Realty Check | Day 7 | Adhil Shetty: Real Estate Sector is Buzzing with Positivity

14 Aug,2014

By Adhil Shetty


The real estate sector once considered to be the sunshine sector of the Indian economy is slowly bracing itself for the good times once again. The sluggish period of the last couple of years triggered by rising inflation, falling sales and high real estate prices seems to be stabilizing.


The good news for the real estate sector started with the announcements in the annual Budget where the newly formed government prioritized its commitment to revive the sagging fortunes of the sector. The multi-dimensional announcements from the introduction of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) to focus on developing 100 new smart cities and emphasis on affordable housing saw the real estate sector is buzzing with positivity.


Capital influx for the sector: The real estate sector has always been struggling to raise adequate capital due to various reasons. The government’s announcement of reducing the size of projects eligible for foreign direct investment along with reducing the minimum investment limit for FDI means more capital inflow is likely to enter the Indian markets. The re-introduction of Real Estate Investment Trusts is also helping real estate companies raise capital from the financial markets as people are investing in Real Estate Investment Trusts owing to the massive upside of the real estate and infrastructure sector in coming years.


Affordable housing: a win-win situation: End-users often complain of the rising real estate prices in the country. With the focus shifting towards affordable housing, real estate companies would now be able to complete their projects well within their timelines while end-users can finally get affordable housing options. With the allocation of Rs 4000 crore for low-cost housing alone, there is no doubt that the sector can trigger massive sales helping real estate companies shift their attention to low-cost housing projects at a bigger pan-India level.


Incentives on home loans likely to boost sales: With easing of inflation and tax incentives announced in the annual budget for home loan borrowers, more people are likely to take home loans to reduce their tax liabilities. The home loan rebate on self-occupied property has been increased from Rs 1.5 to Rs 2 lakh while income tax deduction limits under Section 80C on repayment of principal amount on housing loan has been increased from Rs 1 to Rs 1.5 lakh.


Real Estate watchdog remains an issue of concern: The lack of a real estate watchdog remains a primary concern for both domestic and NRI investors. With an increase in the number of complaints against various builders and developers across the country, end-users often find themselves running from pillar to post to get their issues resolved. Once a real estate sector watchdog is put in place, the realty sector can reach its massive upside bringing in good days to end users, investors and real estate companies alike.


Coordinated by Shobhana Nair

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