Vinod Sharma

Head of private broking & wealth mgt

HDFC Securities

We studied seven large real estate players of the country. They have collectively raised Rs 10,000 crore in equity in last one year. This is likely to bring down their net debt-to-equity ratio from 1.2 to a very reasonable level to 0.75.

But as per the Union budget, a 10.3 per cent service tax will be charged on 33 per cent of the price of an apartment in case of an under-construction property, which effectively means a 3.3 per cent tax on the total value of a house.

Service tax on preferential location and internal and external development of residential and commercial complexes will also hit real estate developers. Non-extension of Section 10A/10B benefits to STPI is also a big negative for the IT park development business of real estate players.

The liberalisation of income tax for individuals will lead to higher savings, which in turn can lead to spending on housing. This is a major positive for the sector. The extension of 1 per cent interest subvention on housing loans up to Rs 10 lakh, where the cost of the house is not more than Rs 20 lakh, too, will benefit developers of affordable housing projects. HDIL’s Virar project and Unitech’s Unihomes projects will benefit from this.

The increase in allocation to

Rs 1,270 crore from Rs 150 crore last year under the Rajiv Gandhi Awas Yojna focused on slum development and urban poor is also a positive for slum rehabilitation players like HDIL.