Meeting the hue and cry from different sectors over the additional reforms after her maiden budget, Finance Minister Nirmala Sitharaman announced a slew of credit support and corrective steps to boost the purchase of home, vehicles and consumer goods on Aug. 23.
Here is the perspective of Mr. Shishir Baijal, Chairman & Managing Director, Knight Frank India: “While the contagion of economic slowdown is evident on many industries now, the real estate sector has been facing a prolonged crisis. The twin challenges of weak housing demand and troubled supply side stress may need recurring and long-term government support until we are confidently back on a strong economic footing and experience positive consumer sentiment.
While a series of measures, more specifically for the affordable housing segment, have been undertaken in the recent past; some well-defined and decisive initiatives could help revive the real estate sector.”
Shishir further continued, “It will be of immense support if the government announces measures in the following crucial areas:
- Enhancement of scope of affordable housing to cover houses up to INR 10 million. Such a move will enhance the spectrum of housing market that enjoys the benefits of fiscal, banking and other associated benefits.
- Income tax incentives have been an important consideration for home buyers and hence, a dedicated income tax deduction of INR 150,000 per annum for principal repayment on housing loans will nudge indecisive home buyers to consider a house purchase.
- While system-wide liquidity remains inadequate, banks and NBFCs have steered clear from lending to real estate. This is a very critical area and measures to restore the confidence of these important financiers should be re-established by some form of government intervention.
- In the wake of a large number of stalled projects on account of liquidity crunch, consumer sentiments have further dampened. The government can consider a dedicated stressed assets fund that would underwrite stalled projects and ensure eventual completion of these. This will help lift sentiments of exiting as well as prospective consumers by allaying fears around non-delivery of projects.”
Find many more insights and opinions of Mr. Shishir Baijal with respect to real estate sector.