recent times like Demonetisation, Real Estate Regulator Bill (RERA), FDI relaxations, GST, Benami Transactions (Prohibition) Amendment Act, Change in Accounting standards (IFRS). The Government is well aware of the importance of real estate sector in GDP numbers and how the sector is sensitive to many of policies that are going to be announced both for various industries and individuals. Government is equally aware that realty sector is just emerging from a transitory but slightly prolonged and painful slowdown and is eagerly looking for all budgetary support. Government shall appreciate that there are many transparent, credible and organised players in the real estate sector who are honestly interested in national growth. Read More

Budget should provide simpler tax norms for REITs, increase HRA deductions
The real estate sector has been the second biggest employer for India after agriculture, and market estimates suggest that it will grow by as much as 30% in the next decade. Consequently, stakeholders have high expectation from the 2017-18 Union Budget. Read More

45% of respondents across India expect commercial real estate prices to soften
The November 8 announcement of the government to demonetise high value currency notes of Rs 500 and Rs 1000 has dampened sentiments of the real estate sector across India, which until now had been comparably more upbeat than most markets in Asia. Both the Occupier Sentiment Index (OSI – an index that shows supply, demand and rent expectations) and Investment Sentiment Index (ISI – an index capturing overall market momentum) readings turned negative in the National Capital Region and Mumbai after demonetisation, according to RICS’ Global Commercial Property Monitor. The OSI index recorded a reading of -3 in the Q4 (October-December, 2016). It represents the weakest number reported for this indicator since the end of 2013. Demand for retail property fell over this period. Office space was more sought after though the rate of demand growth appears to be moderating. Read More

Domestic Newsmaker

Affordable Housing will be given Infrastructure Status
The Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley while presenting the General Budget 2017-18 in Parliament today said that affordable housing will now be given infrastructure status, which will enable these projects to avail the associated benefits.The National Housing Bank (NHB) will refinance individual housing loans of about Rs. 20,000 crore in 2017-18. Thanks to the surplus liquidity created by demonetisation, the Banks have already started reducing their lending rates, including those for housing. Read More

Granting infrastructure status to affordable housing will boost private investment
Finance Minister’s impetus on housing for all by 2022 by way of given affordable housing an infrastructure status is indeed a welcome step and will bring in the momentum towards achieving the goal. The allotment of infrastructure status would also boost investment from private players in the affordable housing campaign. Capital gains on joint development agreement to be taxed only at product launch, 1 year tax exemption from national 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.

[Source:-IIFL]