The forthcoming Union Budget 2024-25 provides a critical chance for the Indian real estate industry to tackle different obstacles and stimulate development, especially in the affordable and luxury housing sectors. Now that the longest election in India’s history has concluded, attention has shifted to the new budget announcements.

Historically, the government has demonstrated a strategic emphasis on maintaining a balance between economic growth and fiscal discipline, as well as prioritizing infrastructure development and improving logistical connectivity. Of particular note is the substantial capital expenditure by the government, signaling a sustained dedication to infrastructure development that has contributed to the strengthening of the real estate sector. This has not only spurred investment in Indian real estate, but has also fostered a favorable environment for upcoming development initiatives.

Simplifying the Goods and Services Tax (GST) to lower expenses and easing Foreign Direct Investment (FDI) regulations to entice overseas capital are considered crucial measures to improve accessibility and promote growth in the high-end market. Given that the real estate industry in India accounts for 8% of the country’s GDP, stakeholders are eagerly anticipating reforms that could spur additional investments from both international and local entities.

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The real estate sector is seeking measures that will not only favor developers but also facilitate wider access to homeownership for a larger portion of the population. In order to encourage potential homebuyers, interested parties are advocating for a raise in the cap on home loan interest deductions. Raising the home loan interest deduction limit from ₹2 lakh to ₹5 lakh is proposed to significantly benefit middle-income homebuyers and stimulate demand. Additionally, there is a push to revise affordability housing caps under the Pradhan Mantri Awas Yojana (PMAY), increasing the price cap from Rs 45 lakh to better reflect market variations across different cities.

Allocation of additional funds to the Special Window for Completion of Affordable and Mid-Income Housing Projects (SWAMIH) fund is also suggested. Increasing the allocation to the SWAMIH fund is crucial for resolving stalled projects and enhancing liquidity in the sector. An additional corpus of ₹50,000 crore is suggested to help bring stalled projects to completion. Encouraging policies that promote eco-friendly and innovative designs are essential for sustainable luxury housing. This could include incentives for developers to incorporate eco-friendly amenities.

Navdeep Sardana, Founder and Chairman, Whiteland Corporation. says, “The Indian economy is growing at an astounding 7.2%, and the real estate sector continues to contribute significantly in the national growth story. The real estate sector in India is expected to reach a milestone of $1 trillion in market size by 2030, up from $200 billion back in 2021, and contribute a significant 13% to the country’s GDP by 2025. This can be made possible by stable interest rates and conducive government fiscal policies. We are confident that the upcoming budget announcement will reflect the government’s commitment towards expanding the growing economy by prioritizing real estate sector and infrastructure development in the country.”

“In the previous budgets, the government has also shown a keen interest in leveraging eco-friendly construction practices to create sustainable, future-ready infrastructure projects. Hence, we do not expect any major changes in the tax structure, which might dissuade investors from the property market. As India embarks on building its bright future, the real estate sector stands ready and committed towards helping the nation realize its aspirations of becoming a developed nation in the coming decades,” he adds.

With the upcoming budget scheduled to be announced in about a week’s time, stakeholders are advocating for raising the affordability cap of housing from ₹45 lakh to ₹75 lakh in metro cities like MMR and NCR to make housing more accessible. Reintroducing the Credit-Linked Subsidy Scheme (CLSS) under PMAY is seen as a way to incentivize first-time buyers of affordable homes. Increasing tax exemption limits on principal and interest paid on home loans is also recommended by the real estate sector.

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Yashank Wason, Managing Director, Royal Green Realty, says, “In any developed nation, the real estate sector remains a significant contributor to GDP growth. The Indian real estate sector is no different. The government understands this and, in the past, has done much to encourage and bolster real estate growth. Infrastructure projects and logistical connectivity initiatives have been allocated significant funding and fast-tracked to reach timely completion. The RBI has further bolstered investor confidence through the implementation of an accommodative monetary policy, alongside efforts to control inflation amidst global geopolitical tensions. We anticipate that the forthcoming budget will sustain its backing of the Indian real estate sector by promoting infrastructure growth, with expectations of unchanged tax rates. The Indian economy is the fastest growing economy in the world and we are confident that with conducive government policies, the real estate sector will continue to bolster the national economy further in the perceivable future.”

Vipin Sharma, Founder & Chairman, Aarize Group, says, “As we approach the Budget 2024, the real estate sector anticipates measures to stimulate growth and sustainability across the industry. We emphasize the government to prioritize infrastructure development, streamline regulatory processes, and provide incentives for green building practices. Also, addressing taxation complexities and introducing reforms to boost transparency and ease of business will drive investment and foster long-term economic stability. We hope the upcoming budget will lay the groundwork for a more robust and resilient real estate landscape.”

S.K Narvar, Group Chairman, Trident Realty, says, “The real estate industry eagerly awaits the unveiling of the pre-budget landscape, as it yearns for measures that not only address the challenges but also nurture the growth of the ecosystem. Investors, developers, and homeowners alike stand poised, hoping for a budget that promotes ease in procedures, transparency in transactions, and encouragement for sustainable practices. The demand for fiscal incentives, tax reforms, and regulatory frameworks harmonized with the evolving needs of the industry resonates within the corridors of real estate power.”

The real estate industry is hopeful that the upcoming Union Budget 2024-25 will implement favorable measures aimed at enhancing affordability, boosting demand, and promoting sustainable development in every housing category. The visionary approach of the Central government in encouraging real estate growth, coupled with key infrastructure developments, positions the Indian realty sector for accelerated growth and economic vitality. With the government pushing renewable energy and eco-friendly construction, there is growing expectation that the upcoming budget would encourage sustainable development. The global audience is closely observing the remarkable progress of India, and the forthcoming budget will set the stage for future advancements and progress in the nation. As key contributors to India’s future, the real estate industry in India is prepared to fulfill the aspirations and ambitions of the country.