Budget 2014 - 14 : Positive for Indian Realty..

by Mr. Anuj Puri, JLL India

The Union Budget 2014 -15 was presented in parliament under economic circumstances requiring tax revenues to keep pace with targets. The Finance Minister Mr. Narendra Modi  has taken a cautious yet courageous path with his budget announcements and the main key points are as below.

Housing sector..
In terms of relief to the housing sector, the budget has allocated  Rs. 4,000 Crores for low - cost housing schemes. Additionally, the budget has also enhanced the deduction limit on interest payment for housing loans from Rs. 1.5 lacs to Rs. 2 lacs. These 2 factors alone will lead to a vastly improved sentiment for the housing markets.

Infrastructure..

The budget has allocated a total of Rs. 37,880 Crores towards the NHAI (National Highway Authority of India) for the construction of highways, and additional Rs. 3000 Crores to boost road connectivity in the North-East regions.

For the current year (2014), it has targeted the completion of 8500 kilometres of national highways, which are a known real estate catalyst.

Retail real estate..
India’s warehousing sector has received a boost with an allocation of Rs. 5,000 Crores. This exhibits positive implications for Retail real estate and specifically for E-Commerce, on account of a strengthened supply chain, which has been a crucial requirement of this sector.

Apart from this, the budget 2014-15 has not provided any further benefits to the retail sector, which is certainly a disappointment.


REITs

The much-awaited clarity on taxation of REITs was finally delivered in the budget. REITs will be allowed tax pass - through status, which means it will not be subject to tax, provided all criteria for investments & dividend distribution are followed. This has laid the final roadmap for REITs to start operating in India and has opened-up an attractive avenue of raising funds.

Realestonomics..
The Indian real estate industry is in an urgent need to reform &  speed up the approval process for real estate projects. As state and central agencies act individually on real estate approvals without any correspondence with each other, they lead to delay in getting a project off the ground. Thereby increasing the project cost.

The reform is likely to benefit the the government as well, as healthy growth in real estate industry will contribute significantly in increasing state and central government's revenue while increasing the nation's GDP

Market Sentiment improving..
Investment sentiment improving with formation of the new Modi government

Deal of the month ..
The bungalow of renowned Indian scientist Dr. Homi J Bhabha located at Malabar Hill in Mumbai was bought by the Godrej family at Rs. 372 Crore.

Think About It!!
JLL's 8th global real estate transparency index, covering 102 markets worldwide showed that Indian cities have moved up the transparency ladder with improved data availability.

Green Wall ..
The Ministry for Environment, Forests & Climate changed has started a system for online submission of applications for environmental clearances on World Environment Day .

About the author
Mr. Anuj Puri,
Chairman & Country Head ,
JLL India
Land Line: + 91 22 6620 7575.  

E- mail id: anuj.puri@ap.jll.com
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