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Union Budget 2014 – A timid response to realty industry needs?

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Rightly so, the investment friendly budget stresses on infrastructure and manufacturing sectors improvement, since these are job creating verticals. For real estate sector it promises to spur growth with incentives like bringing slum rehabilitation under the ambit of CSR, allocating 4000 crore towards the creation of low-cost housing, reducing the FDI norms for low cost housing minimum built-up area and introducing of REITs with tax incentives to unlock a new source of financing for cash-strapped developers.

However, the budget falls short on some of the long standing expectations of the real estate industry such as not granting of infrastructure status to the housing segment which in turn limits the access for bank and institutional funding to the real estate sector as well as not offering any sops to developers or project finance companies focused on affordable housing. There are no measures indicated to bring down the spiraling construction costs. Material costs are expected to remain high over the near-to-medium term and bound to restrict realty sector progress.

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