Tag: Indian real estate sector

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Real Estate’s Hopes from The Upcoming Union Budget

Jun 25, 2024 by Mansi Praharaj 0 Comments #Affordable and mid-income housing, #affordable housing, #Akash Pharande, #Better Finance Access, #budget home projects, #builders, #cash-flow, #CLSS, #credit guarantees, #economic growth and employment, #emerging areas, #Enhanced Credit-Linked Subsidy Scheme (CLSS), #Fast Track Infrastructure, #financial assistance, #financial stress, #financing, #First-Time Buyers, #GST rate, #GST Reforms For Developers, #homebuyers, #Housing for All scheme, #housing projects, #Indian housing industry, #Indian real estate sector, #interest rates, #Interest Subsidies and Housing Loans, #interest subsidy for housing loans, #land acquisition process, #land records management system, #Land Reforms, #LIG and middle-class, #low and mid-income, #metropolitan areas, #metros and railways, #mid-income housing buyers, #Pharande Promoters & Builders, #Pharande Spaces, #policies and tax incentives, #Policy Measures and Provisions, #Pradhan Mantri Awas Yojana (PMAY), #real estate investment fund, #regulatory reforms, #Rental housing, #Rental Housing Policy, #rental income, #Single-window Clearance, #single-window clearance system, #stamp duty, #tax breaks, #Tax Deduction for Housing Loan Interest, #The Union Budget

akash

By Akash Pharande, Managing Director – Pharande Spaces

The Indian real estate sector is a crucible of economic growth and employment. The sector stands at a crossroads as the government prepares to present its Union Budget. Though it has massive potential, the Indian housing industry still faces numerous hurdles.

To generate more growth and address the housing needs of the growing population, particularly in the low and mid-income segments, the budget must include tax breaks, regulatory reforms, and financial assistance measures.

Affordable and mid-income housing

Affordable and mid-income housing is the foundation of the real estate industry, meeting the urgent housing needs of the enormous LIG and middle-class population. To significantly boost this section, the following strategies are critical:

Interest Subsidies and Housing Loans: Widening the scope of the Pradhan Mantri Awas Yojana (PMAY) and raising the interest subsidy for housing loans is the need of the hour. Doing this will make homeownership more affordable. Reducing interest rates will also lower the financial stress put on aspiring homebuyers.

Enhanced Credit-Linked Subsidy Scheme (CLSS): Extending and improving the CLSS can provide financial relief to mid-income housing buyers. Both the income eligibility threshold and subsidy amount should be raised.

Single-window Clearance for Affordable Housing: A single-window clearance system for budget home projects will help considerably to make the incredibly complex approval process more streamlined and simple. This, in turn, would help to decrease delays in possession of such units and reduce the overall costs.

Real Estate's Hopes from The Upcoming Union Budget

Tax breaks to lighten the load

Tax breaks are critical when it comes to making homeownership more approachable, and they can also encourage builders to take on new affordable housing projects:

Raise Tax Deduction for Housing Loan Interest: Raising the tax deduction limit under Section 24(b) of the IT Act is long overdue and the need of the hour. The deduction limit should be increased from the current Rs. 2 lakh to at least Rs.3 lakh or even more.

Reduce Stamp Duty: The government can encourage state governments to cut their stamp duty rates, which account for a significant portion of the cost of homeownership. Even a temporary decrease or waiver of stamp duty on affordable and lower-middle-income housing can boost demand and sales.

Incentives for First-Time Buyers: First-time homebuyers should get further sentiment boosters. For instance, the government can raise the deduction limit under Sections 80EE and 80EEA for such buyers.

GST Reforms For Developers: GST rates applicable on construction materials and services can help lower overall project costs for builders. Also, a reduced GST rate for affordable housing projects would help attract more builders to this vital segment and to pursue such projects.

Real Estate's Hopes from The Upcoming Union Budget

Policy Measures and Provisions: Indirect Increases

Apart from direct financial boosters, the budget can introduce many policy initiatives that will indirectly improve sentiment in the housing sector:

Fast Track Infrastructure: This government is certainly determined to develop infrastructure like roads and public transport such as metros and railways. This helps expand the metropolitan areas and boosts affordable housing, which is usually developed in emerging areas where land is cheaper and infrastructure is still catching up. However, we need a much faster roll-out of such projects so that connectivity to such areas improves at a faster pace.

Land Reforms: Simplifying the overall land acquisition process will help developers speed up their supply of new projects. There is an express need for an open and effective land records management system that reduces disputes and, therefore, project delays.

