New Delhi: Enthused by the Budget proposals, realtors' body NAREDCO today said the 'infrastructure status' granted to affordable housing along with other tax sops would help revive the sluggish property market.
The supply and demand of low-cost homes would increase as both existing and new players are expected to enter into this segment with reduction in borrowing costs after infrastructure status to affordable housing.
NAREDCO, however, demanded that the government should encourage public-private-partnership (PPP) model for the development of affordable housing projects in view of high land cost.
"With infrastructure status to affordable housing, liquidity in the sector will improve and borrowing cost of developers will also reduce. This will encourage both existing and new companies to enter this segment," NAREDCO Chairman Rajeev Talwar told reporters here.
He said there will be huge development in affordable homes category, which has maximum demand.
"As there will be huge supply to meet demand, the prices are also expected to be low in affordable housing segment," Talwar said.
Welcoming the Budget, NAREDCO President Parveen Jain said the borrowing cost of developer for construction of affordable homes would come down to below 10 per cent from 14-15 per cent in any other normal project.
Such projects would now be able to attract investments from institutional, pension and insurance funds and external commercial borrowings at an attractive rates, he said.
He, however, said the government should have created a fund to bail-out stuck projects as demanded by NAREDCO in its pre-Budget memorandum.
Jindal Realty MD & CEO Gaurav Jain said the affordable housing segment would also get significant boost from the Budget proposal to extend completion period from 3 years to 5 years and change in the measurement norm from built-up area to carpet area.
Yesterday, Finance Minister Arun Jaitley had said that affordable housing is one of the thrust area and proposed certain changes in the scheme for profit-linked income tax exemption for promoters of affordable home.
"First of all, instead of built up area of 30 and 60 sq meter, the carpet area of 30 and 60 sq meter will be counted," he said.
The 30 sq meter limit will apply only in case of municipal limits of four metropolitan cities while for the rest of the country, including in the peripheral areas of metros, limit will be 60 sq meter.
