Your browser version is 8.0 and the minimum required version for this
website is 9.0 So please use IE 9+.
click here to upgrade IE
Facebook Icon
Twiiter Icon
Youtube Icon
Google Plus Icon
LinkedInIcon
Great Place To Work Logo
Call:   +91 89 2854 1424


Gera in News
 
 
 

Buget 2015: Wish list, expectations for real estate industry by Rohit Gera

Indiainfoline.com - 11 February, 2015

On the back ground of a negative sentiment, the government must take definitive steps to deliver on its promise of "ache din".

Wish list for the real estate industry from Budget 2015:

On the back ground of a negative sentiment, the government must take definitive steps to deliver on its promise of "ache din". Citizen lives in a world of instant gratification. People do not have the patience to wait for the structural reforms to trickle down to them. The finance minister therefore needs to take steps to now provide citizens with clear benefits.

The Governor of the RBI has already reduced rates by 25 bps. This however, is not adequate to jumpstart the real estate sector. We need out of the box bold decisive moves an example of this could be to offer single home buyers an extra 100% deduction of the interest they pay for their homes for a period of 5 years. 

The effective interest rate for customers works out to 7% and the revenue loss for the exchequer on account of this additional deduction will be more than offset by the revenue gain on account of all other taxes on the home.

Our expectations are therefore very high the government must take clear and unequivocal steps that affect the pockets of the average citizens.

Budget Wish list:

  • Increase deductions towards rental income to incentivize and boost rental housing in India.

  • Disallow long term gains on sale of property if TDS is not done at the time of purchase. Increase compliance.

  • Reintroduce the NDAs provision of 80-IB Tax incentive to develop housing projects  with stringent provisions. This will result in more supply and lower prices.

  • Modify registration act deny registration of property if TDS Certificate and Completion Certificate are not produced.

  • Permit 5 year 200% interest deduction for single home buyers. Net 7 % interest boost for the industry and revenue.

  • Introduce special residential zones like SEZs to boost low cost home supply. Use existing SEZ processes.

Current scenario of the industry.Trends and key challenges:

The Indian real estate industry has been under stress for over the past year. Real estate development is a highly capital intensive business and for the most part, the residential segment is funded through customer sales proceeds. Developers therefore do their budgeting with this assumption and therefore, for the most part, finance costs on construction of the project are not factored in the proforma profit calculations.  As a result, when sales are slow as they have been, developers  are forced to borrow and the interest costs eat into profitability.

This gets further compounded when construction costs rise more than the increases in the sale prices of the apartments. This is the scenario the real estate industry has found itself in over the last year. Costs are up, sales are down. This has led to stress for the real estate developers.

In 2009, in spite of the continuing negative sentiment based on the global meltdown, the UPA re-election led to an instant impact to the stock and real estate markets.

This time however, even though the mandate has been far more decisive, the real estate segment has not seen the turn in customer sentiment and purchase. I believe this is because people are waiting to actually see the benefits to their pockets of the "ache din" promise by the government.

Once this happens, the existing need for homes will translate into demand.

The author is Rohit Gera, MD, Gera Developments.

- See more at: http://www.indiainfoline.com/article/news-sector-real-estate/buget-2015-wish-list-expectations-for-real-estate-industry-by-rohit-gera-115021100300_1.html#sthash.bgjCWoTL.dpuf

News Archive
 
 
 



Testimonials

It has been a wonderful experience in owning a commercial space at Gera's latest offering in Goa GERA GRAND.

Read More

How has your experience been of owning a commercial space with Gera?

My experience has been excellent. I have purchased an office in Gera’s Imperium 2 and a s..

Having a commercial space in and around Panjim was our long desire and this could be possible with Gera’s.

Patto Plaza has ..

First of all I would like to thank  you  and the Gera team for organizing different workshops at our doorstep.
The best thing I have done to my kids is that I  took a right decision to buy a flat in Gera.
Because of this decision , Vishnu could attend  the development workshops that were conducted.
Vishnu was a shy child who didn't like to participate in any of the programmes.
As far as Dale Carnegie workshops is concerned   it  has given him a lot of confidence and was presenting things in a much better way and I can see a lot of improvement in him.In simple words u made a person(..

My son Tattva had been enrolled in the intermediate level and has been coached by the Vishwanathan Anand Chess Academy coach . Tattva has made remarkable strides and will be on his way to get his FIDE rating in November. A lot of credit goes to the mentor for his unique way of handling his students. He has been very patient while working with Tattva on his areas of improvement. In addition before the tournament the coach had voluntarily added additional classes and doubled his efforts to get a better performance out of Tattva. He has shown complete ownership which is commendable. I hope he continues to develop more and more chess players in the coming days.

..