Affordable housing gets a Budget boost but not much for real estate, say developers

While affordable housing continued to remain a priority area for the government with a few additional reforms, the government could have given a further boost to overall real estate which fuels the Indian economy and supports over 250 allied industries.

Industry experts say that despite very high hopes, the budget so far has been a little disappointing for the Indian real estate sector.

Hit hard by the pandemic, the real estate sector was expecting a number of immediate demand-side pushes for its revival, but some significant opportunities were missed. The push to infrastructure spending and sops for affordable housing, however, have kept the sector hopeful of positive changes.

“While affordable housing continued to remain a priority area for the government with a few additional reforms, the government could have given a further boost to overall real estate which fuels the Indian economy and supports over 250 allied industries. There is a huge opportunity in real estate that would enable faster economic recovery,” said Ramani Sastri, Chairman & MD, Sterling Developers Pvt Ltd.

Industry experts and consultants, however, believe that despite several misses, the Budget 2022 has provided various policy incentives that are expected to benefit the real estate sector.

According to JLL, for instance, policy measures like land record digitization, allocation of Rs 48,000 crore under PM housing schemes, completion of 8 million homes by FY 2023 and replacement of SEZ laws are expected to act as catalysts for the sector. In addition to this, infrastructure status to data centres, digital connectivity and 5G spectrum allocation will further give a boost to the sector.

“The land record digitalization programme will build an integrated land Information Management System across the country which will facilitate transparent and litigation free land transfers. This step is expected to provide a big boost for the warehousing and logistics industry. The PM housing scheme is expected to achieve the ‘Housing for All’ objective with 8 million beneficiaries. This will lead to higher growth of affordable housing. The spending on various housing projects is expected to create demand for real estate-linked industries,” said Radha Dhir, CEO & Country Head, India, JLL.

Similarly, the grant of infrastructure status to data centres is expected to provide access to cheaper and long-term institutional funds which will promote the investments in the sector. The data centre industry capacity is expected to double from 499 MW in H1 2021 to 1008 MW in 2023. Increasing optic fiber network and 5G spectrum allocation would mean higher digital push which will increase real estate demand.

Commenting on the Budget, Dhruv Agarwala, Group CEO,, and, said, “In a Budget that aspired to boost private consumption and create jobs to improve the economy in the backdrop of the third wave of the coronavirus pandemic, a variety of measures have been announced by FM Nirmala Sitharaman that would go a long way in meeting the twin targets. The provision of Rs 48000 crore under Prime Minister Awas Yojana for completion of 80 lakh houses will help the government in achieving its target of Housing for All. The government’s proposal to cut down the approval time related to land and construction will bring ease of doing business. The real estate sector will also be benefitted from announcements related to industrial & logistics and data centers, enabling them to aggressively diversify into these two upcoming asset classes in the overall real estate sector.”

A lot of emphasis has also been given on better land record management. Steps such as tax exemption to start-ups extended to March 2023 will go a long way in invigorating the entrepreneurial spirit in the country.

However, “the industry did expect some tweaks in tax slab, a move that would have resulted in greater savings for people, which would have consequently boosted consumption, especially in the real estate sector. The Budget has also been largely mute on any direct support for the housing sector,” Agarwala added.

Amit Modi, Director ABA Corp, President Elect, CREDAI Western UP, said, “The sector had hoped for some tangible announcements like industry status and GST input tax credits for developers in this year’s Budget, but these things did not happen. At the same time, we welcome Rs 48, 000 crore as allocation for PM Awas Yojana and identification of nearly 80 lakh households or the affordable housing scheme in 2022-23. We also look forward to recommendations of the government formed high-level committee for urban planners and economists to be formed for urban capacity building, planning implementation, and governance.”

