India's real estate industry was hoping for tax breaks and fresh incentives from Budget 2024. However, Finance Minister Nirmala Sitharaman's speech has left developers wanting more.
However, there's something in the provisions that may help developers in some parts of the country. There will be more affordable housing and a new programme to move slum dwellers into a better housing projects are some of the proposals of interest for realty players.
The 11.1% increase in capital expenditure is expected to have a ripple effect across sectors including property development. "While the Interim Budget made no big-bang announcements, it continued to focus on infrastructure upgrades and building connectivity across the country," said Anuj Puri, Chairman, Anarock Property Consultants, "This will benefit real estate growth in not just the top cities, but in tier-2 and tier-3 cities across the country."
The government plans to build 20 million affordable homes in the next five years under the PM Awas Yojna (Gramin). So far, nearly 30 million homes have been built since the scheme began in 2015.
The FM also announced the start of a new scheme for middle-class housing — a demographic that Sitharaman claimed lives in rented homes, slums or unauthorised colonies — that would enable housing tenants to build or buy their own homes.
"The indication that the government is looking to focus on housing for all and affordable housing is a welcome step in that direction," said Pavitra Shankar, MD at the Brigade Group.
The fact that this housing plan will likely free present-day encroachments for re-development is being seen as a positive for the real estate sector.
"The infrastructure capex outlay augmentation to 3.4% of GDP will have a multiplier effect," said Samantak Das, Chief Economist and Head of Research & REIS, India at JLL.
While budgetary announcements like long-term loans to states for tourism development, and transit-centric development in urban centres are also seen as big positives for Indian real estate, the industry has been disappointed by a handful of long-standing demands not being met yet.
The real estate sector has been requesting for industry status for years. It would help them get access to credit and tax breaks. But the request has been ignored one more time.
Further, the lack of tax incentives for homebuyers like the much-awaited increase on deduction limits for home loan interest under Section 24 not becoming a reality, has disappointed developers and property analysts. The interim budget also made no move to boost allocations for PMAY (Urban), disappointing a large section of the industry batting for better urban affordable housing.
"We are hopeful that the full budget later this year, will translate into tangible outcomes for the real estate sector and overall development of the economy," said Pavitra.
"The focus on creating multi-modal connectivity through new rail corridors, airport and road infrastructure enhancement will support the overall logistics ecosystem while fostering new growth corridors," Das added.
(Edited by : Pihu Yadav)
First Published: Feb 1, 2024 2:02 PM IST
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