Stimulus to help developers clear 5.45 lakh units unsold across top 7 cities

Our Bureau Bengaluru November 12 | Updated on November 12, 2020

IT relief for developers, homebuyers cheer Covid-hit real estate builders

Atmanirbhar Bharat Package 3.0 recognises real estate as a core sector, creating ancillary industry demand and employment, and enhanced Pradhan Mantri Awas Yojana – Urban allocation, will boost the housing demand in the country, said Shishir Baijal, Chairman & Managing Director, Knight Frank India, reacting to the Finance Minister’s stimulus package announced on Thursday.

“Besides, the increase in circle rate and transaction value threshold from 10 to 20 per cent will remove a transaction hurdle and save tax thereby increasing the opportunity for unbridled property purchase activity,” he added.

Ashish R Puravankara, Managing Director, Puravankara Limited, said: “Today’s announcements will undoubtedly uplift sentiments of all the stakeholders in the realty industry. In a bigger picture, these stimulus measures will go a long way towards job creation and infrastructure development in the country. Industry-wise, the increase in threshold limit for circle rate and transaction value will help developers, especially in the Mumbai market.”

Homebuyers to gain

“The increase in the differential between circle rates and agreement value — from 10-20 per cent (under Section 43CA) — is indeed a good move. This limited-period offer (up to June 30, 2021) will benefit both developers and homebuyers,” said Anuj Puri, Chairman of Anarock Property Consultants.

For homebuyers, it is a clear added financial benefit to round off the existing offers and discounts.

“For developers, this move will help clear unsold stock. As per Anarock Research, there are about 5.45 lakh unsold units across the top seven cities priced up to ₹1.5 crore, while another 49,290 units priced between ₹1.5 crore and ₹2.5 crore.

Housing for all

The additional outlay of ₹18,000 crore for PM Awas Yojana (PMAY – Urban) is another welcome step towards fulfilling its vision of Housing for All by 2022. The additional outlay is over and above ₹8,000 crore already spent this year. It will help 18 lakh houses to be completed. This will help bridge the housing gap in the country to a good extent and is simultaneously an excellent economic growth driver by creating more employment,” explained Puri.

Murali Malayappan, CMD, Shriram Properties, explaining the Income Tax relief, said: “Currently, in regards to residential units sale and purchase, under Sec 43CA of IT Act, restricts the differential between circle value and the agreement value at 10 per cent. At the same time, the actual prices may be much lower. The decision of the centre to increase the differential from 10-20 per cent for the primary sale of residential units of value up to ₹ 2 crore has come as a welcome step, not only helping developers who are saddled with unsold inventory to clear their stock but will also allow individuals looking to invest in their own homes pay less with the reduced differential gap. Making homeownership more accessible to the people.”

Anshuman Magazine, Chairman & CEO - India, South East Asia, Middle East & Africa CBRE said “announced today by the government towards boosting demand and strengthening the economy. The announcement of additional outlay of Rs 18,000 crore for PM Awaas Yojana(urban) is a step in the right direction towards fulfilling the vision of Housing for all, which will lead to generating employment along with supporting other industries, having a multiplier effect on the economy.”

Published on November 12, 2020

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