Better Finance Access: Developers always need access to financing, but smaller and medium-scale players are at a bigger disadvantage than big players. The budget could consider announcing a separate real estate investment fund and also credit guarantees to such builders so that their cash flow improves.

Rental Housing Policy: Rental housing would benefit from favourable policies and tax incentives for those who cannot afford to buy homes. Implementing a model tenancy law and providing tax breaks on rental income would help a lot.

The Union Budget is an ideal platform and opportunity for the government to give teeth to its Housing for All scheme. While the original 2022 deadline was not met, it is not too late to revive this dream and make it a concrete reality. The Indian real estate sector certainly looks forward to such boosts for both homebuyers and builders.

About the Author:

Akash Pharande is Managing Director – Pharande Spaces, a leading real estate construction and development firm famous for its township projects in Greater Pune and beyond. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer of townships in the region. With the recent inclusion of Puneville Commercial into one of its most iconic townships, Pharande Spaces has taken a major step towards addressing Pune’s current and future requirements for fully integrated residential-commercial convenience

Harvinder Singh Sikka, Managing Director of Sikka Group
Business World

2021 to be the best year for real estate sector: MD Sikka Group

Dec 12, 2020 by Neel Achary 0 Comments #Harvinder Singh Sikka, #Indian real estate sector, #Managing Director of Sikka Group

Dehradun: Renowned brand in the Indian real estate sector Sikka Group organized a ‘Pledge and Sacred oblation’ ceremony at Sikka Kimaya Greens. The event was attended by the Sikka team and their partners, buyers and investors. The event started with Hawan Pujan and there was a discussion on growth of the realty sector in 2021. Also, the buyers were assured that Kimaya Greens will be delivered by March 2022.

Sikka Group

Sikka Kimaya Greens is an exceptional home that resonates with sleek modernity and indulgent amenities. Located at Doon IT Park, Aman Vihar, Dehradun, Live life beautifully at Dehradun’s newest address where your life the project comprises 2/3/4 BHK apartments, penthouses & affordable flats. Designed by Broadway Malyan (among world’s top 10 architects), this lavish project is sure to exude a quiet sense of luxury in perfect harmony with nature.

The prime location of Sikka Kimaya Greens inside Sidcul IT Park Sahastradhara Road is set to become a unique lifestyle destination within the heart of one of the most vibrant cities in the world – Dehradun. The view of pristine mountains of Mussoorie serves as a perfect backdrop for your dream home, just like icing on the cake.

The real estate sector has faced tough challenges during the lockdown, but after Unlock 1.0 the sector observed signs of growth. The measures that the RBI took in the last few months are showing a positive impact. Speaking on the same, Harvinder Singh Sikka, Managing Director of Sikka Group, said, “Year 2020 have given us a great lesson of how to overcome the phase of pandemic crisis. Also, the role of digital and virtual platforms has increased which supported the sector a lot. We are hopeful that the coming year will be a boon for the realty sector.”

Ramesh Nair
Business World

Indian real estate sector likely to register USD 4.8 bn institutional flow of funds in 2020: JLL

Nov 4, 2020 by Gouri Achary 0 Comments #Capital Markets Update | Q3 2020, #Dr. Samantak Das, #Indian real estate sector, #investors, #JLL, #Ramesh Nair, #real estate, #REIT

India’s real estate market attracted USD 235 mn in the capital in the third quarter of 2020 (Q3,2020), growing by 52% quarter-on-quarter (QOQ), according to JLL’s ‘Capital Markets Update | Q3 2020’ report released today. The India real estate sector is expected to draw USD 4.8 bn of capital in 2020, representing an 8% decline on 2019’s total transactional volume of USD 5.3 bn.

According to JLL, investors are most attracted to the country’s office sector, with interest remaining strong throughout the pandemic and the partial relaxation of the lockdown with USD 200 mn invested during Q3 2020. Concurrently, global investors actively sought asset portfolio opportunities, with two landmark portfolio transactions amounting to a total of USD 3.6 bn in investment value likely to be concluded in Q4 2020. In the primary markets, Mindspace Business Parks REIT- India’s second REIT issue of USD 600 mn was oversubscribed by 13 times in August 2020. The strong response to this REIT indicates a preference for cash flow opportunities in private and public markets.

