It is a highly disappointing budget. The Finance Minister has miserably failed in highlighting the importance the role of Housing in economy, employment generation, apart from the very need of housing. The announcements on ECB for affordable housing is a minor respite but still meaningless.
The Union Budget 2012-13 has left the Indian real estate sector grope with the indecision yet again and everyone is wondering whether the Finance Minister’s offer is glass half full or half empty for them.
The share of housing sector to the overall GDP (gross domestic product) is likely to rise by one per cent to 6 per cent on increased investment.
The Economic Survey, while recognising the importance of the services sector (it accounts for 59 per cent of gross domestic product), has raised concern over the second largest economic activity–housing & real estate. Three months after the government rolled back its decision to allow 51 per cent foreign direct investment (FDI) in multi-brand retail, the survey referred to it as a major challenge before the sector.
Ahmedabad stands out as a city that weathered the market slowdown most smartly and the property market of the city was the first in the country that showed signs of recovery by June 2009 itself. Since then realty in Ahmedabad is back and booming, with nearly 35% appreciation.
In contrast to what was been witnessed in many of the more volatile cities over the last couple of years, Chennai’s residential property market saw steady growth in terms of pricing, demand and supply. Chennai’s residential property market is predominantly end user driven, and this fact did a lot to sustain consistent absorption throughout 2011.
It has been a difficult market to be in as a developer. Rising interest rates have impacted the customer interest in new properties moderating the flow of new funds and in addition to that high inflation and rising commodity prices have increased substantially the delivery cost for existing projects.
CREDAI has stressed the importance of a devising a new scheme like tax holiday to generate stock under affordable housing category. It demands that all projects with tenements below 80 sq meter in Mumbai and Delhi, and 1000 sq meter in other cities, could be exempted from taxes.
There is no doubt that the property prices in almost all the micro market of eastern city is going northwards, yet uncertainty looms large over Kolkata realty. There have been less transaction and even lesser new launches in the city, even when the state chapter of the Confederation of Real Estate Developers’ Association of India (CREDAI) demands ten satellite towns in the state.
Industry body NAREDCO admits that a lot is needed by the Finance Minister rather than just the tax exemption, which again was needed keeping in view the housing shortage which is one of the biggest challenge for the government of the day.