The real estate sector, a major contributor to the Indian economy and one of the largest employers, reached new heights in 2023–buoyed by increased property sales and rising buyer confidence. The year 2024 looks to be even brighter. As the time for the Union Budget 2024 approaches, real estate companies are pinning their hopes on strategic policy interventions to continue this trajectory. Amendments to certain laws and regulations related to affordable housing, tax reforms, home loans, sustainable development, and specific recommendations for special economic zones (SEZs) will augment growth of the sector.
Rebate in home loans
A reduction in home loan interest rates and repo rates, coupled with special bank and EMI discounts, will be key to supporting the continued resurgence of the sector. As millennials have become the driving force in the property market, revising the price cap for affordable and mid-segment homes can invigorate their homebuying spirit. Additionally, a hike in the tax rebate on home loan interest under Section 24 of the Income Tax Act, from Rs 2 lakh to Rs 5 lakh, will definitely catalyse housing demand.
Focus on affordable housing
In the upcoming Budget, developers expect special measures from the government to revive this segment. This segment was one of the worst-hit during and after the pandemic, and affordable homes saw a decline in overall sales—to approximately 20% in 2023 from over 30% in 2022. To address this, builders are looking for targeted measures such as revising price caps and introducing incentives for both affordable and mid-segment homes. Additionally, they are looking for tax breaks and a review of Goods and Services Tax (GST) rates to make affordable housing more accessible. These measures aim to enhance the financial viability of such projects.
Additionally, measures such as liquidating cash to SWAMIH fund for developers to complete stalled housing projects would be beneficial. Certain lands that are owned by the government, such as Indian railways, port trusts and others should be released to address land shortages.
Single-window clearance
Builders are emphasising the need for a single window clearance system to expedite project approvals. Streamlining these processes will not only reduce project timelines but also enhance the ease of doing business in the real estate sector.
Sustainable development and digitisation
In line with global trends, real estate developers are urging the FM to prioritise sustainable development, smart cities, and digitisation within the real estate landscape. Further, in alignment with the global shift towards sustainability, we anticipate incentives or subsidies for green building certifications and renewable energy installations in commercial real estate projects, which will benefit the environment and position the sector for long-term growth.
Real Estate Investment Trusts (REITs):
To encourage investment in real estate, realtors propose bringing REIT units into parity with listed equity. Reducing the holding period for long-term capital gain benefits from 36 months to 12 months would make REITs more attractive to investors.
Ease of doing business in SEZs
Developers are seeking simplified compliance for developers and occupants of SEZ parks through a single window clearance system. This would streamline processes, making them more appealing for investment. Concessional tax rates or tax breaks for both developers and SEZ units should also be proposed to retain its draw.
To reduce timelines, realtors are urging the government to ease the denotification process for SEZs. Relaxing the process of obtaining state-level NOCs and providing in-principal approval would expedite projects and enhance the ease of doing business in SEZs.
Conclusion
The expectations of the real estate sector from the Union Budget 2024 in India are high, driven by a dynamic economic landscape and the need for sustainable growth. Developers anticipate proactive measures that address the challenges faced by the sector, including streamlined regulatory processes, financial incentives, and policies that promote affordability. A forward-looking Budget that aligns with the evolving needs of the real estate market can serve as a catalyst for revitalising the sector and contributing significantly to the nation’s economic development. As we await the unveiling of the Budget, the hopes and aspirations of real estate stakeholders remain anchored in the belief that the government will provide a conducive environment for the industry to thrive, fostering a positive ripple effect across various segments of the economy.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |
