Union Budget 08-09: No-bad is Good for Property Sector

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Author: George Gonigal

Article source: http://www.articledeshboard.com/. Used with author's permission.

Although the Union Budget 2008-09 does not bring any explicit benefit for the Indian real estate sector, restructuring of tax-slabs is likely to enhance liquidity in the economy. As a result, people wishing to buy real estate for themselves will have higher disposable income saved out of tax breaks, and this way a number of people would either be able to buy property or at least save for the down payment, in case they opt for a home loan.

A large number of people in the middle income group will be able to afford equated monthly installments of home loans owing to tax benefits, and the slowing demand in the residential property markets may witness revival. Banks, which were suffering from slipping growth rates in home loan segment may also witness an upsurge.

According to Sanjay Chandra, managing director of Unitech, "The budgetary provisions will bring down the cost of construction due to reduction in duty and central value-added tax, and the benefit will be subsequently passed on to the customers." Chairman of Parsvnath Developers, Pradeep Jain, at the other end, was expecting the grant of industry-status to real estate in this budget. Real estate development is capital intensive and it needs industry status in order to access organised routes of financing, he says. The budget, however, did not address the issue.

With regard to commercial property markets of India after budget, Mr Rajnikant Agrawal of CoreNet Global says that the outlook for the industry remains optimistic and that the sector can look forward to continued expansion during 2008. "In general, corporate rentals are steady with a minor upward movement being reported in Central Business Districts (CBDs) and off CBD areas in most of the cities across the country."

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