The challenge brought about by the COVID-19 pandemic has affected the economy. When things looked normal, the third wave scare came to haunt everyone. Though the sector is well-prepared not to let the wave affect the way it did in 2020, the challenges will persist. At this crucial juncture, the government must extend a helping hand to the real estate sector to ensure things stay in control.
The biggest learning had been the availability of capital, which has gone down from being abundant capital a few years back to an acute liquidity crunch. The pandemic has also affected the realtors as they face various challenges, including the rising cost of project development coupled with the inability to dictate prices in sync with the expenditure. The sector is betting hard on the forthcoming budget waiting with bated breath to see what is in store for them this time.
The sector needs government support and further stimulus to get out of the current situation. Some key tax and fiscal measures can act as key enablers for much-needed boost to the sector. We hope that the FM would increase the incentive on affordable housing as has been coming out in the media; if it happens, it will be the driver for achieving the ‘Housing for All’ target.
Affordable housing remains a segment where the government should continue to provide developers with tax benefits. However, the primary area of focus should be streamlining the fixed price of affordable housing according to the cities; as of now, the fixed prices are making it challenging to come up with these units in bigger cities. The goverment should take a call as we are already behind schedule to achieve the ‘Housing for All’ target, and demand for these units is high in major cities where people shift for work.
The Union Budget is an expression of annual operating intent. The last budget had a clear thrust on infrastructure development, which should continue to be a focus area. Similarly, another important, but largely ignored area, is the issue of rising urbanization that calls for renewed focus on initiatives of developing new cities, which are nowhere a replica of today’s crowded cities. Policy initiatives that can address the issue of crumbling infrastructure in the existing cities and serve as a guiding light to create new cities will relieve the burdened metro and Tier I cities. Therefore, it is essential to formulate budgetary policies with a vision and a plan for the next 10-15 years to cope with the demand for increasing urbanization.
Even though a lot has been written about the green buildings, more needs to be done to promote such initiatives. The developers working on such projects have long been asking for more benefits or policies for accounting towards the higher costs incurred in Green Buildings. These initiatives are important, keeping in mind the deteriorating environmental conditions the world over and the current requirement of buyers to have healthy living spaces.
Finally, the sector is also expecting that the low home loan interest rate regime will continue for the time being as it is helping even the fence-sitters to buy property. Also, it is now time to give industry status to the sector that contributes significantly to the GDP. Additionally, a mechanism should be devised to ensure that developers do not fall prey to the price cartelization of the raw materials, which is making it difficult for them to hold prices at this critical juncture.
(By Sachin Gawri, CEO, RiseInfraventures Limited)