Budget 2020: Contrary to general perception, it is the commercial real estate segment which stands to gain the most from the Union Budget.
Budget 2020: The nation’s real estate sector had high expectations from the Union Budget 2020. However, as always, only a few demands of the sector received the attention of the finance minister. With the government’s focus on ‘Affordable Housing’, the budget extended the additional deduction of up to Rs 1.5 lakh for interest paid on loans borrowed for the purchase of an affordable house valued up to Rs 45 lakh, by one year, i.e., up to March 31, 2021. Also, the dual tax slab introduced in the budget provides some flexibility to individuals to choose the best amongst the two options. The twin moves may help the cause of ‘affordable housing’ particularly in tier II & III cities.
However, contrary to general perception, it is the commercial real estate segment which stands to gain the most. Setting up of 5 new smart cities under the PPP model, development of 100 new airports across the country along with enhanced focus on infrastructure sector will boost the demand for commercial real estate immensely.
“The announcement of the National Infrastructure Pipeline that includes 6,500 projects across the country and development of 100 new airports among others are some of the measures, which are likely to integrate cities and foster growth. Undoubtedly, these measures are bound to benefit commercial real estate, particularly the office segment, both in metros as well as tier II & III cities,” said Ashish Bhutani, CEO, Bhutani Infra, a renowned real estate player in Delhi NCR, which is developing few commercials including office spaces in the Noida region. It recently forayed in the co-working segment as well.
Agrees Harinder Singh, Chairman and Founder, Realistic Realtors. “The announcement of formulation of the National Logistics Policy and viability gap fund for development of warehouses along with the development of 5 new smart cities under public private partnership is likely to augment the demand for commercial real estate segment across the country.”
In the Budget 2020-21, Finance Minister Nirmala Sitharaman has also proposed to increase the real estate circle rate limit to 10% from 5% for purposes of tax. The move is likely to benefit the commercial real estate segment. “At many places, across the country, the prevailing commercial rate is lower compared to stamp duty rate – the new move will benefit both the buyers and sellers. It will especially benefit the logistic sector and have a positive impact on the entire commercial segment,” explained Yash Miglani, MD, Migsun Group.
With the Finance Minister addressing the major issues concerning the startups such as ESOP taxation, setting up of a single investment clearance window, and raising the threshold for turnover to be eligible for tax exemptions from Rs 25 crore to Rs 100 crore, the startups sector has got a major fillip, which is vital for creation of new employment opportunity especially in key sectors. The move is likely to perk up demand for co-working spaces across the country, which may continue to grow in double digits.