June 5, 2024: With the results of the Lok Sabha elections out on June 4, 2024, for third time in a row, the NDA will form the government with the swearing in of the prime minister to be held on June 8. “In the third term, the country will write a chapter of big decisions,” said Prime Minister Narendra Modi in his speech yesterday.
In the previous terms, implementation of national policies have instilled great confidence in the realty sector, as mentioned by industry reports. “RERA and GST implementation, national policies specific to logistic parks and data centers and overall infrastructure push in the form of National Infrastructure Pipeline and Gati Shakti National Master Plan have instilled a sense of confidence amongst various real estate stakeholders in the last decade. These long-term measures to balance growth while maintaining fiscal discipline will be pivotal to drive equitable public and private investment in the economy. A progressive and an economically viable vision is inevitable if the real estate sector is to reach a $1 trillion market, forming 13-15% of the country’s GDP by 2030,”said Badal Yagnik, CEO, Colliers India.
In the new term, the real estate segment, the second largest employment generator in India, next only to agriculture, has set a lot of expectations from the government.
Sunil Sisodiya, founder, Geetanjali Homestate, said, “The recent election outcome instills confidence, with expectations of sustained policy continuity and measures to bolster economic stability. Anticipated reforms, including potential adjustments to GST and enhanced financing options, signal a brighter future for developers and homebuyers alike.”
Tax benefits
Amit Goyal, managing director, India Sotheby’s International Realty, said, “The return of an existing government to power positively impacts the Indian economy and the real estate sector. Political stability significantly enhances confidence among both consumers and investors. We are a young country, poised to become the third largest global economy by 2027 and demand for homes is inevitably going to remain strong. We do believe that several of the measures brought in by the BJP led government such as RERA need far more fine-tuning, to be effective in spirit. NDA 3.0 will also be presenting the Union Budget soon and this will be an opportune time to relook at the GST burden on under-construction homes and increase the tax breaks on home loans, to encourage wider home ownership.”
The infrastructure sector along with the real estate sector is key for achieving the goal of ‘Vikshit Bharat’ that forms an important part of the government’s mandate for the third time. “We are confident that the new government will continue its focus on both infrastructure development beyond metro and large cities and on the real estate sector, as they have a multiplier effect on the economy. The real estate sector has seen good growth in the last few years and is poised to achieve new heights. We hope the new government will extend the income tax benefits on home loans in the new income tax regulations as well. We also expect the new government to address some of the challenges faced by these sectors and take the lead in convincing the GST Council to ease the burden of Goods and Services Tax (GST) on both developers and consumers,” said Pradeep Aggarwal, founder and chairman, Signature Global (India).
Agreeing on the lines of tax benefits, Samir Jasuja, CEO and MD of PropEquity, said, “Real estate prices have surged in recent years, nearly doubling in the last four years. On the contrary, tax deductions offered on home loans haven’t kept pace. In effect, the benefit of these deductions has been halved taking into account the rising property values. In order to achieve the government objective of the $1 trillion real estate industry, reforms are needed to incentivise both buyers and investors. Reintroducing tax benefits that were previously available could be a significant step. For example, landlords could deduct their entire rental income against the interest paid on the property’s mortgage. Restoring such benefits would encourage investment and boost overall property purchases. This will benefit homeowners a great deal.”
Affordable housing and industry status
One critical area that needs attention is affordable housing. “Despite its importance, this sector has seen slower progress. In Q1 2024, affordable housing accounted for just 20% of total home sales, a drop from previous years. This underscores the need for targeted actions to rejuvenate this segment, aligning it with middle and high-end sectors, which have seen healthier growth. Moreover, with approximately 70% of our workforce being unskilled, there is a pressing need for enhanced training and education. Developing a skilled workforce is essential not only for the growth of real estate but for the overall economic advancement of the nation,” said, Chandresh Vithalani- Partner, Palladian Partners Advisory.
He added that despite all this, May 2024, has seen a 22% uptick over the previous year in terms of registrations and this trend is expected to continue under the ongoing leadership of BJP. “The re-election of the BJP for a third term, now with a more robust opposition, underscores a balance that is vital for democracy and industry alike. Together, with a stable government and an effective opposition, we can look forward to a future where both democracy and development thrive, benefiting all sectors, including real estate. This is a pivotal time for us to harness the potential of our industry and contribute meaningfully to India’s growth trajectory,” said Vithalani.
Industry status is something that the segment has been asking for a long time now. Shrinivas Rao, FRICS, CEO, Vestian, said, “ The real estate market sentiments are optimistic as the stock market is moving northward, especially the BSE Realty Index which has crossed 8,400, reaching the highest level since 2008. Furthermore, it has grown by 4-5% in the past five days on the back of positive expectations from the newly elected government. We expect the newly elected government’s uninterrupted focus on infrastructure development and a boost to affordable housing in the coming years. Moreover, the real estate sector should be allocated industry status to ease the availability of funds and increase the participation of foreign investors.”
Investments in crucial sectors
Policies foster economic growth, innovation and a business-friendly environment. “Promoting entrepreneurship and investing in crucial sectors are essential for sustained progress. Stability in governance and a reliable regulatory framework are fundamental to creating a conducive environment for business expansion and investment. By prioritising the needs of the corporate sector, the government can drive economic development and generate growth opportunities,” concluded Suraj Morajkar, MD, Sun Estates Developers.
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