Realty companies disappointed, dub it as a ‘lost opportunity’

Realty companies disappointed, dub it as a ‘lost opportunity’
The Financial Express, Corporates & Markets, February 17, 2009, Page I

fe Bureau, Mumbai

The interim Budget 2009 has come as a disappointment to the real estate sector, as developers feel that the government has failed to offer relief for realty and housing, which is crumbling under the liquidity crisis, job losses and a slowdown in demand.

Says Niranjan Hiranandani, managing director, Hiranandani Constructions, “This is a lost opportunity for the government. In extremely difficult times, where in the economic situation, 1.5 million jobs have been lost since the past three quarters, the finance minister could have created an economic success, instead of a political success and won the battle by infusing more funds into the real estate sector.”

Competitor, Lodha Group had hoped for some initiatives on affordable housing and tax benefits for developers but that didn’t happen, comments Abhinandan Lodha, director, Lodha Group. According to Hemant Shah, chairman of Akruti City, “We were expecting an increase in availability of liquidity in the real estate sector so that flats can be given to end-buyers below Rs 30 lakh, as this industry supports a large portion of the GDP. One can say that this is a pure economy budget.”

Kumar Builders too was completely disappointed with this interim Budget. Lalit Kumar Jain, chairman, Kumar builders said, “The finance minister should have given a subsidy of 2% in the home loan rate to loans up to Rs 35 lakh.”

Certain industry experts too have raised concerns about the lack of expected relief for the sector. Jai Mawani, head, real estate, KPMG told FE, “This interim Budget is more of a report card and a summary of various developments that have happened over the last few years. However, we were expecting that the finance minister could have created an environment of refinancing real estate projects and enabling the secondary market to finance the assets, which are already built in the form of a combination of tax incentives for low income housing and housing loans.”

Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj (JLLM), “We are aware that, by definition, an interim Budget will have its limitations. We had nevertheless hoped that it would factor in the overall languid state of the real estate sector and provide measures that will assist in energising it. In the final analysis, Indian real estate plays a cornerstone role in the country’s overall economy.”

Pradeep Jain, president, Confederation of Real Estate Developer’s Associations of India (CREDAI)-NCR said, “It was expected that through the interim Budget, the government would send a strong message to RBI to take the necessary steps, like reduction in the home mortgage interest rate to the tune of 6% to 6.5%. Also, to increase the bracket for priority lending for houses upto Rs 30 lakh instead of Rs 20 lakh, coupled with the reintroduction of section 80(IB) and reductions in direct taxes.”

Amitabh Das Mundhra, director, Simplex Infrastructures Ltd, said, “The interim Budget is a continuation of the government’s agenda for the past five years, with a further intention of increasing investment in the infrastructure sector. This would in turn keep the momentum of the economy going. Moreover, increased outlay for the Bharat Nirman Scheme and JNNURM would provide the requisite impetus to infrastructure development in the country. However, it’s essential that this spending is utilised appropriately, only then would it benefit the sector and the economy as a whole.”

Failed expectations
• No increase in availability of liquidity
• No subsidy in the home loan rate
• No reduction in home mortgage interest rate
• No increase in the bracket for priority lending
• No reintroduction of section 80(IB)