The recent Union Budget’s announcement of a complete income tax exemption for individuals earning up to ₹12 lakh annually is expected to have a significant impact on the real estate sector, particularly in Tier 2 cities. While demand for housing in these cities has been steadily rising, a supply crunch due to fewer new project launches has created an imbalance in the market.

In contrast, Tier 1 cities have managed to maintain a balance between sales and supply, ensuring stability. However, in Tier 2 cities, the increase in disposable income resulting from tax exemptions is expected to further fuel demand, leading to a surge in affordable housing sales. With higher savings on EMIs, prospective buyers will find it easier to invest in property, further accelerating market activity.

Experts suggest that while the tax exemption is a welcome move, additional policy support is needed to boost housing supply. Pankaj Kapoor, Managing Director of real estate research firm Liases Foras, noted that reinstating the 100% tax deduction on profits from affordable housing projects under Section 80-IBA could have incentivized developers to increase supply. “Perhaps the reinitiation of the 100% tax deduction on profits from affordable housing projects under Section 80-IBA would have been ideal to promote the supply of affordable housing projects,” he said.

With increasing demand and a potential rise in supply, Tier 2 cities could soon become the new growth hubs for real estate. Industry stakeholders now await further policy measures that could complement the tax exemption and ensure a well-balanced housing market.

Also Read: budget expectations for real estate

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With Union Budget 2024-25 set to be tabled in July, the real estate sector pins renewed hope on the Modi 3.0 regime. Expectations are high for tax reliefs and other sentiment boosters. The future of the overall industry also depends on unfettered infrastructure deployment to support and improve urban living standards as well as to develop and promote newer areas. 

Will the government finally decide to give in to the long-standing demand for industry status for the entire housing sector? Will it take ‘real’ measures to revive the affordable housing segment, which has been on a steady decline after the pandemic? 

The Indian housing sector remained upbeat in 2024 till date, with housing sales and new launches creating new peaks in the top 7 cities. Sales reached an all-time high at about 4.93 lakh units in FY23-24, while 4.47 lakh units were launched.

However, this momentum must continue in the future too – and the current growth trajectory is skewed towards mid-range and premium housing. Considering the specific housing needs of India’s lower-income groups, this momentum cannot ride solely on higher-priced homes while affordable housing continues to languish.

As per ANAROCK Research, the sales share of affordable housing reduced significantly after COVID-19 – from over 26% in 2022 and over 38% in 2019 to approx. 20% in Q1 2024. Due to low demand, this segment’s share of the overall housing supply in the top 7 cities also fell to 18% in Q1 2024, from nearly 40% in 2019.

Many interest stimulants previously extended to buyers and developers of affordable housing have expired in the last two years. This important segment must be revived with high-impact measures like tax breaks – for developers, so that they will focus more on affordable housing, and for buyers to improve affordability.

Other measures to reignite affordable housing would be:

Credit-linked subsidy scheme under PMAY

This scheme for EWS/LIG, which expired in 2022, should be revived to incentivise first-time buyers of affordable homes across cities. This will onece again invigorate demand in this segment. Subject to criteria specified under government guidelines, CLSS was previously available for housing loans to EWS/LIG buyers in new constructions, and for the addition of rooms, kitchen, toilet etc. to existing dwellings. Also, under PMAY (Rural), one could avail of this subsidy for all ‘kaccha’ homes being converted into ‘pucca’ ones, provided they fulfil the eligibility criteria.

Re-introduce 100% Tax Holiday for affordable housing developers

To boost supply and incentivise developers to build more affordable housing, the government can re-introduce the ‘100% Tax Holiday’ benefit they previously enjoyed under section 80-IBA in the Finance Act, 2016. This section provided for major tax relief on the profits earned from developing and building affordable housing projects.

Tweak definition of affordable housing criteria to widen additional deductions benefits to more buyers

According to the Ministry of Housing and Urban Poverty Alleviation, affordable housing is defined based on property size, price, and buyers’ income. For instance, affordable housing is a house or flat with carpet area up to 90 sq. m. in non-metropolitan cities and towns, and 60 sq. m. in major cities and valued up to INR 45 lakh for both. The central bank’s definition, on the other hand, is based on the loans given by banks to people for building a house or buying apartments.

