Realty index hits 20-month high on hopes of sops in Budget

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The Nifty Realty index outperformed every other sectoral index in the market, thanks to the government sops for the sector including Rs 25,000 crore funds infusion to revive stalled projects. The sharp cut in corporate tax rate was also gave a boost.

The Nifty Realty index surged more than 30 percent since October 10, 2019 against Nifty50 which rallied 10 percent in the same period.

Indiabulls Real Estate was the biggest gainer among realty stocks, showing 130 percent rally in last three months, followed by DLF (up 79 percent), Prestige Estate (up 23 percent) and Phoenix Mills (up 23 percent).

Now the run-up which we have been seeing for last few days is largely on hope of more such measures in the forthcoming Union Budget 2020 scheduled to be presented in the parliament on February 1.

Industry players largely expect some GST relief, one-time subvention scheme, Single Window Clearance system, additional income tax deductions for buying house etc.

“The developers and buyers hope that the 2020 – 2021 Union Budget will introduce reforms like tax sops and correction in prices which will benefit and stabilize the industry. The industry anticipates that the budget should address the long-term expectations for the industry in terms of status, single window clearance and reforms in the Goods and Services Tax (GST),” Anuj Khetan, Director at Vijay Khetan Group told Moneycontrol.

The real estate market in India is also expected to address the liquidity crisis faced by the government potentially which affected various segments, he said.

Ketan Musale, Director at Dotom Realty also expects the upcoming budget to hold provisions to restore the faith among the developers by including long-awaited measures like the introduction of a dedicated Single Window Clearance system for speedy clearances and approvals of the projects.

For the homebuyers, he expects the Budget will include additional income tax deductions for the customers buying housing units under the affordable segment.

Indian real estate needs to be made more attractive to foreign investors has been another demand from industry players. The budget is an ideal platform to announce further incentives that will attract more foreign investments into Indian real estate.

“The entire real estate sector should immediately be granted industry status to make it eligible to avail finances from banks on lower interest rates. However, we expect this budget will further help in providing the much-needed fillip to the housing segment,” Musale said.

Last week, Moneycontrol learnt from sources that Prime Minister Narendra Modi has been doing several meetings with industry players and bureaucrats before the Union Budget which indicated that the government may be preparing big bang budget with the intention to revive economy.

“With GST, stamp duty, income tax, and capital gains tax already a burden on homebuyers; an income tax rebate could be provided for new home buyers. The real estate sector has been going through a cash crunch and the current NBFC crisis has worsened it. Therefore the industry hopes, the government will help the sector in raising funds from other sources by relaxing norms,” Praveen Shetty, Vice President – Marketing at Runwal Group said.

“We hope for a budget that is conducive and propels the growth of the economy, boosts the real estate sector, benefits the homebuyers and provides relief to the developer community,” he added.



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