Real estate developers are hoping for a raft of Budget proposals that will enable lower cost of construction, speedier approvals and help increase supply of housing. PS Jayakumar, Managing Director, Value and Budget Housing, believes that FDI requirement should be lowered to 20,000 sq m for residential projects against the current minimum limit of 50,000 sq. m to be eligible for FDI.
The objective is that policy must support rapid construction, which is best achieved through a large number of small projects in a given area, he said in a press release. Builders with less than five years track record should be allowed access to External Commercial Borrowings and the deadline extended beyond March 2013.
Bank finance for construction equipment must be enhanced by giving the credit a priority sector tag to equipment finance for low cost/affordable home building. Mechanisation is key to rapid construction. Bank loans for construction should also be eligible for priority sector. Funds that can invest in residential property should be encouraged.
Budget policies should enable development of organised, institutional funded, rental markets, he said.
Arun Kumar, Managing Director, Casa Grande Private in his expectations of the budget said in 2011, a one per cent interest rate subsidy was provided for loans towards affordable housing. The scope of this subsidy should be broadened to include a wider price band of budget housing to benefit home buyers, especially in lower income groups.
Tax rebates on home loan interests can be increased from the current Rs 1.5 lakh to 2.5 lakh, enabling more investments in real estate. Infrastructure has to be created in the suburbs of cities as development is concentrated in the outskirts. The cost of builder providing the infrastructure is high and this impacts the affordability.