Thaindian News

Mumbai, March 16 (IANS) Predicting an escalation in property prices, top players in Maharashtra’s crucial realty sector Friday said they had been ignored by Finance Minister Pranab Mukherjee in the union budget.

Lalit Kumar Jain, chief of the Confederation of Real Estate Developers’ Association of India (CREDAI), said the announcement on External Commercial Borrowings (ECB) for affordable housing is a minor respite but still meaningless.

Jain, who is also chairman and managing director of Kumar Urban Development Ltd, added: “We contribute 6.5 percent to the GDP and expected a big boost from the budget for affordable housing through special schemes, an interest subvention of five to seven percent for LIG (low income group) and EWS (economically weaker section) housing and promotion of rental housing through tax exemption.”

Jain pointed out that the interest subsidy on home loans was too low.

“The cost of housing will go up. Plus, there is a grave risk of drying up of liquidity,” he added.

Gaurav Gupta, director, Omkar Realtors & Developers Pvt Ltd, lamented that the realty sector had got nothing to boost market and customer sentiments.

“No indications of this sector being granted the much deserving industry status. On the contrary, the increase in service tax will push up the realty prices as the additional cost will be passed on to the buyers.”

Tata Housing Managing Director and CEO Brotin Banerjee added: “Initiatives to make affordable housing available to a larger section of the society have only been met partially. But ECB for the affordable and low-cost housing segment will enable tap long-term funds and help ease the liquidity in the sector.”

He was of the view that increased funding for highways and other infrastructure would help put more territories on the real estate map.

There were some who welcomed the proposals.

Sachin Sandhir, managing director, RICS South Asia, felt it “exceeded expectations” given the pressures on the fiscal situation.

“It has focused on affordable housing sector by allowing ECB for low cost housing, road as well as construction. Withholding tax on ECBs for affordable housing has been reduced from 20 percent to five percent for three years and this move will help ease the liquidity in the sector,” Sandhir explained.

Also, investment linked deduction of capital expenditure in affordable housing is proposed to be provided at 150 percent as opposed to 100 percent will encourage supply of low cost housing, he said.

Though the one percent interest subsidy scheme has not been rolled back for the home buyer, the participation of FII’s to grow corporate bond markets is also a very positive development and will open up the opportunities for real estate companies, according to Sandhir.