Property/ Real Estate:: Budget FY12 - A Preview -Anand Rathi Research

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Property
We expect the budget to be largely neutral for the property sector.
Surprises could come in the form of increasing priority-sector
housing loans to `3m (from `2m now) and grant of infrastructure
status . In addition, the government’s continuing thrust on the
‘Housing-For-All’ program and emphasis on affordable housing
could result in measures to boost the sector.

Fig 19 – Budget expectations and possible impact on companies
Expected Measures Impact Company
Increase in priority-sector housing loans –
from `2m to `3m
Positive
All companies with affordable/mid-income
housing projects
Re-instatement of 80I (B) benefits Positive All companies
Increase in allotment for RAY Positive Unitech, HDIL, DB Realty, Ackruti City
Increase in tax deduction for first-time home
buyers
Positive
All companies
Infrastructure status not granted for Group
housing, Integrated townships, SRA and
Redevelopment projects
Neutral
All companies
Source: Anand Rathi Research
Expectations
 Increase in allotment for the “Rajiv Gandhi Awas Yojana”(RAY)
 Increase in income-tax deduction for principal repayment (currently
`0.1m) and interest payment (currently `.0.15m) for buyers availing of
home loans.
 Integrated townships, Group housing, Redevelopment projects and
SRA projects may not be granted infrastructure status.
Impact on the sector
Incentives for affordable housing in the current scenario would make such
projects more viable for developers, thus addressing the housing shortage.
Companies affected
 Any positive measures would benefit the property sector since most of
the companies are focussing on the residential segment. Companies
focussing on affordable housing would immediately benefit if section
80 I(B) is reinstated.
 Increase in income-tax deductions would reduce the cost of a loan for
a home buyer, thus encouraging people to have a house of their own,
leading to an increase in demand, and positively affecting all the
companies in the sector.
 Grant of infrastructure status to Integrated townships, Group housing,
Redevelopment and SRA projects would be a huge surprise and have a
positive impact on the sector. Developers would be allowed to raise
ECB for such projects, which would reduce the cost of funds and
enhance liquidity in the sector. Key beneficiaries would be DLF,
Unitech, HDIL, Ackruti city, DB Realty, Orbit Corporation.