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BW Businessworld

Infra Status For Affordable Housing A Game Changer

The infrastructure status will make it mandatory for financial institutions to lend to developers at low cost to affordable housing projects

Photo Credit : Subhabrata Das


The 2017 budget falls under positive light for the real estate sector. As announced in the Budget, infrastructure status for affordable housing will give the much sought after boost in the sector and will be a boon to the home buyers in the low and middle income group. The infrastructure status will make it mandatory for financial institutions to lend to developers at low cost to affordable housing projects.

Developers will in all likelihood pass on the benefits to homebuyers. Real estate experts and analysts viewed the recommendations as highly positive and it will enable a revival to the sector that has been under pressure due to economic recession and demonetisation at the BW Businessworld Budget-2017 Roundtable in Mumbai on 3rd February.

Real estate sector, according to most of the participants in the Roundtable, hope to see a revival in the immediate post-Budget quarter.

“One of the strongest points is the abolition of Foreign Invest Policy Board (FIPB) as it will make the entry of foreign developers easy to work with local developers. It will in turn enable faster recovery and also to expedite the fulfilment of the government dream of housing for all,” said Manoj Paliwal, chief financial officer, Omkar Realtors and Developers Pvt Ltd.

“Real estate being the second largest employer in the country, the overall sectoral revival will also help creating more jobs both in the real estate as well as several of its ancillary sectors,” he added.

Gulam M Zia, executive director, research and advisory, at consultancy giant Knight Frank, opined that the major thrust of the government to infrastructure is the highlight of the last two Budgets of the new government and this would help expansion of development into more regions and connectivity between them, which will not only help real estate sector but also the sectors like steel, cement, logistics among others in addition to creation of more jobs in the country.

The introduction of Real Estate (Regulations and Development) Act was the other positive thing that happened in the sector. This has brought in certain discipline in the sector, which is good for both the serious players in the industry as well as the customers, Zia added.

“The real estate market is likely to see more project launches in the affordable housing segment,” says Jitendra Mehta, director-finance, at Kanakia Group. The other benefits that builders will get under the new Budget include a profit tax holiday and thus more builders will enter this segment, he said.

According to Rohit Chokhani, director, Lakshachandi Reality, smart city projects envisaged as part of the overall infrastructure focus is going to be a game changer in this sector. “The extended holding period for developers from three years to five years to complete the project will also help the sector positively as approvals are of often the biggest concern in the sector and this always takes the maximum time,” he added.