What Will Be The Impact of 2017 Budget on Real Estate Market?

The mini budget presented by our Prime Minister on the eve of New Year is a boon for the middle-class people. After the demonetization, government came up with this mini-budget. In his speech, our Prime Minister announced some schemes under “Pradhanmantri Awas Yojna”.

The schemes are initially for poor class people. These schemes offer loan with relaxation between 3-4% in interest rates. For a loan up to 9 Lakhs, you can get a relaxation of 4% on the rate of interest and on 12 Lakhs, it is nearly 3%.

Announcement was a bit beneficiary for small businesspersons as well. The limit of loan under which government guaranties the loan was increased and doubled to Rs. 2 Crore. Therefore, in a way this is a good time to invest in the residential as well as commercial estate.

In areas like Pune, which has seen the humongous development in last few years, buying a home these days is like hunting in a dark forest. According to the financial analysts, the 2017 budget will surely make an impact on the real estate market.

The people who are looking for properties are more likely to settle for the ready-to-move-in units. Those who had put off a purchase decision after demonetization are likely to be encouraged to take the plunge after the announcement of Budget 2017, as this in most probable condition is going to reduce the property prices and availability of ready inventories will make their dream for home, come true.

By the end of 2016, demonetization bumped real estate market. Pune also faced the effects of demonetization. Most of the things are now dependent upon the State Government’s reaction to the policies of Central Government. There is also a possibility that this budget of 2017 can affect big cities like Pune.

In 2016, about 89,000 units were launched in six major cities of India, which is about 34% less than the units launched in 2015. Out of the total new launches, 28% were in Bangalore followed by Mumbai at 25%, Pune at 23%, and NCR at 15% and Chennai at 9%. The decrease in the number of new launches indicates less interest of buyers in the primary market.

Despite beginning on a promising note, as 2016 progressed, the real estate market in the Pune city, was impacted by several factors and one being the demonetization drive. Developers and buyers alike adopted a wait and watch approach and the number of launches decreased considerably. In 2016, there were approximately 20,470 new launches in Pune and its suburbs, showing a decline of 18.8% over 2015.

Finance Minister Arun Jaitley in his Budget 2017-18 on 1st Feb, 2017 speech has given one of the much needed thrust to the Indian real estate sector. The minister announced that the ‘Affordable Housing’ would be given ‘Infrastructure’ status, which is likely to result in more participation from private industry.

Pune’s proximity to Mumbai has enhanced the accessibility of Pune. The Mumbai-Pune Expressway has made it a much preferable location for investors, while good weather makes it a preferred destination for end-users. Its inclusion in the smart city list just adds another feather to its cap.

The first corridor will enhance the connectivity between north and south Pune. It will become the umbilical cord between Pimpri-Chinchwad, Shivajinagar, and Swargate. The second is expected to be a boon for East-West. Both are expected to be completed by 2020. The existing Lohegaon Airport, a new International Airport is planned at about 14 km west of Rajgurunagar.

The Sangamwadi-Vishrantwadi and the Sangvi-Kiwale Corridor in Pimpri-Chinchwad became operational last year. The Kalewadi-Phata to Dehu-Alandi route is most likely to be operational by 2017.

Pune offers better opportunities to invest in real estate because of its diversified economy, close to Mumbai, improving infrastructure. Once the final notification of the DCR norms are out, the city is most likely to see new launches in the coming years.

According to the latest Knight Frank report titled “Indian Real Estate (Jan-Jun 2016)”, Pune is the best performing residential market among the eight tracked cities.

The bulk of the demand for housing is from the steady migration of professionals and students from other parts of the country. This can be inclined mainly to the people from IT, manufacturing industries, and educational institutions.

Above all, the property values in the city are more realistic as compared to the other metropolises.

The real estate big tycoons like Venkatesh Oxy Group in Pune are pioneering the lifestyle with the combination of luxury and budget. They have many projects in Pune in areas like Wagholi, Kesanand-Theur, Bhosari-Alandi road and mini Township in Shirur. They offer 1, 1.5 and 2 BHK flats in Pune.

Below are some of the bullet points for - why impact of the budget is in favor of real estate developers and buyers to conclude this article:

1)  Affordable Housing has been given the Infrastructure status.

2)  1 crore rural houses will be launched by 2019.

3)  National Housing Bank to refinance Rs 20,000 crore loans.

4)  Real estate developers to get tax relief on unsold stock as liability to pay capital gains will arise only in the year, a project completes.

5)  Total allocation for the infrastructure sector is Rs 3, 96,135 crore.

6)  Rs 2.41 Lakh crore has been allocated to boosting infrastructure for transportation.