Real estate developers were a disappointed lot with the budget not presenting any major step to bail out the sector that is facing the brunt of the liquidity crisis plaguing the financial sector for the past 18 months.
The government retained its focus on affordable housing but did not make any specific announcement to revive housing. The finance minister proposed to extend a tax holiday offered to builders developing affordable housing projects. “To boost the supply of affordable houses, the tax holiday is provided on profits earned by developers on affordable projects approved by 31 March 2020. I propose to extend the date of approvals on affordable projects for availing this benefit by one more year again," she said.
The government has also proposed to extend by one more year the additional deduction of ₹1,50,000 for interest paid on home loans taken for buying affordable homes. In her last budget, the minister had increased the interest deduction to ₹3,50,000 for houses priced below ₹45,00,000 as against ₹2,00,000 earlier for loans until 31 March 2020.
These announcements are however unlikely to be enough to revitalize the real estate market where several projects have been stalled for want of funding, according to several developers and property consultants.
“As far as real estate is concerned, its only affordable housing. I think the misses are more than what has been given. We have been suggesting that the government provide a one-time rollover of loans like it did in 2008, and also come up with a better rental housing policy given the success of the commercial leasing segment because that’s where all the foreign direct investment money has come in. So, a large amount of work needs to be done," said Rajeev Talwar, chief executive officer, DLF Ltd.
Unsold luxury housing stock (homes costing more than ₹1.5 crore per unit) grew 10% in the top seven cities by 2019-end, according to data from real estate advisory firm Anarock Property Consultants. These cities had a total of 89,200 unsold luxury homes at the end of 2019.
Last year saw several realty-focused steps from the government, the key being the ₹25,000 crore alternate investment fund for last-mile funding of stalled housing projects.