Rental housing may emerge as new biz opportunity, feel realtors
Times of India | 24 July 2024
Kolkata: Rental housing with dormitory-type accommodation could be the new asset class for investment and could allow larger developers and investors a way to invest in real estate while ensuring good rental yields, developers in Kolkata told TOI after finance minister Nirmala Sitharaman proposed the introduction of enabling policies and regulations to facilitate growth of this sector.
The finance minister also announced a provision of interest subsidy to facilitate housing loans at affordable rates. But developers were cautious in assessing its implication in the absence of any clarity on whether the credit-linked subsidy scheme (CLSS) that was in vogue would be reintroduced for affordable housing.
“The budget has allocated Rs 2.2 lakh crore for urban housing over the next five years. This increased funding should accelerate urban housing projects, improve urban infrastructure and enhance living conditions in cities, attracting more investments into the urban real estate market,” said Sanjay Jain, managing director of Siddha group that focuses on affordable housing that has shrunk in Kolkata from 50% in 2019 to 35% now.
Merlin group chairman Sushil Mohta said the affordable category needed to be re-defined from units priced up to Rs 45 lakh to Rs 75 lakh in metros.
Owners of ancestral property are worried about the implication of restructuring the long-term capital gains tax on property sale that makes tax outgo higher despite the reduction in tax rate from 20% to 12.5%. “This proposal is a silent killer for those who have owned property for a while and want to sell now,” said Mohta, the Credai Bengal president.
“Older properties had the benefit of indexation, after removal of the same the tax liability will increase on the seller. This could have a negative impact on sales. Over time, this could rationalize as newer apartments/projects will have a lower tax incidence,” said Belani group director Nandu Belani, the national vice-president of Credai.
Developers were, however, enthused about the rental housing with dormitory-type accommodation proposed in the budget. Real estate consultancy firm Knight Frank India director (Kolkata) Abhijit Das expects it could emerge as a new asset class. “This is a very interesting concept and should have a good demand in the healthcare, IT and education sectors,” he said.
Primarc group director Siddharth Pansari felt the possible areas for development of rental housing could be Salt Lake, Rajarhat, Joka and other areas in Kolkata that have good transport connectivity. Pansari, who is Credai Bengal president, felt changes in personal taxation could also have a positive impact on home-buyers’ ability to spend more in housing.