The Indian real estate industry has achieved remarkable growth figures in recent quarters. As the Union Budget 2024 approaches, there is optimism within the sector for significant reforms to be announced. Through the allocation of resources and the implementation of favorable policies, the government has the power to accelerate the growth of this industry, leading to job creation and economic stimulation.

Developers are eagerly anticipating the budget announcements and have expressed their essential requirements, which, if met, will contribute to shaping the trajectory of the sector in the upcoming fiscal year.

“As the real estate sector eagerly anticipates the 2024 Union Budget, we hope to see policy measures that foster sustainable growth and address key challenges facing the industry. This sector plays a pivotal role in the economy, contributing significantly to employment and GDP. We urge the authorities to not forget initiatives to facilitate employment, facilitate regulatory approvals and encourage funding in low-priced housing. Supportive regulations will no longer simply encourage investor confidence but additionally facilitate important infrastructure,” says Shiwang Suraj, Founder & Director, InfraMantra.

Furthermore, measures are needed to boost cash flow within the quarter, together with mitigation of cost burdens and enhancement of tax sops for homebuyers. These steps can stimulate calls throughout broader segments of society to ensure housing availability.

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Moreover, as the demand and supply for affordable homes have shown fluctuating trends over the last three years across major Tier I and Tier II cities, the upcoming budget should focus on revitalising both the demand and supply for homes in the Rs 15-75 lakh per unit price bracket. Introducing interest subsidy programs could incentivise potential homebuyers effectively.

Dhruv Agarwala, Group CEO, Housing.com & PropTiger.com, says, “To boost supply, the government could strategically deploy its extensive land banks in partnership with private developers, offering land and capital at concessional rates. Implementing tax incentives for developers engaging in these affordable projects could further stimulate activity in this sector. It’s noteworthy that substantial demand persists within the Rs 15-75 lakh price category, necessitating focused governmental action in the upcoming budget. This approach would not only catalyze growth in the real estate sector but also stimulate approximately 200 ancillary industries, substantially boosting job creation across these sectors.”

There is also the need to motivate state governments to reduce stamp duty on affordable housing to make these homes more accessible. Moreover, long-standing sector demands, such as granting industry or infrastructure status and raising tax exemption limits on home loan repayments, should be considered to sustain long-term growth in the housing sector.

Avneesh Sood, Director of Eros Group, says, “While industry status for real estate and revived incentives for affordable housing remain key expectations, a nuanced approach is crucial. Beyond fiscal incentives, the budget should focus on enhancing transparency and efficiency through a robust regulatory framework and streamlined approvals process. Introducing innovative financing mechanisms, such as green bonds tailored for sustainable urban development, could align economic growth with environmental stewardship. Moreover, there’s a pressing need to revisit GST input tax credit rules to mitigate cost burdens and bolster market transparency. Emphasizing digital infrastructure and smart city initiatives will not only modernize urban living but also attract foreign investment.”

By prioritizing these measures, the government can catalyze a resilient recovery in the real estate sector, fortifying its role as a cornerstone of economic growth and employment generation in the post-pandemic era.

Aman Gupta, Director of RPS Group, says, “The real estate sector expects further reforms in the budget to solve the existing issues. We expect a single-window clearance to be finalized and implemented to avoid more delays and increased cost for projects. The industry also awaits policies that promote rental housing, including tax incentives for owners and the framework for the Model Tenancy Act for the states.”

Another emerging area is to raise the permissible statutory regulations in relation to home loan interest deductions, which holds potential to bring homeownership within the reach of a middle-income earner.

“We are also expecting policies that will help with the implementation of new technologies for the construction industry. For instance, through offering grants for research and development or subsidies for integrating PropTech into the construction industry. Finally, the sector wants policies and measures to lure foreign investment through change in FDI policy or via tax exemption for large scale development of urban infrastructure projects. More such support would undoubtedly help further develop the sector and bring about a more rapid turnaround in its development for modernization,” adds Gupta.

Gunjan Goel, Director at Goel Ganga Developments, says, “Actions are expected to raise funds for affordable housing, including the expansion of tax incentives for first-time homebuyers and the extension of PMAY timelines. The industry also expects the government to bring down GST rates on under-construction properties to boost the demand. There is another expectation of an increasingly globalized market, namely, the rationalization of capital gains tax on property sales for secondary market trades. This is because it can encourage the implementation of sustainable and green buildings where perhaps policies such as tax credits or rebates for green building practices could be adopted. Finally, there is probability for expansion by way of improvement policies towards constrained liquidity for different sectors, including housing finance companies through a priority sector lending. These measures would do more than help revive the real estate market.”

The real estate sector is expecting policies that would help strengthen its position. “Our expectations on future policies include those that encourage integrated township developments, which may include allowing relaxed zoning ordinances and tax incentives. The industry also anticipates actions in relation to the discovered negative impacts that consists of encouraging strategies for structure construction particularly in areas affected by floods due to climate change. Another pressing expectation is the growth of REITs and InvITs possibly through more liberal regulatory measures and favorable tax treatment so that the end-use investors could be attracted easily. We are also awaiting some positive steps which should act as a catalyst for growth in the senior living segment, which may entail some kind of differential incentive structure for developers in this segment which is a growing segment indeed,” says LC Mittal, Director, Motia Group.

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The sector is also looking for policies which will enhance skill development in modem constructions, through subsidized training sessions or derive tax incentives for companies seeking to train its workforce.

Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara Pvt Ltd, says, “The 2024-25 budget may prove to be a golden chance to meet the new challenges of the real estate sector. Looking closer, measures to stimulate the commercial real estate segment which has clearly been weakened by shifting work patterns are anticipated. This could involve offering tax credits to businesses intending to occupy offices or to developers offering versatile commercial spaces. The industry also wishes to see policies to kick-start redevelopment; possibly, there may be some specific incentives for overhauling older portions of cities. Another important expectation is that governments should work towards the proper and consistent taxation of stamp duty for the upliftment of property demand. We are also anticipating measures that would create added vitality in the logistics and warehousing segment like the infrastructure for large scale approval.”

Last but not least, the sector expects initiatives to boost the digital transformation of real estate transactions, potentially by encouraging the use of blockchain technology in property registration. Policies such as these would put the real estate sector into long-standing development trajectories and long-term sustainable growth paths.