“We’re expecting a broad-based ‘V-shape’ recovery in the Indian real estate market, but depending on the economic recovery and pandemic response, our estimates have substantial scope for an upward revision. We have already witnessed very positive signs of recovery in the office segment in Q3 with gross leasing at 13.8 mn sq. ft. The REITs market has done exceedingly well with the combined market cap of the India REITs at USD 6 bn accounting for 33% of the market cap of listed real estate companies,” said Ramesh Nair, CEO and Country Head (India), JLL.

Office assets remain the preferred choice

USD mn
Asset Class Q1 Q2 Q3 Q3/ Q2 growth rate Total
Residential 102 48 35 -28% 185
Office 505 66 200 202% 771
Warehousing 54 41        – -100% 93
Hotels 130             –        –                     –             –
Grand Total 791 155 235 52% 1180

Source: JLL Research

The review of investments in the first nine months of 2020 reveals that out of the USD 1.2 bn investments, Bengaluru, Chennai and Mumbai together accounted for 71% share. Bengaluru led the pack with 33% share of real estate investments.

“The impact of COVID-19 on the India real estate market has been unprecedented, but investors have remained bullish on the long-term prospects and voted with their deployments in the third quarter. Though we expect 2020 investments level to be marginally lower than 2019, the recovery will not be broad-based given that two large transactions slated to be concluded this year would account for 76% of the total investments estimated for 2020,” said Dr Samantak Das, Chief Economist and Head of Research & REIS (India), JLL.

Lessons from past and looking ahead

Post the Global Financial Crisis (GFC), investments in Indian real estate declined by 71% during Q1-Q3 2009 as compared to the same period in 2008. However, investors after the brief wait came back with lessons learnt. Investments during Q1-Q3 2010 saw a recovery of 92%. This year, a similar pattern has panned from Q1-Q3 2020 wherein investments declined by 73% although on a higher base.

Green shoots of recovery like a strong response to REITs, large office and retail asset portfolio deals in progress and robust office sector fundamentals indicate that a similar pattern which was witnessed in 2010 could unfold shortly. Indian real estate has come a long way, post the global financial crisis due to structural transformation as well as regulatory reforms introduced in the last decade.

REITs: Redefining investments in Indian real estate

According to JLL, increased awareness of REITs will ensure acceptability and lead to a gradual increase in retail interest and deeper institutional involvement in this segment. Brookfield Asset Management has filed for India’s third REIT with an expected issue size of USD 600 mn. As the market matures, JLL expects global funds are looking for an established track record, an ability to remain transparent and deliver predictable returns, which were demonstrated by India’s two listed REITs.

luxury house
Business World

Indian real estate sector to recover faster than expected

Sep 14, 2020 by Gouri Achary 0 Comments #Dhiraj Bora, #Harvinder Singh Sikka, #Indian real estate sector, #MD, #Paramount Group, #SAYA Homes, #Sikka Group, #Vikas Bhasin

The demand for residential property is increasing as is evident from the increasing inquiries and sales conversions over the past few months. The buyers are giving priority to housing especially the projects that have all the facilities that can keep them safer. In spite of all the darkness that sector witnessed during the lockdown, it is returning back with a bang. Besides, maximum investors got enough time to plan during the lockdown and realize the potential of real estate assets.

It is important to understand the downfall, recovery, and growth patterns of the residential segment market in the past decade. The lockdown happened just when the residential market was in demand for the two successive years and then it came to a near standstill for a few months during the lockdown. However, realtors remained in touch with the end-users after realizing the enhanced need of the people to have a property of their own. Going forward, the maximum number of end-users, as well as investors, will prefer homes that take care of the social distancing in addition to providing financial security.

End-users as well as investors are also showing readiness to pay a premium for homes that would include a wellness idea. The coming time will require constant policy support and economic stabilization so that the market remains upbeat.

Vikas Bhasin, MD, SAYA Homes, “It is good to see that customers are coming up with their queries and the demand for housing is coming in the track. Besides, to ensure the operations in a smooth manner as well as to help the customers, realtors are also coming up with various schemes and easy modes of payment methods.”

According to Harvinder Singh Sikka, Managing Director Sikka Group, “No doubt in saying that there was a financial imbalance due to national lockdown, which was necessary considering the spread of the global pandemic. But now it has been observed that there is a good query to sales conversion ratio, which is a positive sign for the sector.”

Dhiraj Bora, Head Marketing and Communication, Paramount Group said, “As per the present situation real estate sector is coming with various schemes & offers and are pushing even the fence-sitters to come forward.”