India’s real estate sector made a strong recovery in 2022. However, its woes are far from over as the sector is still grappling with issues such as high input costs and rising interest rates. Keeping this in view, the realty sector has now started pinning its hopes on the forthcoming budget to be presented by finance minister Nirmala Sitharaman soon.
In fact, despite the prevailing positive sentiments, specific challenges must also be taken into consideration. The threat of the pandemic is not entirely over. Decreasing income could also impact the demand in the price-sensitive, affordable segment and the real estate development in tier II and III cities.
“The real estate industry has recovered smoothly from the volatility brought on by the pandemic. According to us, the sector needs to be further stabilized by including significant changes in the Union Budget. GST, circle rate and stamp duty reductions would be substantial fresh-start reforms that would give this sector the upper hand at the start of the year. In order to enhance the overall amount of the stress fund and make it easier for us to use it when we need it, we also anticipate some reduction in the GST rates and an increase in SWAMIH. In addition, realtors should receive interest rate subsidies to lessen the impact of exorbitant inflation rates and speed up the building of stalled projects,” said Sanchit Bhutani, Managing Director, Bhutani Grandthum.
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For one, the sector has long-pending demands like conferring industry status on real estate and creating a single window clearance system. Besides, it is also looking for government incentives that can decrease the prices for first-time home buyers and thus make housing affordable for the masses.
“Among others, we are also looking up to the government to take steps to decrease the input costs such as steel and cement, along with fuel costs. The GST on cement, one of the main consumables, at 28%, accounts for almost one-third of the total cement cost and, therefore, is an area of concern. As far as tax incentives are concerned, the sector is batting for sops to the home buyers, friendly provisions under capital gains tax and increasing tax concessions to home buyers, among others,” says Salil Kumar, Director – Marketing & Business Management, CRC Group
Real estate employs a large number of casual labourers. Therefore, developers argue that incentivising the sector would have a wider ramification than the numbers imply.
“2022 has been a good year for the real estate sector. It has made the country realise the wonders a combination of low prices, low-interest rates, and ample supply can bring to the sector. And this is something that the sector expects the government to ensure by taking certain initiatives at the policy level in its forthcoming budget. Raising the limit for deduction under section 80C for principal repayment of housing loans to much higher levels from the existing limit of INR 150,000 is among the few things that would help the country realise its housing dreams. One of the long-pending demands for conferring the industry status on the sector should also be considered. Besides, a system of single window clearance should also be established. These are some of the few steps that would encourage real estate in the country,” says Uddhav Poddar, MD, Bhumika Group.
“The release of the budget for 2023 is imminent, and the real estate industry, like every other one in the nation, has hopes for how the government’s assistance might boost growth. In 2022, more residential developments will be launched, making it the most advantageous decade for real estate. We anticipate cooperation from the government in a number of areas to keep the momentum going. Our top demand, which has gone unmet for a long time, is the status of “industry.” In order to enhance the overall amount of the stress fund and make it easier for us to access it, we also anticipate some reduction of the GST levies and an increase in SWAMIH,” says Yash Miglani, MD, Migsun Group.
The long-term prospects remain high. As per the forecast by NITI Aayog, the Indian real estate sector will reach a market size of $1 trillion by 2030 and will account for 13 per cent of India’s GDP by 2025. Further, even though the residential sector has outpaced the demand in the commercial sector, the latter coming up with new models like hybrid spaces is also catching up.