The real estate sector is betting big on major reforms to induce homebuyers and fence sitters to make purchases. There are major expectations of investors riding on the Union Budget for 2018-19. This will be the last full budget presented by the current Central Government prior to the 2019 Lok Sabha General Election. The introduction of major structural reforms such as GST and RERA have paved the way for greater transparency and accountability in this sector. The sector is now witnessing a return of buyers and a desire from real estate developers to clear their stocks before launching new projects. Developers are more accountable than before and customers are also more safeguarded under the provisions of RERA.
The real estate sector will be gunning for infrastructure as part of the Union Budget 2018. Even though the affordable housing sector has received infrastructure status, the entire sector is hoping for this tag since it will enable it to garner funds at more attractive rates of interest. This will also open up opportunities as far as commercial borrowing is concerned. This will also boost the entire sector and economy in turn. Single-window clearance is also expected from the Union Budget 2018 by real estate developers and home loan players. The real estate sector has risks due to the time taken to garner several approvals for projects. This delay can range between 9-15 months and even more. This impacts returns from the project greatly. There should ideally be a single window clearance system which ensures smoother environmental clearances and approvals within specified deadlines. This will help in faster delivery of projects to buyers.
A rationalization of the existing GST rate of 12% is something that many real estate developers are also expecting. Stamp duty could also be merged into GST or be abolished altogether. REITs should be encouraged and working out better tax blocks could usher in these industry boosting developments. There should be lowered land costs for affordable housing projects in various areas. High land costs make it unviable for real estate developers to buy land in major cities for such projects.
The biggest expectation pertains to lower rates of interest on home loans. A drop between 150-250 basis points will attract more buyers and drive up sales volumes due to more home loans being taken in turn.