“For the real estate and housing sector, this years’ budget has exceeded expectations given the pressure on fiscal situation. Most importantly, it has taken into account the crying need to focus 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% to 5% for 3 years and this move will help ease the liquidity in the sector.
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.
Our reaction to Union Budget 2012-13 is mixed at best. It seems fair to state that the Indian real estate sector does not have much to cheer about.
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.
The Company Law Board (CLB) has asked real estate company Unitech to decide by Monday if it wanted to buy its joint venture partner Telenor’s 67 per cent stake in telecom company Uninor or sell its 33 per cent stake to the Norwegian firm.
Despite a gloomy global outlook, foreign direct investment (FDI) clocked a 31 per cent growth to $27.5 billion during January-December 2011 period. FDI inflows for January-December 2010 stood at $21 billion.
Fearing share price manipulation with the help of certain ‘independent’ research reports onIndian companies, market watchdog Sebi may soon bring all kinds of research analysts under its regulatory ambit.
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.
The office market is likely to observe steady demand, especially in prime locations in leading cities like NCR, Mumbai and Bengaluru.