The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman on Tuesday, gave a significant boost to the real estate sector emphasizing urban development as a pillar of ‘Viksit Bharat’. The commitment to address the housing needs of one crore urban poor and middle-class families with an investment of Rs 10 lakh crore under PM Awas Yojana-Urban may prove to be a game-changer.

“This allocation, with Rs 2.2 lakh crore in Central assistance over the next five years, demonstrates the government’s serious intent to tackle the urban housing crisis and stimulate economic growth. Establishing industrial parks with a Plug & Play model near 100 cities and the emphasis on rental housing with dormitory-type accommodation for industrial workers in PPP mode with VGF support will further enhance infrastructure and provide affordable housing options. These initiatives will not only invigorate the construction sector but also generate millions of jobs, positively impacting allied industries. Additionally, the focus on urban development and transparent rental markets will benefit both developers and buyers, fostering a more robust and inclusive real estate market,” said Avneesh Sood, Director, Eros Group.

The government’s robust focus on the housing sector in this year’s budget will not only address the housing needs of 1 crore urban poor and middle-class families but also stimulate the real estate market, creating vast opportunities for developers and homebuyers alike.

“The inclusion of an interest subsidy to facilitate affordable housing loans is particularly welcome, as it will make homeownership more accessible to many. Additionally, the emphasis on rental housing through dormitory-type accommodations in PPP mode is a strategic move. It will provide much-needed housing solutions for industrial workers, fostering a more inclusive housing market. This initiative will also encourage the private sector to invest in rental housing projects, further expanding the housing supply,” said Shiwang Suraj, Director & Founder, InfraMantra.

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The real estate sector has witnessed the creation of an inventory bubble, characterized by an oversupply of properties relative to buyer demand.

“The government’s proposal to the States, for further reducing the stamp duty for women property purchasers, represents a welcome intervention in this regard,” said Haroon Asrar, Partner, Solomon & Co.

The Pradhan Mantri Awas Yojana (PMAY) Urban 2.0 scheme, which aims to attract Rs 10 lakh crore in investment to urban housing, signifies a significant leap forward in India’s approach to its urban housing crisis. This substantial commitment to providing housing for one crore families demonstrates the central government’s unwavering dedication to fostering inclusive urban development.

“The Government’s proposal for implementation of enabling policies and regulations will establish an efficient and transparent rental housing market. This will lead to a streamlined and well-functioning residential rental market within urban centers. Furthermore, land records in urban areas will undergo digitization, incorporating GIS mapping technology. Additionally, an IT-based system will be established for property record management and tax administration. This initiative is a welcome step towards efficient management of land records which would improve the ease of access to land-related documents by a common man,” added Asrar.

Here we take a look at some of India’s leading developers’ budget reactions:

Manoj Gaur, Chairman, CREDAI National, and CMD, Gaurs Group: “The biggest announcement concerning the real estate sector is the provision of Rs 10 lakh crore investment in urban housing for the poor. This will be a milestone for affordable housing in the country, meeting the needs of 1 crore urban poor and middle-class families. Despite high demand, progress in this segment has been slow due to a lack of budgetary support. This funding is expected to lead to the rise of many new projects in the affordable housing segment. The provision for rental housing for industrial workers through a PPP model is also commendable. Additionally, the focus on transit-oriented development for urban centres with populations of 30 lakh and above will boost urban infrastructure. With an expected 30-40% increase in people moving into urban areas, this budget demonstrates a long-term vision. Overall, this budget is a significant boost for the real estate sector.”

Yogesh Mudras, Managing Director of Informa Markets in India: “Finance Minister Nirmala Sitharaman’s announcement of Rs 11.11 lakh crore allocated for capital expenditure in the fiscal year 2024-25 is a significant milestone. This major investment, equivalent to 3.4% of India’s GDP, underlines a strong commitment to advancing infrastructure development. The government’s focus on increasing capital expenditure, particularly in infrastructure and road projects, is set to enhance connectivity nationwide. While initiatives like Phase-4 of the Pradhan Mantri Gram Sadak Yojana aim to improve rural access, the broader infrastructure enhancements will also benefit urban areas and industrial zones. For the trade exhibition sector, upgraded infrastructure—including better roads, transportation networks, and venue facilities—is essential for the successful execution of large-scale events. Improved infrastructure supports smoother logistics, better access for exhibitors and visitors, and overall enhanced event experiences. This strategic emphasis on infrastructure development will foster industry growth and contribute to a more dynamic economic environment, benefiting sectors like ours and the broader economy.”

Uddhav Poddar, MD, Bhumika Group: “The emphasis on infrastructural development by allocating Rs. 11.1 lakh crores along with employment generation and skill development will boost real estate development and provide a fillip to the commercial segment. The promulgation of the PPP model for rental housing in urban centres, along with transit-oriented development (TOD,) will also promote real estate development.”

Sandeep Chhillar, Founder & Chairman, Landmark Group: “The Finance Minister stated the government’s commitment to maintaining significant financial support for infrastructure development. This year’s capital expenditure allocation of Rs 11.11 lakh crore, amounting to 3.4% of India’s GDP, highlights this dedication. An allocation of Rs. 2 lakh crore for job creation over the next five years is expected to stimulate demand, thereby accelerating growth in the sector. The presentation of the Union Budget for FY25 also highlighted the government’s focus on enhancing affordable housing, aiming to address concerns in this sector through a substantial investment of Rs 10 crore in urban housing, increasing housing supply and affordability, thereby positively impacting the real estate market’s dynamics.”

Ramani Sastri, Chairman & MD, Sterling Developers: “The real estate sector has been witnessing landmark growth in recent times and hence we appreciate the targeted measures by the government to further push real estate growth and unlock its full potential. The government’s concentrated efforts on infrastructure development promises to significantly enhance housing demand and benefit around 250 ancillary industries, generating numerous job opportunities and bolstering overall economic growth. The generous financial assistance for urban housing and provision for more houses under PMAY scheme will go a long way to address the housing needs of urban poor and middle-class families. Additionally, the further reductions in duties for properties purchased by women will bolster housing sector. From a buyer’s perspective, addressing the crucial issue of lowering stamp duty will make housing more accessible.”

Rajiv Gupta, Managing Director, Wave Group: “The Budget 2024-25 is very encouraging for the real estate sector, focusing on infrastructure development in rural and urban areas. The thrust on building three crore additional housing under the PM-AWAS yojana is an essential step in bridging the housing gap for the poor and middle class. The Rs 10 lakh crore overall allocation to urban housing will bolster the growth momentum. The suggestion to state governments to lower stamp duties, particularly for properties purchased by women, will undoubtedly boost sales. The budget lays the foundation for sustainable real estate growth, promoting cities as growth hubs of new India.”