Budget 2015 evokes mixed reactions from real

estate sector

Mumbai: The real estate industry, which had pinned high hopes on Union Budget 2015 for
revival of the liquidity-starved sector, welcomed some of the proposals of finance minister
Arun Jaitley, but said that there was no clarity on development of 100 smart cities. The
industry leaders said the document also lacks serious incentives to boost the key sector.
In the first full-year budget of the National Democratic Alliance (NDA) government, Jaitley
proposed to rationalize the capital gains regime for the sponsors exiting at the time of listing
of units of real estate investment trusts (REITs) and Infrastructure Investment Trusts (InvITs)
and also announced creation of six crore homes to meet the centres housing for all
vision.
Overall the budgets direction is positive with several macro factors making way for a
better economic regime. However, with three consecutive bad years for real estate that left
developers and other stakeholders gasping for fresh air, the expectations were high.
Unfortunately, the budget has not given them anything to cheer about, said Shishir Baijal,
chairman and managing director, Knight Frank India.

The budget announced the governments intention to build six crore houses towards the
Housing for all by 2022 initiative. Specific details on this subject, however, were not
elaborated on and neither was any light shed on the Sardar Patel Urban Housing Mission in
terms of fund allocation, funding instruments and entities, exact timelines and project
locations, among other factors, said Anshuman Magazine, CBRE South Asias chairman
and managing director.
Gera Developmentss managing director Rohit Gera said, Though the budget is positive,
it has completely ignored the residential real estate market and there is a total lack of any
push for the housing sector. We had hoped for increased deduction towards home loans
amongst other things to give an impetus to the industry. Given the prevailing indirect
taxes, stamp duty, borrowing costs for both buyers and developers, the industry was hoping
for some serious incentive given the significant housing shortfall, but it was one big miss.
However, the industry is hopeful in the course of the year the government will make some
announcement in this regard, said Gera.
Embassy Office Parks chief executive Mike Holland said, Indications that tax pass through
on REITs will be implemented is welcomed. We will await and review the detail but if the
understanding is correct, this has the potential to stimulate the REIT market in India which
can release lower cost capital, increase liquidity and stimulate the next phase of enhancement
of Indias urban infrastructure.
The budget is positive and balanced. The proposal to rationalise capital gains tax regime
for REITs is a welcome step. Also, the reduction in corporate tax will lead to higher
investments in the realty sector, said Gaurav Gupta, director of Omkar Developers.
The decision on providing six crore urban and rural housing units, revisiting and
revitalising the PPP model, increasing funding for infrastructure, introduction of predefined
permissions regime and proposal to rationalise capital gains tax regime for REITs, will have a
positive impact on the sector, said Brotin Banerjee, managing director and chief executive
of Tata Housing.
The industry, however, said the budget lacks direction for development of 100 smart cities, a
pet project of Prime Minister Narendra Modi. The budget did not provide any details on
the initiative taken by the government for developing 100 smart cities. Factors such as how it
will define these cities and which cities have been identified remain unclear. But increased
allocations for rail-road development, penetration of education and training centres and push
to Digital India initiative could contribute to the shaping of smart cities, Anuj Puri,
chairman and country head, Jones Lang LaSalle.
Indiaproperty.com CEO Ganesh Vasudevan said the budgets objective was to improve
the quality of life and pass on benefits to the common man. To an extent the Budget has
succeeded in doing so. As expected the Budget mainly focused on growth of infrastructure,
but it had no mention of smart city project.
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