Sunday, January 25, 2009

Budget 2009 and Real Estate


The Expectations from Budget 2009 across all sectors were big and some would say unreasonable as a new Government would have naturally opted for continuity and a staggered roll out of policies as the Budget is not the only policy instrument available to the Government today.

In general, the budget is a mixed bag which focuses on the core areas of development to ensure growth in the economy given the difficult circumstances globally. Hence the stress laid on infrastructure development which is needed to sustain growth and strengthening the rural economy which will ensure that the growth is inclusive and boost consumption and consequently demand for goods and services.   

The increase in spending on infrastructure and the various ongoing infrastructure and rural housing schemes will give a boost to the Real Estate industry by way of increase in the value of Real Estate along the tracts of infrastructure development and all surrounding areas.

It was expected that there will be  Fiscal Incentives to developers to develop budget homes targeted at the low and middle income group which can housing more affordable to the target groups where there is great demand but low supply with  caps for pricing the product to ensure that there is no profiteering taking advantage of the policy. However nothing came through except for an amendment in sec 80 I (B) which plugs the loop holes used to subvert the intent of providing low cost smaller size units.  
 
The tax incentives provided to the common man could lead to an increase in disposable income and the macro steps taken by the Government to increase expenditure to kick start growth and increase employment will have an overall impact on all sectors which may see a revival very soon. The consequent improvement in sentiment, hope for stability in jobs, reversal of wage cuts, decrease in housing loan rates, etc which can happen in the near future , will positively impact the Real Estate market with a revival in demand.   
 
A.Shyamsunder
ED & COO – Disha Direct Marketing Services Pvt.Ltd.