Allowing external commercial borrowings (ECBs) in the low-cost housing segment, the supply of affordable housing projects will increase in the outskirts of Mumbai in areas such as Karjat, Boisar, Nalasopara, Virar, Dombivili etc. on the heels of increased liquidity for budget home projects.
The extension of 1% interest subvention scheme on housing loans up to Rs 15 lakh wherein the cost of the house does not exceed Rs 25 lakh, for another year will also help sustain demand for affordable housing in Mumbai.
The increased allocation for highways and other infrastructure projects will help boost development of Mumbai’s outskirts and increase the supply of housing units there. This will result in price stability and affordability over the long term. The investment-linked deduction of capital expenditure in affordable housing, proposed to be raised to 150% from 100%, will also encourage more supply of low-cost housing in the city.
The reduction of the withholding tax on ECB interest from 20% to 5% will help Mumbai’s affordable housing segment by creating much-needed liquidity for budget home developers. End users will have more money available for home loans with the setting up of a credit guarantee trust fund to ensure better flow of institutional credit for housing loans.
The announcement of central assistance and Japanese participation in the Delhi-Mumbai Industrial Corridor project is a big plus. Areas on Mumbai’s outskirts that lie along the corridor will see increased land values.
By reinforcing the tax pass-through status for all types of Venture Capital Fund (VCFs), there will be renewed confidence levels of real estate private equity investors to invest in cities such as Mumbai (which has seen most of the PE investments post the Global Financial crisis.)