The real estate sector is still reeling under numerous problems and, stakeholders are eagerly awaiting this year’s budget to do something substantial by the Govt for the sector. In the last year’s budget, limited access to funds, growing cost of debt to both developers and property buyers and high construction dampened the spirits of the developers. The new year started with a negative outlook for the real estate sector due to weak overall demand and high construction costs.
A recent Estate Report by Knightfrank, said that around 44 per cent of housing units under Rs.35 lakh are unsold in seven major cities in the country which is a poor reflection on the affordable housing sector scenario. The affordable housing sector is considered to be a key to real estate revival.
The cash-strapped and debt-ridden developers are looking for incentives such as land and building cost in capital expenses to fill the huge gap between demand and supply.
The Finance Ministry has a long-pending demand to promote special residential zones (SRZs) through tax incentives and liberalised floor area ratio (FAR) to make affordable housing a viable business proposition for developers who complain of squeezed margins.
Finalising guidelines for real estate trusts and mutual funds and opening up of external commercial borrowing for the sector are expected to reduce cost of funds and ease property prices. This is expected to go a long way in boosting affordability of the houses.
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