Budget 2015: Realty bites — Nothing to cheer, say builders

There were no cheers for finance minister Arun Jaitley’s budget from builders and real estate experts, who feared a further dip in realty sales in the NCR due to a hike in construction costs coupled with no fresh tax breaks for housing loans.

Industry insiders said the increase in service tax and excise duty, added to the hike in petrol and diesel prices announced on Saturday, were likely to raise costs in the sector that was already witnessing a slump.

Supertech chairperson R K Arora called the budget “disappointing”. “Although the finance minister in his speech announced construction of two crore houses in rural India and four crore in cities, no concession either for home buyers or for the developers has been given in the budget,” he said.

A real estate expert said developers were unlikely to absorb the higher service tax and excise duty and these will have to be borne by the end user.

Unitech managing director Sanjay Chandra said, “Bigger tax breaks on housing loans could have provided a much needed incentive to home buyers to make a purchase decision.”

According to Raheja Group CMD Navin Raheja, who is also chairman of industry body National Real Estate Development Council (NAREDCO), the increase in various taxes and fuel rates have come at a bad time. “This only adds to the pressure on real estate developers at a time of sluggish demand,” he said.

On a positive note, SARE Homes’ MD David Walker said, “We are enthused by the reduction of the corporate tax. But the budget has fallen short of expectations. The sector will have to continue to wait for a separate infrastructure status, and other measures to rejuvenate sales.”

The industry, however, welcomed the Benami Prosecution Bill. “It will put an end to unscrupulous funding activity in the sector,” said Gaurav Mittal, managing director of CHD Developers.

According to property consultant Jones Lang LaSalle, there are 1.54 lakh unsold housing units in NCR. The average span of unsold properties is 33 months in Gurgaon and 38 months in Noida.