Housing sector needs focused measures to further bolster demand in 2021

After being hit by the pandemic, the real estate sector seems to be witnessing a decent recovery on the back of stamp duty reduction and a good festive season. Now the sector is expecting moves, which will help rationalise input costs for the developers and will go a long way in expediting project completion, thereby keeping price escalation in control. The industry is also expecting new launches in the market attracting investments from institutions. Speaking to Ritwik Mukherjee of Bizz Buzz, Anuj Puri, Chairman, Anarock Property Consultants, says that from the forthcoming Union Budget, the realty sector expects measures that will sustain the growth of the real estate industry in the coming months and beyond

Given that the real estate sector contributes more than 8 per cent to the Indian economy, are you looking forward to the forthcoming Union Budget for some special measures for the sector?

Have the government and RBI done enough to bail out the economy and, by implication real estate? After all, the realty industry remains one of the most precise bellwethers of the state of India's economy. While the country waits for the first vaccines to roll out, Union Budget 2021-22 presents several opportunities to give the sector a shot in the arm, too. Therefore, the sector has more expectations than one from the Budget.

Multiple measures were announced in 2020 to beat the unprecedented impact of Covid-19 on the overall economy and the real estate industry, Can you please throw some light on them?

Let me point them out one by one. The RBI's massive repo rate cut of 140 bps (leading to the lowest home loan interest rates in over 15 years). A six-month moratorium on EMIs. Restructuring of loans of real estate companies at the project level, At a state level, stamp duty reductions in Maharashtra. A liquidity boost to NHB, and the first real-time deployments of rescue capital from the SWAMIH fund.

Have the government and RBI done enough to bail out the economy and, by implication real estate?

These measures, as announced by the Centre, were proactive and commendable but not surprisingly, given the depth of pain in the real estate sector, they were not enough. The housing industry needs focused measures to further bolster demand in 2021. This year, the demands go beyond the usual suspects of single-window clearance and industry status.

What about the affordable housing sector, in particular?

Affordable housing is very likely to get another booster shot. However, the Budget also needs to focus on the larger market as more than ever before. Homebuyers and investors need focused tax incentives to get mobilised. Also, as the government is aware, developers' liquidity woes need to be alleviated to forestall further market mayhem.

What are the other key demands and expectations of the sector from the FinMin this Budget season?

There are more demands or expectations than one. But the key ones are:

Hike the Rs 2 lakh tax rebate on housing loan interest rates under Section 24 of the Income Tax Act to at least Rs 5 lakh to generate healthier housing demand, most notably in affordable and mid-segment housing.

Personal tax relief, either by tax rate reductions or amended tax slabs - The last increase in the deduction limit under Section 80C (to Rs 1.5 lakh a year) was in 2014 and an upward revision is long overdue.

GST waiver for under-construction homes - The present GST rate on under-construction properties is 5 per cent minus the ITC benefit for premium homes (>Rs 45 lakh) and 1 per cent for affordable homes (

What should the government do to bring in more cash flows from the private sector into the realty sector?

There must be more incentives for private sector investments in affordable housing. Despite the benefit of infrastructure status for this critically important segment, developers are unable to get funding from major banks and NBFCs at affordable cost. The profit margins for affordable housing projects continue to be extremely low. The government needs to address the issue urgently.

Do you think Liquidity has been a great concern?

Yes, it is. The liquidity crunch had a cascading impact across sectors, including real estate. Project delays - the biggest fallout of the cash crunch had severely dampened buyer sentiments in the last two years. Developers need a rational capital flow to keep up the supply pipeline, especially for ready-to-move-in homes which are in highest demand healthy. Increased supply also helps to keep property prices range bound. Finance Minister needs to keep that in mind.