The government must seriously reconsider revising the pricing of homes within the affordable housing budget, taking into consideration city-specific market dynamics. As per the current definition, the size of units at 60 sq. m. carpet area is appropriate. However, prices of units (up to INR 45 lakh) are not viable across most cities.

For instance, for a city like Mumbai, a

Also Read: REAL ESTATE SECTOR’S EXPECTATIONS FROM INTERIM BUDGET 2024-25

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NAREDCO Maharashtra organized a Knowledge Session ‘Realty of Budget 2023’ with real estate industry experts, to analyze the Budget and its impact on home buying and real estate industry. Dr Niranjan Hiranandani, Vice Chairman, NAREDCO; Adv Anil Harish, Partner, D.M. Harish & Co., Advocates; Shri Rajiv Sabharwal, MD & CEO, Tata Capital Ltd.; Shri Srini Sriniwasan, MD, Kotak Investment Advisors Ltd.; Mr. Sanjay Dutt, MD & CEO, Tata Realty & Infrastructure Ltd. and Mr. Navin Makhija, MD, The Wadhwa Group formed the august dais along with Mr Anuj Puri, Chairman & Founder, Anarock who moderated the session. 

Adv. Anil Harish, Partner, DM Harish & Co analyzed the Budget and its implications. 

Sandeep Runwal, President, NAREDCO Maharashtra welcomed the budget which he said is a fine balance between sustainable growth and financial stability. He applauded the honorable Finance Minister, Smt. Nirmala Sitharaman for her hard work in meeting the aspirations of the people through lowering income tax brackets and driving forward growth with increased infrastructure budget.

Adding further he said, “Pradhan Mantri Awaas Yojana (PMAY) is a lofty initiative by the central government, aiming to bring affordable housing for all. The staggering 66% increase in funding for the scheme to Rs 79,000 crore for the next fiscal year is expected to address more than 55% of the estimated deficit in funds for projects under the scheme, providing a huge impetus in providing housing to those in need.”

“The First Budget of Amrit Kaal, Budget 2023, struck all the right chords. Income Tax Reforms ensured more disposable income in the hands of citizens to accelerate demand-based growth. The government has also taken an honest effort to reduce taxes from all the tax slabs which is a great initiative,” added Mr. Runwal.

Dr. Niranjan Hiranandani, Vice Chairman, NAREDCO opined, “The real estate industry has a long way to go in realizing the goal of housing for all. India needs a greater push in the affordable urban and rural housing space for making housing possible to a last mile person, which requires a consistent growth impetus to the real estate sector. India needs to create a surplus of houses. Measuring the demand for housing, Dr. Hiranandani mentioned that the Budget could have given certain deductions against home buying and restructuring of home loan installments, which could have softened the burden on the home buyers.  

Adding further Dr. Hiranandani said, “It is a fantastic budget overall but not much has been done for the housing sector. Home loan EMIs need to be restructured. There is a surplus of stock in clothing and other sectors, but where is the surplus in housing stock, he asked. We need to further develop the concept of rental housing that is viable. In the US, 50% of the population lives in rented houses all their lives. He goes on to add that no one will invest in rental housing as returns are not working. They will rather invest in commercial real estate.”

“The government needs to set up bodies like charitable trusts set up during British rule or chawls which provided people with inexpensive accommodation. The aim is to provide every citizen in the next 5 to 10 years with a house to live in; be it owned or rented. Over 50% of Mumbai’s population lives in the slums. This goes on to show that we have not done enough in providing better housing for our citizens. The 66% increase in the PMAY outlay to Rs. 79,000 crores are not for urban housing alone but for both urban and rural housing.”

Navin Makhija, MD, The Wadhwa Group observed that the Government wanted to take the development agenda to tier II and tier III cities and it was an opportune time to look for development opportunities in such areas. Makhija envisaged that due to stiffening of interest rates the cost of buying affordable housing had gone up. 

