Indian Real Estate Industry Looks Forward to a Promising Union Budget 2024-25
The upcoming Union Budget 2024-25 presents a crucial opportunity for the Indian real estate sector to address various challenges and drive growth, particularly in the affordable and luxury housing segments. With the longest election in India’s history now over, all eyes look expectantly to the new budget announcement. In the past the government has shown a strategic focus on balancing economic growth and fiscal discipline, while also prioritizing infrastructure development and enhancing logistical connectivity.
Particularly promising has been the significant capital expenditure by the government, indicating a long-term commitment towards infrastructure development that continues to bolster the real estate landscape. This has not only encouraged investment in Indian real estate, but also created a conducive ecosystem for future development projects. Simplifying GST to reduce costs and relaxing FDI norms to attract foreign investments are seen as critical steps to enhance affordability and foster development within the luxury segment. With the Indian real estate sector contributing 8% to the national GDP, stakeholders have high expectations for reforms that could further boost investment from both foreign and domestic sources.
The real estate industry is looking for policies that not only benefit developers but also make homeownership more accessible to a broader segment of the population. To incentivize homebuyers, stakeholders are calling for an increase in the deduction limit on home loan interest. Raising the home loan interest deduction limit from ₹2 lakh to ₹5 lakh is proposed to significantly benefit middle-income homebuyers and stimulate demand. Additionally, there is a push to revise affordability housing caps under the Pradhan Mantri Awas Yojana (PMAY), increasing the price cap from Rs 45 lakh to better reflect market variations across different cities.
An allocation of additional funds to the Special Window for Completion of Affordable and Mid-Income Housing Projects (SWAMIH) fund is also suggested. Increasing the allocation to the SWAMIH fund is crucial for resolving stalled projects and enhancing liquidity in the sector. An additional corpus of ₹50,000 crore is suggested to help bring stalled projects to completion. Encouraging policies that promote eco-friendly and innovative designs are essential for sustainable luxury housing. This could include incentives for developers to incorporate eco-friendly amenities.
Stakeholders are also advocating for raising the affordability cap of housing from ₹45 lakhs to ₹75 lakhs in metro cities like MMR and NCR to make housing more accessible. Reintroducing the Credit-Linked Subsidy Scheme (CLSS) under PMAY is seen as a way to incentivize first-time buyers of affordable homes. Increasing tax exemption limits on principal and interest paid on home loans is also recommended by the real estate sector.
Industry Expert’s Opinion:
Mr. Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd. & Chairman, ASSOCHAM National Council on Real Estate, Housing and Urban Development
"As we look forward to the upcoming budget, the real estate sector anticipates several key reforms to drive growth and efficiency. Granting Industry status to real estate will attract investments and streamline regulations. A simplified single-window clearance system will expedite project approvals, reduce delays, and enhance overall project execution. Revising the GST input tax credit rules will reduce property prices and increase transparency, while increasing the home loan interest rebate under Section 24 to ₹5 lakh will boost demand. Additionally, increased budget allocations for urban infrastructure and lower stamp duty rates for property transactions or waiver for first time home buyer from stamp duty will stimulate real estate growth. Expanding the definition of affordable housing to include homes up to ₹75 lakhs with a larger carpet area of 90 sq. meters, along with the relaunch of the CLSS scheme or similar scheme will further benefit homebuyers. The Indian economy has shown remarkable resilience and transformation over the past decade, with significant progress under the principle of 'Sabka Saath, Sabka Vikaas.' The government's unwavering commitment to development is evident in continued investments in infrastructure, housing, and urban development. These initiatives and reforms are crucial for sustaining economic growth, creating jobs, and improving living standards, paving the way for India to become a developed nation by 2047."
Mr. Navdeep Sardana, Founder and Chairman, Whiteland Corporation
“The Indian economy is growing at an astounding 7.2%, and the real estate sector continues to contribute significantly in the national growth story. The real estate sector in India is expected to reach a milestone of $1 trillion in market size by 2030, up from $200 billion back in 2021, and contribute a significant 13% to the country's GDP by 2025. This can be made possible by stable interest rates and conducive government fiscal policies. We are confident that the upcoming budget announcement will reflect the government’s commitment towards expanding the growing economy by prioritizing real estate sector and infrastructure development in the country. In the previous budgets, the government has also shown a keen interest in leveraging eco-friendly construction practices to create sustainable, future-ready infrastructure projects. Hence, we do not expect any major changes in the tax structure, which might dissuade investors from the property market. As India embarks on building its bright future, the real estate sector stands ready and committed towards helping the nation realize its aspirations of becoming a developed nation in the coming decades”.
Mr. Yashank Wason, Managing Director, Royal Green Realty
“The Indian real estate sector is the engine that has contributed in the Indian economic growth on a better part. In any developed nation, real estate has always been the front runner in that overall economic growth and a significant contributor in GDP growth. The Indian real estate sector is no different in keeping the overall growth of the economy on the upside. The government understands this and, in the past, has done much to encourage and bolster real estate growth in the nation. Infrastructure projects and logistical connectivity initiatives have been allocated significant funding and fast-tracked to reach timely completion. The RBI has also encouraged investor confidence by adopting an expansionary monetary policy while also regulating inflation rates in the backdrop of geopolitical strains outside India. We are confident that the upcoming budget will continue to support the Indian real estate industry by encouraging infrastructure development and we are expecting the tax rates to be unchanged. The Indian economy is the fastest growing economy in the world and we are confident that with conducive government policies, the real estate sector will continue to bolster the national economy further in the perceivable future”.
Mr. Gaurav K Singh, Founder & Chairman, Womeki Group
"As a real estate company, we anticipate the government to introduce measures that will drive sector growth and investment in the budget. Key expectations include tax incentives, such as reductions in GST rates on construction materials and real estate transactions, which would lower costs and improve affordability. We also hope for increased tax deductions on home loan interest and principal repayments to encourage home purchases. Additionally, we expect enhanced regulatory and infrastructural support from the government. Implementing a single window clearance system to streamline project approvals will reduce delays and increase efficiency. We also hope for increased investment in urban infrastructure, such as roads, water supply, and sewage systems, alongside affordable housing schemes like the Pradhan Mantri Awas Yojana (PMAY) to support new housing developments. Incentives for green building practices and smart city initiatives are anticipated to promote sustainable and technologically advanced urban development, enhancing the sector's long-term appeal and functionality."
Mr. Santosh Agarwal, CFO and Executive Director of Alphacorp
“As we approach the upcoming Union budget 2024-25, the real estate sector eagerly anticipates policies that can drive development, growth and affordability. With housing demand expected to rise in both urban and rural areas, strategic tax reliefs for homebuyers and incentives for housing sector are important. The measures promoting sustainable urban development and enhancing infrastructure are imperative. A balanced approach that fosters both investment and affordability will not only lead to economic growth but also boost housing demand in the times to come. Not to forget, the budget presents a pivotal opportunity to bring forth a positive change in our urban landscape.
Looking Forward
The real estate sector is optimistic that the Union Budget 2024-25 will introduce supportive policies that address affordability, stimulate demand, and foster sustainable growth across all housing segments. The visionary approach of the central government in encouraging real estate growth, coupled with key infrastructure developments, positions the Indian realty sector for accelerated growth and economic vitality. With the government pushing renewable energy and eco-friendly construction, there is growing expectation that the upcoming budget would encourage sustainable development. With the world watching the phenomenal Indian growth story, the upcoming budget will provide the template for future growth and development in the country. As builders of India’s future, the Indian real estate sector stands ready to deliver on the hopes and dreams of the nation.
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