Following a challenging year, it was critical to allocate resources to job creation and the strengthening of employment-creating industries, which the government has attempted to do, “but the real estate sector being one of the largest employers in the country had hoped for more fiscal and policy support to not only bounce back from the pandemic-induced slowdown, but also be a sizeable contributor to the government’s 60 lakh job creation target and $5 trillion economy scale,” Modi added.

Industry experts say that despite very high hopes, the budget so far has been a little disappointing for the Indian real estate sector.

Ankit Kansal, Founder and MD, 360 Realtors, said, “There has been a slew of sector-specific policies for industries such as chemicals & fertilizers, gems & stones, steel, defense, animation, electronic appliances, etc. Meanwhile, nothing very concrete has been announced about real estate. However, there have been a couple of positive outcomes.”

“Firstly GOI’s commitment to further develop urban infrastructure in a robust but sustainable fashion is a welcome step. Secondly, GOI has rationalized custom duties for a host of steel products, including steel scarp for secondary steel producers. Lowering steel prices might be helpful in optimizing input costs. Another icing on the cake has been the Indian economic comeback. The Honorable Finance Minister during the budget session suggested the GST collection of over 140,000 crore during Jan 2022, the highest after the implementation of the GST regime. The spike in GST collection resonates with a healthy economic outlook, which will drive demand for real estate demand. Meanwhile, the government has also extended one more year for availing tax benefits for newly incorporated manufacturing units. This might help drive demand for industrial lands, warehouses, and commercial assets,” added Kansal.

Amarjit Bakshi, CMD, Central Park, said, “We anticipated a budget that is both people and business-friendly; the current Budget made it clear that economic growth is the prime focus as the Economic Survey projected a GDP growth of 8-8.5 per cent in the next fiscal. The emphasis on improving transport infrastructure, including highways, will go a long way in creating sustainable pockets of real estate development. Though there was no announcement related to the sector, we are hopeful that job creation and the announcement of Ease of Doing Business 2.0 will lead to increased demand.”

Uddhav Poddar, MD, Bhumika Group, said, “This year’s budget focus was more on boosting the overall infrastructure, urban planning etc. not just in metros but also in Tier II-III cities. The measure of setting up a high-level committee for urban planners and economists for recommendations on urban capacity building, planning implementation, and governance is a giant leap to introduce modern urban planning structures. Overall, the Union Budget 2022-23 had a mixed bag of announcements for the real estate sector; much was expected on the terms of single window clearance, industry status and tax incentives which did not come through.”

A majority of developers, however, welcomed the budget announcements, particularly its focus on affordable housing.

“We are happy that the focus of the government is on providing affordable housing; the announcement to come up with 80 lakh houses under PMAY for urban and rural areas calls for a concerted effort of the government and developers. The focus on improving transport will definitely help develop affordable houses, which is a precondition of the buyers. The government has also said that it will work with the financial sector to reduce the cost of intermediaries, which will further streamline the process and control the cost,” said Vikas Garg, DMD, MRG World.

“Gati Shakti Masterplan for expressways, 100 new cargo terminals for multi-nodal logistics, and the development of urban metro systems will give an immense enhancement to new warehousing and logistics facilities across the country which will certainly generate more job opportunities, turning up demand in both the residential and commercial sectors. In addition, the government also plans to launch ‘Ease of Doing Business 2.0′ which should include more dynamic aspects and make India a more investment-friendly destination. A high-level panel to be set up for urban planning and modern building by-laws will be introduced which will be a booster for the overall sentiments for the real estate sector,” said Sandeep Sahni, Chairman, iThum World.

Manpreet Singh Chaddha, Chairman of Wave Group, said, “The Union Budget for fiscal 2022-23 is certainly a growth-oriented budget. The allocation of Rs 7.5 lakh crore for capital expenditure would act a huge catalyst to achieve over 9% GDP growth. With enhanced focus on modernizing and upgrading of infrastructure, urban capacity building, in addition to making Data Centre part of infrastructure and strengthening of public transport systems will lead to job creation that will fuel fresh demand in the real estate sector.”

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