He further went on to add, “We need to focus on affordable housing bringing in more investments into this segment. It has become slow due to increase in home loan interest rates and also input costs have gone up. On the other hand, commercial realty and IT are doing well. Prices have firmed up as well as occupancy. Huge allocations have been announced for various infra projects but we need to see if execution at the ground level is taking off. The direction is right but the pace at which projects are being completed is the big question.” 

Assessing the impact of removing the Income Tax Act’s Section 54 that allowed indexation of capital gains, the experts felt that the move could impact the housing sales. Srini Srinivasan, MD, Kotak Investment Advisors Limited said, “We were expecting a more populous budget with taxes going up, but that did not happen. The cap of Rs 10 crore on the capital gains deduction will impact the luxury housing segment, mainly in Mumbai. There will be bunching of sales till 31^st March 2023. Additional tax on REITS was a dampener but overall the budget on housing was a good one.”

Rajiv Sabharwal, MD & CEO, Tata Capital Ltd., lauded the Finance Minister’s efforts to balance both the short and long-term growth measures. He maintained that though the Budget has not proposed any new proposal for the real estate industry, it has not dented the ongoing pace of growth, as the real sector had caught a good momentum due to the Government’s push for the past two years.” 

He further added, “More could have been done in reducing income disparity. The income tax exemption rebate being increased from Rs. 5 lakhs to Rs. 7 lakhs will impact the housing sector positively as individuals will benefit with more money in their hands. Home buyers will invest in a project with good amenities coupled with quality construction and timely delivery. There has been no impact on the realty market due to home loan interest rate increase.  The government should find ways to control the prices so that the unit price does not go up for the home buyer.”

Agreeing that a big boost to urban infrastructure will spur investments, the experts pressed on the need to have cooling off the cost of capital in India. Anuj Puri, Chairman & Founder, Anarock while moderating the session cautioned that the foreign investors were finding the US market cheaper than India and preferring to invest there than India.  

Sanjay Dutt, MD & CEO, Tata Realty & Infrastructure Ltd., mentioned that while the USA was becoming cheaper to the investors, they preferred staying there instead of coming here. India needed to be consistent with its policies. The government has not done anything to disrupt the cost of capital in the country, which is good and welcomed.

Also Read: Union budget 2023-24 focuses on infrastructure development, green growth; thrust on affordable housing 

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“The upcoming budget is a highly anticipated one. While on the residential side, the rising interest rates are slowing demand in the affordable and mid segments, the limit in the tax deduction on interest paid should be increased from the current INR 2 lakhs to about INR 3-4 lakhs in case of self-occupied property and to be allowed without any limit in case of let out property. A hike in interest deduction will encourage the homebuyers to invest in the real estate and increase the demand in the market. On the commercial front, it will be a huge breather if investments in REITs can get exemption under section 80C, starting INR 50,000. Moreover, sovereign green bonds can be given a further push which could attract investments and enhance green development”, said Ramesh Nair, Chief Executive Officer | India & Managing Director, Market Development | Asia, Colliers.

Benefits to home buyers to boost demand in mid and affordable housing segment

Further, 100% tax holiday for affordable housing projects under Section 80IBA can be continued which was earlier only extended till 31 March 2022. This can provide a boost to rental housing in the affordable segment.100% exemption for rental income up to INR 3 lakhs for houses costing up to INR 50 lakhs can directly incentivize owners to rent out their houses to the targeted segment.

Separate deduction for principal repayment

There should be a separate deduction for the repayment of the principal amount of the home loan, which is currently clubbed under section 80C. At present, the ceiling of deduction for principal repayment of housing loan is INR 150,000 along with other tax saving instruments. Alternatively, the overall ceiling limits of section 80C can be raised up to INR 500,000 which can further spur investments.

Softening input costs load

Raw material costs have been constantly on the rise since last three years when they touched highest levels in March 22 led by supply chain constraints. Average cost of construction rose 10-12% YoY. The government should take steps to reduce the GST on such materials especially cement which corresponds to 28% of the total cost. Input Tax Credit (ITC) can also be levied on raw materials to boost commercial and residential development.

