Budget misses out on long term demands of realty sector; home sales rebounding: Niranjan Hiranandani

In a way yes. But then, there is no major tax implication on the sector. So, no bad news is good news for us. However, we are hopeful that the GST Council will consider extending input tax credit benefits to developers.

Nearly ₹80,000 crore has been allocated under the PMAY–Urban and PMAY–Rural in the last five years. Execution of such a large scale project will always be a problem here. But PMAY–Rural has really done well despite the Covid–induced slowdown over the last few years. It is PMAY–Urban which is facing some issues especially if one considers the bigger metros– Delhi, Mumbai and Chennai.

Slum development projects are an issue here, including ownership concerns. So naturally there is slowdown in big cities. Plus migration happened (during the pandemic) towards smaller towns, thus slowing down the scheme. But the same PMAY(Urban) has done well in the peripheral areas of metros, Tier-I and Tier-II cities, and in larger urban areas of the hinterlands.

Infra push apart, there is a clear focus by increasing allotment of funds to PMAY scheme–both urban and rural segments. Even without tBudget provisions, the real estate demand has improved post-Covid.

Affordable housing, the upgrade market and premium homes are all doing well. The supply situation across cities hhas also stabilised. Demand is expected to be strong in the coming year if factors like the low interest rate regime and stamp duty cuts continue.

The RBI Monetary Policy Committee maintained status quo on key policy rates on February 10 while also maintaining an ‘accommodative’ stance. This reflects on their consistency. For the home buyer, favourable market dynamics in terms of home loan interest rates continue. However, trends indicate that this ‘historic low’ may not continue for long.

Warehousing, industrial and commercial real estate are witnessing good demand and institutional investment appetite is visible. Homes/ real estate is also generating substantial queries. The Market has consolidated and many developers are cleaning up books, which has renewed investor interest.

India continues to give attractive high double digit returns (for investors in real estate) through alternate asset classes, as compared to the western world which has now dropped to mid-to-low single digits. This however, does not include big ticket REIT markets like Singapore.

The Budget has also given infrastructure status to data centres, which will make low-cost financing available. Considering increased data penetration and data localisation policy in India, data centres are emerging as relatively low cost, high return model, too. This sector will see increased foreign investor interest, too, and big ticket investment from Indian players like us (Hiranandanis). Some land locked states will emerge as attractive destinations also.

On REITs there is nothing immediately. May be two to three years down the line, as the market matures, we can consider it. It could be listing of an arm of the Group, too.

The Budget takes a long term view in announcing capital outlay. Road construction has improved to 35 kms per day, from 5 kms a day previously; there is focus on affordable housing through the Prime Minister Awas Yojana (PMAY) with a ₹48,000 crore outlay; one crore homes are expected to come up in one to two years. So the infra push will see a multiplier effect across 260 industries. Then, there are tPLI schemes twhich are expected to boost manufacturing. On the negative, the middle class was given a miss.

There is no tax relief across any income bracket. The income tax rate in the higher slab rates works out to be 42 per cent; against which corporate tax rates are lower. Similarly, we were hopeful that tax deduction limits on interest on home loan would be increased to ₹5,00,000 (against existing ₹2,00,000). This could have given a boost to the real estate sector. Also developers were expecting input tax credit benefits to be passed on. It, too. did not happen.

A MNREGA type or income guarantee scheme for urban poor, which is nearly 45 per cent of the (urban) population, could have helped spur demand. Presuming that all economically weaker section or migrants would move back to villages to avail benefits of MNREGA is a little off-mark.