Indian Real Estate Forum - www.indianrealestateforum.com - View Single Post - Real budget expectations in the real estate sector

mohan · 02-03-07

Though the Budget did not have anything substantial for the real estate industry, there is one sector that has the developers buoyant - hospitality. Most builders in the Delhi NCR are now keen on entering the hotel industry after the finance minister announced a five-year income tax holiday for two, three or four-star hotels. However, another spin-off effect would be on the land prices of hotel sites - they are bound to go up as a result of the announcement.

The tax holiday also includes convention centres with a seating capacity of not less than 3,000. However, the Budget lays down that the hotels should be completed and begin operations in the National Capital Territory of Delhi or in the adjacent districts of Faridabad, Gurgaon, Ghaziabad or Gautam Budh Nagar during the period starting from April 1, 2007 and ending March 31, 2010.

The Delhi NCR seems to have been the only region that seems to have benefitted from the Budget, courtesy the Commonwealth Games. This will help in making Delhi a world-class city and give a major boost to the hospitality industry, encouraging developers to foray into this sector in a big way.

An increase in the number of hotels will also increase employment and provide a great surge to the tourism industry. However, it will also have a productive effect on the real estate sector as it is bound to increase land valuations for hotel sites in the city.

Last month, a subsidiary of the Delhi-based Eros Group, The Millennium Plaza notched up a five-acre plot for a hotel site in Sector 47, Gurgaon for Rs 255.20 crores. This is bound to go even higher. This step is very clearly aimed at addressing the severe shortage of hotel rooms in Delhi before 2010 Commonwealth Games. However, the Budget has failed to address the key issue here - that of land availability for hospitality use. These tax benefits may even have a counter productive impact as it can lead to increased land valuations for hotel sites in the city. Tax exemptions enhance free cash flows of the project thereby leading to an increase in residual valuations of the project.

02-03-07	#4
mohan New Member Join Date: Oct 2006 Posts: 25 Thanks: 0 Thanked 0 Times in 0 Posts	Hospitality, new mantra for realtors Though the Budget did not have anything substantial for the real estate industry, there is one sector that has the developers buoyant - hospitality. Most builders in the Delhi NCR are now keen on entering the hotel industry after the finance minister announced a five-year income tax holiday for two, three or four-star hotels. However, another spin-off effect would be on the land prices of hotel sites - they are bound to go up as a result of the announcement. The tax holiday also includes convention centres with a seating capacity of not less than 3,000. However, the Budget lays down that the hotels should be completed and begin operations in the National Capital Territory of Delhi or in the adjacent districts of Faridabad, Gurgaon, Ghaziabad or Gautam Budh Nagar during the period starting from April 1, 2007 and ending March 31, 2010. The Delhi NCR seems to have been the only region that seems to have benefitted from the Budget, courtesy the Commonwealth Games. This will help in making Delhi a world-class city and give a major boost to the hospitality industry, encouraging developers to foray into this sector in a big way. An increase in the number of hotels will also increase employment and provide a great surge to the tourism industry. However, it will also have a productive effect on the real estate sector as it is bound to increase land valuations for hotel sites in the city. Last month, a subsidiary of the Delhi-based Eros Group, The Millennium Plaza notched up a five-acre plot for a hotel site in Sector 47, Gurgaon for Rs 255.20 crores. This is bound to go even higher. This step is very clearly aimed at addressing the severe shortage of hotel rooms in Delhi before 2010 Commonwealth Games. However, the Budget has failed to address the key issue here - that of land availability for hospitality use. These tax benefits may even have a counter productive impact as it can lead to increased land valuations for hotel sites in the city. Tax exemptions enhance free cash flows of the project thereby leading to an increase in residual valuations of the project.