Tax benefits for REITs to attract more investments

The presence of high-quality tenants has led to uninterrupted revenue for the REITs, ensure stable returns to unit holders. The budget should make provisions for tax reductions in REITs by reducing TDS rate from the present 10%. This will give a major thrust to the sector and improve the flow of working capital. Further, investments made in REITs can get exemption under section 80C, starting INR 50,000, this can provide a thrust to the investors. 

Start-up-centric initiatives for higher investments in innovation and tax breaks

Start-ups can be offered with policies that can reduce input costs, enhance liquidity, and stimulate financial enclosure for certain sub-sectors. The budget can infuse certain assistance to save time and financial savings in forming a business. For instance, registering for GST, obtaining MSME certifications, number of tax filing, tax slabs, etc. for firms qualifying under Start-up India Scheme can be done through a single window clearance system. A separate tax and regulatory framework can be created for Private Equity/Venture capitals and start-ups.

Incentivise development of green/sustainable buildings

The government can provide incentives to companies who are engaged in climate responsive projects.   Developers and investors who are engaged in building green buildings can be exempted from income tax for any 10 consecutive years in a 15-year block. The sovereign green bonds announced in the previous budget should be further given a push in during 2023. As India gears up to implement the strategies addressed during COP 27, a robust sovereign green bond framework would aid in raising funds and improve investor confidence. The government can also create a 5-year plan to steadily scale up the usage of green bonds.

Budget likely to augment reduction of logistics costs and extend subsidies for EVs

The budget is expected to align with the National Logistics Policy, which would attract more investments in developing connectivity projects and logistics infrastructure through PPP model. To reduce the overall logistics cost, it shall give exemption from GST on all international transportation services. The government should also plan incentives for developers to adopt green warehousing concepts. To further electric mobility, subsidies for electric vehicles (EVs) are likely to get extended under Faster Adoption and Manufacturing of Electric Vehicles (FAME-II) scheme and shall also include light to heavy commercial vehicles in the scheme.  

Also Read: Real Estate looks for enhanced impetus in Union Budget 2023-24

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Following agriculture, the real estate sector employs the most people in India and accounts for approximately 6-7% of the country’s total gross domestic product (GDP). Recognizing its significance, the Central and State Governments have taken proactive measures to strengthen the real estate sector. For instance, in the previous budget, Finance Minister Nirmala Sitaraman allocated Rs 48,000 crore to the Pradhan Mantri Awas Yojana (PMAY) for affordable housing. The thrust on making affordable housing available to all, seeks government intervention in the forthcoming Union budget to address the acute shortage of demand situation. Realtors want the government to provide an impetus package that fetches relief to home buyers on the costing front.    

The realtor companies too are seeking remedial action by speedy implementation of the Model Tenancy Act on a pan-Indian scale, as it gives a level playing ground to all the players in the sector. The Act calls for a system of checks and balances that protects the interests of all, landlords, tenants and agents. 

The top priorities on a scale of five were, increase tax rebate slabs, encourage consumption by home buyers, enhance building of social infrastructure to invite home buyers, make room for more buying capacity in terms of employment and jobs and ensuring housing for all turns into a dream come true.

The Centre on its part had initiated measures beginning with Pradhan Mantri Awas Yojana (PMAY) to mitigate the housing shortage problem that has precipitated massive slum pockets and shanties in the urban and semi-urban areas of the country. Currently, the Centre is also mulling with the proposal of bringing down the costs of under construction properties as in most instances the developers have failed in passing on the benefits of input credit tax to the home buyers, despite repeated pleas from the government.

The forthcoming budget session will also be keenly watched for providing relief to prospective tenants in metro cities like Mumbai. This envisages the speedy implementation of the Affordable Rental Housing Scheme (ARHS). The ARHS falls under the aegis of PMAY and seeks shelter for everyone including those falling in the Below Poverty Line (BPL) category.

Himanshu Jain, is the VP – Sales, Marketing & CRM, Satellite Developers Private Limited (SDPL)

Also Read: Real Estate’s Budget Expectations – 2023-24 

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India Inc. has already started pinning hopes on various economic reforms in the upcoming Union Budget 2023-24. Unavoidably, there is quite a bit of overlap with previous years in the form of recurring demands which have, so far, not been or insufficiently met. 

