‘Infra status to affordable housing will help in foreign funds inflow’

Kolkata, Feb 1 (IANS) Giving infrastructure status to the affordable housing sector, as announced by Finance Minister Arun Jaitley in the Budget 2017-18, will open the door to foreign funds at cheaper cost to developers and attract more investments in the sector, experts said on Wednesday.

Affordable housing developers will also be eligible for government's incentives, tax benefits and institutional funding.

"Affordable housing developers will now be eligible for several government incentives, subsidies, tax benefits, and most importantly, institutional funding. The status could also mean that the government may release land specifically for affordable housing development in central locations of major urban centres in India," said Neeraj Bansal, Partner and Head of Real estate and Construction in KPMG in India.

"With the infrastructure status, developers can access foreign funds at a cheaper cost by way of debt and it will be a priority lending for banks as well. This should result in progress in the sector," said Hemal Mehta - Partner - Deloitte Haskins & Sells LLP.

Tata Housing's MD and CEO Brotin Banerjee said that infrastructure status to affordable housing was a long-standing demand of the sector. "The government has realised that housing and infrastructure can be two pillars to increase GDP and accelerate economic growth," he said.

"Easy and dedicated access to institutional financing, higher limit on external commercial borrowings will attract more investments and assure sustained growth of affordable housing in India, making it the core driving segment for real estate," Banerjee said.

On the other hand, long term financing at lower rates will reduce costs of construction for developers allowing them to pass on benefits to consumers. The new status will increase the resource allocation for the sector, catalysing housing supply and reducing the supply gap, he said.

Experts also say the move will not only allow access of cheaper loans for developers of budget housing but significantly boost the sector in achieving the government target of Housing for All by 2022.

"The affordable housing sector has seen a significant change in the government's existing scheme, with the qualifying size requirements now changed from built-up area to carpet area of 30 sqm and 60 sqm for projects within the municipal limits of the large four cities," Amit Enterprises Housing's CMD Kishore Pate said.

The Finance Minister reduced the holding period for land and buildings from three years to two years for long-term capital gains purpose. "This would help improve investability in properties in comparison to shares and stocks where the period is one year," Bansal added.

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