As widely expected, the Budget 2024 failed to make any big-bang announcements for the real estate sector, but it put its focus on long-term social and infrastructure development.
According to realty experts, the 11.1% increase in infrastructure outlay, which is 3.4% of GDP, will further enhance the railway, roads and logistics infrastructure of the country. The three new economic railway corridors identified under the PM Gati Shakti program are massive projects with the potential to grow economic hubs and boost development of the Tier-2 and Tier-3 cities along their alignment.
“The intention to complete 2 crore housing units in the next five years will aid the ‘Housing for All’ mission of the government. Additionally, the proposed boost to housing for the middle-class living in sub-par accommodation is also a welcome inclusion. Further, the enhanced focus on domestic tourism development will provide a fillip to the hospitality industry,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
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The soon-to-be-launched housing scheme, aimed at supporting the middle-class in owning their homes, is poised to be a significant boost to the housing sector in a country where an increasing number of people are entering this income category each day. Industry estimates suggest that India’s middle-class is set to nearly double to 61% of the total population by 2047, up from 31% in 2020-21.
“The finance minister announced that the government is going to bring a new scheme designed to assist deserving segments of the middle class residing in rented houses, slums, chawls, and unauthorized colonies in acquiring or constructing their own homes. This significant step is taken against the backdrop of the government’s overarching commitment to address the imperative of “Housing for All”. The ongoing Pradhan Mantri Awas Yojana (PMAY) Urban initiative has already made substantial strides in providing affordable housing to a considerable number of middle-class individuals through subsidy benefits. However, the latest announcement expands the ambit of assistance to encompass individuals living in rental accommodations and unauthorized colonies, who have hitherto faced challenges in realizing the dream of homeownership,” said Adhil Shetty, CEO, Bankbazaar.com.
Housing, as one of the fundamental human needs, plays a pivotal role in fostering a sense of security, dignity, and confidence among individuals. The government’s concerted efforts to extend support to those in rented dwellings and unauthorized colonies underscores a commitment to addressing the diverse housing needs of its citizens. By focusing on this crucial aspect, the government seeks not only to provide shelter but also to empower individuals with the confidence to lead dignified lives.
“By extending assistance to those residing in rented accommodations or unauthorized colonies, the government aims to bridge the gap and make homeownership a reality for a broader spectrum of society. This initiative aligns with the broader vision of inclusive development, where access to housing is viewed as a cornerstone in enhancing the overall well-being of citizens,” added Shetty.
“Another critical driver of growth in the housing segment is the government’s commitment to enhancing infrastructure and connectivity across the nation. Allocating 3.4% of the GDP to targeted initiatives will yield widespread benefits across various sectors. In the short-to-medium term, Tier-II and Tier-III cities can anticipate increased economic activity due to these concerted efforts,” said Dhruv Agarwala, Group CEO, Housing.com, PropTiger.com & Makaan.com.
The budget is focused on infrastructure development and scores well on initiatives for women, youth, farmers, and weaker sections of the society.
“The proposal to add 2 crore additional houses under the PM Awas Yojana (Gramin) over the next 5 years is likely to enable growth in the rural areas. Further, the announcement on housing for middle class for deserving sections would propel the development of real estate and construction activities along with allied sectors. Emphasis on developing tourism in the country is an excellent initiative. With this, numerous Tier 2 and Tier 3 cities will witness economic development which will further help the overall economy,” said Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE.
The proposal to address the emerging fervour for domestic tourism with announcements of projects for port connectivity, tourism infrastructure, and amenities will also help in generating employment. Additional emphasis on continued development of airports will drive more opportunities for the sector.
“The 2024 Interim Budget represents a significant milestone in advancing India’s real estate sector. It focuses on infrastructure and connectivity improvements, which are crucial for expanding real estate development, especially in tier 2 and 3 cities. This budget notably supports the middle class’s transition from renting to homeownership, revitalizing many urban areas. The 11.1% increase in Capex outlay indicates a strong future for diverse real estate projects, bolstered by infrastructural enhancements. However, if following would have been addressed, it would have been a significant booster to real estate like the long-standing request for industry status, essential for various benefits, remains unaddressed. Additionally, the absence of extra tax incentives for homebuyers and significant support for affordable housing are considerable oversights. Despite these issues, we remain optimistic about the Union Budget’s potential to tackle these crucial concerns,” said Vivek Singhal, CEO, Smartworld Developers.
Aditya Khushwaha, CEO and Director, Axis Ecorp, said, “While the interim budget did not feature substantial announcements specifically addressing the real estate industry, we acknowledge the government’s broader vision outlined for ‘Viksit Bharat.’ The notable announcement was the revised fiscal deficit estimate at 5.8% of GDP, underscoring a commitment to fiscal responsibility and the cultivation of a stable economic environment. Moreover, the budget’s focus on promoting tourism is promising, holding the potential to greatly benefit the real estate and hospitality industry by opening up new avenues for growth and investment.”
Realtors said the government’s commitment is evident in the successful construction of 30 million houses under the PMAY-Rural scheme, coupled with plans for an additional 20 million in the next five years to meet the escalating demand for housing.
“The substantial 66% increase in allocation, totaling ₹79,000 crore for FY24, for the Pradhan Mantri Awas Yojana scheme underscores the government’s emphasis on urban and affordable housing. Beyond housing, the government’s proactive stance extends to the infrastructure sector with the ongoing expansion of existing airports and the strategic development of new ones will progress efficiently. This forward-looking initiative is designed to enhance connectivity for tier 2 and tier 3 cities, to establish 149 new airports. By aligning our endeavors with the government’s vision we aim to contribute to the growth of the country,” said Santosh Agarwal, Executive Director and CFO, Alphacorp.
Mohit Jain, Managing Director, Krisumi Corporation, said, “The Finance Minister’s announcement of launching a new housing scheme especially focused on the middle class bodes well for the housing sector. It is likely to boost demand for mid and affordable-segment homes. The revised estimates of fiscal deficit at 5.8 per cent of GDP in FY24 and targeting a fiscal deficit at 5.1 per cent 2024-25 means that home loan rates are unlikely to go up from the current level, which in turn is expected to help the overall housing sector, including the luxury segment. The government’s continued thrust on infrastructure development, wherein outlay has been increased 11.1%, also bodes well for the economy as a whole, including the real estate sector.”
“We appreciate the government’s commitment to inclusive development, which is particularly evident in the housing scheme for the middle class. The plan to construct an additional 20 million homes in the next five years under the PMAY-Rural scheme reflects their concerted effort to address the surging demand for housing. Furthermore, the government is focusing on developing infrastructure by expanding ongoing airport projects and strategically developing new ones to improve connectivity across cities, especially non-metros. These announcements made in the budget reflect the government’s forward-looking approach to contribute significantly to the nation’s growth,” said Aman Sharma, Founder and Managing Director, Aarize.
Dr Dharmesh Shah, CEO, Hero Realty Pvt Ltd, said, “Today’s budget by the Finance Minister is future-looking and in sync with the formula of Vikshit Bharat. It proposed to raise capital expenditure by 11.1% to Rs 11.11 lakh crore, which is 3.4% of the GDP, is a welcome step. This shows the government’s emphasis on developing the country’s infrastructure and improving last-mile connectivity. This unwavering focus on infrastructure will indirectly drive real estate growth in Tier 2 and 3 cities.”