1. The demands for single-window clearance and industry status for real estate are among the recurrent ones, and have yet to be addressed. The sector hopes that the forthcoming budget will finally address it.

2. The government must offer more incentives to boost affordable housing. To a noticeable extent, the pandemic derailed the affordable housing growth story since early 2020 – one segment which the current government has rightly stressed on since taking charge in 2014. The affordable housing supply by private players has reduced significantly since Covid-19, largely because its buyer class was impacted economically and hence went into wait and watch mode. Now, there is a need to make this segment attractive again, not least of all because it resonates well with the government’s housing for all initiative.

3. There is an express need for more tax sops for homebuyers as well as investors. The INR 2 lakh tax rebate on housing loan interest under Section 24 of the Income Tax Act needs to be hiked to at least INR 5 lakh. This will add momentum to housing demand, particularly in the affordable segment

4. The Budget should offer a degree of personal tax relief, either by ways of lower tax rates or by readjusting tax slabs. Doing so would also help boost housing absorption. The last increase in the deduction limit under Section 80C (to INR 1.5 lakh a year) was in 2014. Another favourable revision is long overdue, though it is admittedly unlikely. Instead, we may see the Budget further incentivising MSMEs and SMEs that are still struggling post the pandemic.

5. Government spending on infrastructure has been exemplary, and may get a further boost in the forthcoming budget. The positive correlations of infrastructure development with all real estate asset classes is well established.

6. Perhaps most importantly, the government should seriously consider revising the price bandwidths for homes to qualify as affordable housing to align with the market dynamics of different cities. The size of units as per the current definition (60 sq. m. carpet area) is fairly appropriate, but the catch-all pricing band of up to INR 45 lakh for affordable housing is definitely not appropriate across most cities.

For instance, a price band of INR 45 lakh or below is far too low in a city like Mumbai, where it should be increased to INR 85 lakh or more. In other major cities, the qualifying price band should be increased to INR 60-65 lakh. Such a move would  have more homes qualifying as affordable housing, and many more homebuyers would be able to avail the current benefits like reduced GST at 1% without ITC, and other government subsidies.

Also Read: This Maha Budget announcement set to benefit Real Estate

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By Varun Singh

The budget was presented we bring to you all that the realty industry thinks of the budget 2022 presented by the Finance Minister N Sitharaman.

Reacting on the union budget 2022 Dr. Niranjan Hiranandani, National Vice Chairman -NAREDCO and MD Hiranandani Group spelled that “As budget decodes Kaam, Kisan and Kamai as the focus, the outlays have comes out with a ‘budget for the economy’, with sustainability & infrastructure investment as its underlying theme. Rating it at 7/10, the Budget is clearly about complementing macro-growth with micro-all-inclusive welfare, digital economy and fintech, tech-enabled development, energy transition, bolstering investment and climate action – which augurs well for the nation.” “Industry welcomes much awaited focus to resolve long standing issues of reduction in approval timelines for land & construction. Emphasis laid towards modernisation and reforms in building byelaws, TDR reforms, urban town planning schemes, transit oriented multi modal corridors and transferable development rights. Impetus to urban development policy with enhanced capacity building will lead holistic development of urban cities. With rise in population & career mobility, focus on nurturing new smart tier 2-3 cities will result in a big boost for Real Estate infrastructure with cascading impact on additional job creation. Extension of PMAY scheme till March 2023 along with an allocation of Rs 48,000 crores outlay will further enhance affordable housing benefits 80 lacs new beneficiaries under middle class and economic weaker sections in urban areas. Single window portal for green clearances is a step to promote ease of doing business in augmenting sustainable development along with special mobility zones for electric vehicles. Granting of infrastructure status to data centres in lieu of impetus to data localization and protect data sovereignty is shot in the arm. This will enable the data centres industry to avail long & cheap credit financing in order to foster competitiveness to become a global data centre hub. Additional impetus on Gati Shakti, inclusive development for last mile connectivity, public investment, capital spending and financing of investments will augment steady economic growth.”

Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty and Treasurer, CREDAI MCHI
The Government has once again laid an emphasis on infrastructure in the Union budget announced today. Infra spending in PPP mode seems to be the thrust of the Union Budget 2022. The Budget made several announcements to spur the growth of the infrastructure sector in the country that includes the announcement of 25,000 km of new highways, Gati Shakti Masterplan for expressways, 100 new cargo terminals for multi-nodal logistics, and development of urban metro systems. This will propel the growth of the real estate sector and will also help drive demand for the warehousing and logistics sector across the country. The Government also extended the ECLGS up to March 2023. This will go a long way in supporting the MSME sector and revive industrial activity. The good news for the real estate sector has been the allocation of Rs. 48000 crore for PMAY along with 80 lakh houses expected to be completed by 2023 across the country. This has yet again highlighted the Government’s vision of Housing for All. The move will not only boost the affordable housing segment but will also encourage a lot of homebuyers to buy their dream homes. Through Ease of Doing Business 2.0, the Government continues to encourage digitization and fin-tech innovation. The focus on creation of digital infra, single portal for ease-of-doing business and digital skilling will strengthen the start-up ecosystem.
Overall, a progressive budget with the Government’s emphasis on job creation, building a robust infrastructure and revitalizing the economy.

Jitesh Lalwani, President, HomeSync Real Estate Advisory
‘Finance Minister Nirmala Sitharaman presented a growth-oriented Budget by hosting several measures to encourage leading sectors of the economy. Looking at the medium and long-term goal for the overall economy, it seems a desirable budget where the efforts will be made to increase private capital in the infrastructure sector. The announcement of 25000 kms of new highways along with Gati Shakti Masterplan for Expressways will pull forward the economy and will lead to more jobs and opportunities for the youth. In a boost to affordable housing, FM announced Rs 48,000 crore towards the Affordable Housing Scheme (PMAY) and will build 80 lakh homes for identified eligible beneficiaries, and identify eligible beneficiaries for 60,000 houses under PMAY in rural and urban areas that will directly support the Government’s mission of Housing For All. Although, the real estate sector was further eyeing sops such as relaxation in GST on under-construction properties, a reduction of GST on key raw materials, a higher interest exemption for homebuyers and above all, the long-awaited demand of granting ‘infra’ status to the sector; there were a few big announcements which will augur growth across the major sectors of the country.

Shraddha Kedia-Agarwal, Director, Transcon Developers
As anticipated, in today’s Budget 2022, Union Finance Minister Nirmala Sitharaman addressed the nation with the overall focus on national infrastructure development that will act as a catalyst to growth. It was a neutral budget where FM talked about rolling out the next phase of ease of doing business and ease of living. Besides, there were various implementations of reforms to boost digitization that might grab some attention from the NRIs to invest in the housing sector from around the globe. However, the major announcements on the economic front will surely benefit the overall GDP of the country in the near future.

Bhushan Nemlekar – Director, Sumit Woods Limited
The real estate sector had high hopes from the Budget 2022. Although the focus of the Union Budget 2022 was on overall economic development, the only thing to cheer for the real estate industry was the budget allocation of Rs 48,000 crore for the PM Awas Yojna. In urban and rural areas, 80 lakh houses will be constructed for identified beneficiaries for affordable housing under the PM Awas Yojana and 60,000 houses will be identified as beneficiaries. Also the Government has given a lot of importance on urban planning by showing it’s desire to set up a high-level committee for urban planners and economists. This will lay a foundation for Tier 2 & Tier 3 cities to transform into centres of economic growth. It is undoubtedly a progressive budget especially with its emphasis on building infrastructure for the country.

Jaatin Suratwala, Founder & MD, Suratwwala Business Group Ltd.

The Union Budget of 2022-2023 has come during times of uncertainty. The pandemic is obviously on its way out but the tail seems as unpredictable as the head two years back. Because of it, unemployment has reached unprecedented levels with an overall slowdown and has brought with it massive inequalities in income and wealth besides pushing even the middle class into absolute poverty. The realty sector and its buyers had certain expectation from the budget, namely: For homebuyers, it was expected to get more tax sops and higher relief on home loan rates + relief on a second home. In the tax sops, the specific areas were standard deduction to increase cash available to buyers and relief on long-term capital gains besides minimum tax rebate of Rs 5 lakh as against the current limit of Rs 2 lakh. For developers, it meant a rational capital flow source to keep up the work process + relief on GST (a single slab, relaxation in under-construction realty, and reduction in taxes on key raw materials) to reduce overall property cost and push demand. It also included granting industry status to the overall real estate sector and having a single window system.

