Union Budget 2011-2012: Mixed bag for real estate sector
Finance Minister Pranab Mukherjee presented Union Budget 2011-12 amid rising inflation, tight liquidity, high interest rate, industrial slowdown, delayed reforms and negative market sentiment.
February 28, 2011 / 17:47 IST
Finance Minister Pranab Mukherjee presented Union Budget 2011-12 amid rising inflation, tight liquidity, high interest rate, industrial slowdown, delayed reforms and negative market sentiment.
He also raised the housing loan limit to Rs 25 lakh for priority sector lending. He said the government would liberalise scheme of interest subversion of 1% on home loan by including loans upto Rs 15 lakh for houses that cost up to Rs 25 lakh.Interest subvention on housing loans is extended by one year.Priority home loan limit hike is positive for companies like Puravankara, HDIL, Sobha Developers.However, the real estate sector was disappointed as it was not given the industry status. The real estate sector currently does not have industry status which has been a plea since quite sometime. This would have made bank financing easier and cheaper for RE companies.What were the expectations?The sector expected fiscal sops in the form of deductions or other incentives for affordable housing. This would address affordability issues and boost residential sales.The real estate sector currently does not have industry status which has been a plea since quite some time. This would make bank financing easier and cheaper for RE companies.Furthermore, rotation of capital is a matter of concern for this space as there is no secondary market available for channelising investments into real estate assets which have stabilised returns. While a draft policy for REIT was issued a couple of years back, no further developments had been made in this regard. Promoting REIT would also enable pension fund investors and insurance companies to invest into real estate assets providing stabilized revenues to meet their return obligations. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
