Puravankara, Ashiana, Mahindra Lifespace welcome the current real estate friendly budget
The current budget emphasises on the economical use of resources and cuts down on expenditure. Looking at the condition of the central treasury, Jaitley’s budget does not emphasise on allotting budget for the infrastructure and other sectors, instead has opened the floodgate for FDI and retail investments in the forms of REITs and InvITs so that the liquidity crunch is met and it does not stress out the central treasury.
Real estate is one of the few sectors to win big benefits as there are many key proposals that will open up funding for developers, boost buyer sentiment and allow foreign investments to flow in. In the past few years due to the slump in demand, the money was not rolling in the market and access to funds has been a key bottleneck.
The banks were apprehensive to provide loans to the developers and the private financers charged a huge interest rate adding to the woes of the sector. It was reeling under huge debt-burden and introduction of Real Estate Investment Trusts (REITs) is expected to bring in some relief to the sector.
Tax structure was a major hurdle in REIT structures and the proposal to allow pass-through status to REITs is a positive. Developers such as DLF, Prestige Estates, Godrej Properties and Phoneix Mills with a large commercial property portfolio will benefit from this proposal.
Home loan rates have been hovering high and the increased deduction should lower borrowing costs for buyers which is expected to boost buyer enthusiasm. Puravankara and Ashiana Housing who develop mid-income housing and Mahindra Lifespace who are looking at low-cost housing welcomed these moves.
Source- The Hindu Business Line
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