Impact of Budget 2011-12 on Indian Real Estate Industry

Indian real estate sector is a key contributor in the economy and has multiplier impact on allied industry as well as overall economy. The sector, in a way has a direct bearing on every person’s life – be it the house we stay in, workplace where work, commercial complexes/ shopping malls for leisure etc.
The government has proposed in the Union Budget 2011-12 that low-cost housing loans up to Rs 15 lakhs will be eligible for 1% interest subsidy.  The existing interest rate subsidy is on loans of Rs 10 lakhs where cost of house was Rs 20 lakhs. Under budget proposal, norms for cost of house have been also raised to Rs 25 lakh. So, next year, home buyers will get 1% interest subsidy on loans up to  Rs 15 lakh where cost of house was up to Rs 25 lakh. Priority sector lending for housing loan limit is raised to Rs 25 lakh for vs. Rs 20 lakh.
The increase in upper cap is welcome but it does not make much sense for tier-1 cities as cost of the flats is already beyond possibilities. The real estate companies will focus on tier-2 &3 cities where cost of land is still within Rs. 500 psft. The tier -2 & 3 cities will get the boost from this budget. In metro cities like Delhi, there is no option available in this budget except in some remote suburbs such as NOIDA- Extn, Greater NOIDA, Ghaziabad etc.
What are missing in this budget?
1. The cost of real estate should be reduced by reforming and adopting multipoint strategy. Some of the items to be worked upon are
  • ·          Reduction in building material cost which means price control on cement, reform in building material imports
  • ·         High stamp duty is a major cause for honest citizen to turn their money as black money, this fact is accepted by or FM too.  But there is no provision to reduce the stamp duty and make it uniform across the country
2.       The rising interest is another  very important concern of customers but no step is taken to resolve this concern

In short real estate industry is not given a due importance in this budget which will not only affect the real estate industry, but also common man and nation’s economy too.

This post is personal opinion of

Mr. Avdhesh Goel FCA, ACS, AICWA
Jt. Managing Director,
Earth Infrastructures Ltd
http://www.earthinfra.com

Visit my linkedin Profile at: http://www.linkedin.com/profile/view?id=92008750

Your constructive comments are most welcome at avdheshgoel @ earthinfra.com

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About Avdhesh Goel FCA, ACS, AICWA

Mr. Avdhesh Goel is a professional turned entrepreneur currently working as Joint Managing Director at Earth Infrastructures Ltd. He is an accounting & finance professional with three of the top class industry recognized qualifications CA, ICWA and CS. After being in professional service successfully for two decades, he ventured to create a real estate brand in the country which is based upon the principles of excellence in quality, customer experience & business ethics. His strong determination, out of the box vision & innovation beyond imagination has turned his brand to be worth 1000s of crores. Such is the legacy of Earth Infrastructures Limited under the leadership of Mr. Avdhesh Goel Today, EIL is a pioneer in construction and real estate industry. The Earth Infrastructures is into both commercial and residential projects. The Earth Towne (Noida & Gurgaon) and Earth Sapphire Court (Noida) are among many projects which stand as testimonials for the brand. The Earth Infrastructure has also leapt in construction and development of farm-houses, resorts, luxury villas, hotels and corporate buildings Real Gains Estate Pvt. Ltd. is another company promoted by Mr. Avdhesh Goel. It is a sole selling agent to market properties in SEZ, Software Technology Parks (STP), Hotels, Shopping Malls and residential apartments IQ Gains - the most recent initiative of Mr. Goel, speaks of his leadership vision in creating a common networking platform for High Networth Individuals (HNIs) & intellectuals in Delhi/NCR. This way, he proved himself as a true networking soul. IQ Gains – The Elite Club, is a true opportunity for HNIs , Entrepreneurs and Professionals to unleash the benefits of Intelligence Sharing, Innovation in Business Ideas, Investment Opportunities, Finding Trade & Commerce Partners, Professionals or Service Providers, Angel Investors, VCs etc He has released many papers on Business Intelligence, Innovative Entrepreneurship, VC & Realty Sector . Specialties . Mr. Goel is a proven ready reckoner in facilitating and advising the right investment options in Real Estate, Angel Investment, Private Equity, Venture Capital etc. Any businesses seeking finance can also approach him with their project reports. Tags: Construction , Real Estate , Investment , Properties , Builder , Networking , IQ Gains Club , Real Gains , Earth Infrastructure , Developer , Construction , Taxation , Finance
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