The real estate sector, buoyed by a remarkable year, has again started looking towards the upcoming Interim Budget 2024-2025 with a blend of hope and expectations. The previous year, as detailed in various reports, was a milestone for residential real estate, witnessing an upsurge in both new launches and home sales. This success story has set the stage for what many in the industry hope will be a transformative period of policy reform.
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Highlighting the sector’s critical role in India’s overall economic framework, Kunal Rishi, COO, Paras Buildtech, said, “As we enter 2024, the real estate sector stands at the brink of further growth and innovation, with the forthcoming budget being a critical milestone. Contributing approximately 8% to the GDP and acting as a major employment generator, the sector’s health is crucial. The support of over 200 ancillary industries hinges on the robustness of real estate. Therefore, granting it industry status would be a pivotal step, promoting an environment for sustained growth. Measures such as single window clearance, tax breaks, and GST rationalization are essential to stimulate growth in our sector and have a ripple effect across the economy. We urge the government to champion these reforms, which are key to boosting demand, reducing costs, and elevating the real estate sector, thereby enriching our nation’s economic landscape.”
Statistics reveal a record-breaking momentum in housing sales across the top seven cities, scaling up to approximately 4.77 lakh units. Simultaneously, nearly 4.46 lakh newly-launched homes flooded the market, underscoring a thriving sector in the previous year. The disparity between government-defined parameters and practical market realities also comes to the forefront.
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Vivek Singhal, CEO of Smartworld Developers, said, “The Indian real estate market witnessed robust growth in 2023, marked by new residential launches and record-high home sales. Housing sales in the top seven cities surged to an all-time high of 4.77 lakh units last year. Industry projections indicate a steady 9.2% Compound Annual Growth Rate (CAGR) from 2023 to 2028, highlighting the sector’s stability and potential. As we step into 2024, the market is gearing up for sustained demand which is propelled by various imminent factors. Consequently, the real estate industry has high expectations for the upcoming union budget.”
“The industry seeks a favourable industry status for the housing sector and emphasizes the necessity of maintaining single-window clearance for housing projects, both of which continue to remain significant this year. There is optimism surrounding anticipated policy changes, such as potential reductions in Goods and Services Tax (GST) rates and efforts to reconcile material prices. Additionally, expectations revolve around prospects for tax relief and amplified deduction limits on home loans. The upcoming budget holds promise, appealing to both millennials and savvy investors with its potential offerings,” he added.
The industry’s wishlist for the upcoming budget remains consistent, calling for critical reforms, including industry status for housing and streamlined clearance processes for housing projects. Experts emphasize the pressing need to reintroduce and extend substantial benefits, such as tax breaks, to incentivize developers to build more affordable housing units and broaden accessibility for potential buyers.
Mohit Malhotra, Founder & CEO, NeoLiv, said, “We are optimistic that the budget announcements will carry provisions to empower new age developers with strong financial backing and transparent policies, and promote the growth of the housing sector in the country. One of the key proposals for the input tax credit under GST is a pivotal requirement for development companies who are pivoting this new era of the sector. Granting developers access to input tax credit is not merely a fiscal incentive; it’s a strategic move that can stimulate the sector’s growth for homebuyers, and fuel economic recovery. In the context of the mid-housing segment, a pivotal focus for us, we look forward creation of new pockets of development with focus on higher budgetary allocation for infrastructure development enabling smooth access to city centres. Mid-range housing projects play a vital role in addressing the housing needs of the middle-income demographic, and we hope that the budget recognises the future potential of this segment.”
This budget holds the key to shaping the industry’s future, understanding its challenges, and nurturing opportunities for resilience and prosperity. ANAROCK Research indicates a noticeable decline in the budget home category’s overall sales, dropping to approximately 20% in 2023 from over 30% in 2022. The percentage of affordable housing in the total housing supply in the top seven cities also decreased to 18% in 2023 from nearly 40% in 2019.
Sandeep Agarwal, CFO, Elan Group, anticipates a transformative year ahead for the Indian real estate sector, and seeks strategic fiscal measures stimulating demand for homebuyers and developers, addressing liquidity concerns, and simplifying regulations.
“These actions can revive the market and foster sustainable growth. We also expect policies promoting technological innovation, propelling a digital revolution in real estate, enhancing efficiency, and global positioning. This budget holds the key to shaping our industry’s future, understanding its challenges, and nurturing opportunities for resilience and prosperity. The upcoming agenda necessitates a multifaceted approach encompassing several critical aspects. Firstly, addressing the long-standing issue of undelivered projects is pivotal to reinstating customer confidence and trust within the real estate sector. Simultaneously, there’s an urgent need to redefine affordable housing parameters, specifically by revisiting and elevating the thresholds concerning area and value,” he said.
Additionally, rectifying the discrepancies surrounding GST input credit on commercial properties developed for leasing and moderating the impact of ineligible GST inputs on residential project prices is crucial for market stability. “Implementing a time-bound single window clearance for government regulatory processes becomes imperative to streamline operations and foster efficiency. Lastly, considering a deferred income tax liability tied to residential property investments, through a 5-7-year moratorium on tax payments, could significantly alleviate financial pressures and encourage further investments in the sector,” Agarwal added.
As the real estate industry awaits the unveiling of the interim budget, the stakes are high, and expectations run deep for measures that could redefine the housing landscape and promote broader access to affordable homes.