Hyderabad see jump in construction activity with affordable housing catchphrase Budget 2017

With affordable housing being the catchphrase of Budget 2017, the focus could well shift from core areas of Hyderabad to its cheaper peripheries, said market analysts post Arun Jaitley's near two-hour-long speech on Wednesday. The bouquet of incentives that the finance minister showered with this segment, however, left industry biggies disappointed.

“Though a lot of people think affordable homes in Hyderabad does not have the potential to develop Personally i think otherwise. The city's outskirts, where land rates are cheaper, are perfect destinations for such ventures that have up to now not been economically viable,” said Sandip Patnaik, managing director (Hyderabad) of global real-estate services firm Jones Lang LaSalle. He felt the benefits extended to this segment were very encouraging.

Aside from an increased carpet area, affordable housing was also awarded the ‘infrastructure status '. This can lead to bigger homes for buyers and lower interest rates for builders and developers in Hyderabad. The typical projected cost of those homes is Rs 15– Rs 20 lakh.

“This can push more local players to occupy small projects they shied away from until now. Currently, the city has pretty much two or three firms that build homes under 900 square feet,” said S Ram Reddy, president, Confederation of Real Estate Developers'Association of India (CREDAI – Hyderabad). He said, “Increased activity in this segment will even enhance sales among customers, primarily from the low middle class.”

That the us government has eased the burden of capital gains tax on land owners – element of joint development agreements – will further make certain that the cost of these Hyderabad properties doesn't shoot northwards, experts said. “As yet, land owners had to cover a hefty capital gains tax – anywhere between Rs 200 and Rs 300 per sft of the land owner's share -- the moment they signed a cope with a developer. Now, they are able to pay this only once the project in Hyderabad is completed. This can provide them with a rest and also make land transactions smooth,” Reddy said.

Another high point of the Budget, according to the industry is the reduction in holding period for capital gains tax on immovable properties from three to two years. Which means that a person is now able to sell his or her house within couple of years of shopping for it, without having to pay this tax. The ceiling was four years until now.

“This can attract investors to the Hyderabad market, that will be largely end-user driven. If investors can exit a project within couple of years, they would become more prepared to park their money in the city,” said Veera Babu, managing director (Hyderabad) of Cushman & Wakefield, another leading real-estate service provider.