Anuj Puri, Chairman – ANAROCK Group
Providing a broad-spectrum booster shot to the economy, Union Budget 2022-23 is progressive – especially with its emphasis on building the infrastructure of the country. The FM clearly emphasised the top priorities of the government – PM Gati Shakti for sustainable growth, inclusive development, productivity enhancement, and financing of investments.
Notably, the government also expanded the Capex target by 35.4% – from INR 5.54 lakh crore to INR 7.50 lakh crore – which may help boost overall spending towards economic growth. The budget also emphasises on the need for proper urban planning, provides some relief to states while keeping the fiscal deficit well under control. In another major positive, the government’s aim to create 6 million new jobs over the next 5 years will enable growth of residential real estate across the country.

Manju Yagnik Vice Chairperson Nahar Group and Sr Vice President NAREDCO MAHARASHTRA
The Union Budget 2022 presented by FM Shrimati Nirmala Sitharaman earlier on Tuesday morning was a growth-oriented one. The FM majorly focussed on India’s push for infrastructure project wheeling out the development plan for Railways, roads, airports, ports, mass transport, waterways and logistics. Under the master plan, the government plans to roll out big infrastructure projects including – the expansion of highways by 25,000 kilometres spread throughout the country, allocating Rs 60,000 crore to the Nal Se Jal scheme, the commencement of five river link projects across many states.
The push towards the infrastructure industry is optimistically anticipated to largely benefit the real estate sector as well. These projects will definitely be beneficial for the real estate sector with regards to better connectivity, enhanced productivity, property as well as rental price appreciation and increased employment rates. With the allocation of an additional Rs 48,000 crore to the Pradhan Mantri Awas Yojana and the identification of 80 lakh households for the affordable housing scheme, the consumer could definitely spark a sharp boost in residential demand.

Also Read: Budget 2022: Will these expectations of Realty Industry come true today?

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By Varun Singh

The Union Budget for the coming financial year will be presented by the finance minister N Sitharaman today.

There are lots of expectation from the budget by the real estate industry.

Here are some of the expectations from the developers.

Sandeep Runwal – President, NAREDCO Maharashtra and Managing Director, Runwal Group
Real estate being the second-highest employment generator and contributing more than 8 percent to the economy, the expectations from the 2022-23 budget are high and the industry is awaiting big announcements that will alter the future of the real estate sector.

The Central and State governments rolled out several reforms and incentives during the past year to revive the economy from the ill effects of the pandemic.

The Government will continue to put in its sincere efforts in pushing affordable housing. The cap of Rs. 2 lakh per annum against interest rate deduction under section 24(b) of the Act needs to be hiked to at least Rs. 5 lakh along with removing the 45 lakh cap from affordable housing, which will boost the affordable and mid-segment housing in a big way.

We also expect the government to continue promoting the affordable rental housing schemes by announcing tax reliefs for rental housing projects, which will fast track the pace of investments in these schemes. The Government’s commitment to boost both affordable and rental housing will help achieve their overall goal of Housing for All. We expect the Government to introduce tax sops for first-time homebuyers and look forward to re-introducing GST with an input tax credit on under-construction properties that will generate demand among homebuyers. There is a specific need for tax relief to spur significant real estate growth, along with single window clearance and lowering of home loan interest rates that will definitely go a long way in improving the market sentiments. We also urge the Government to reintroduce subvention schemes, helping the homebuyers to align their payments and encourage them to take a decision on home buying.

The quantum of the SWAMIH stress fund needs to be enhanced along with strengthening the financing institutions to generate adequate liquidity and help the completion of stuck realty projects.

In addition, the ‘industry status’ for real estate has been the long-standing demand by the sector; we anticipate that the Government can address this concern too.

Overall, the industry expects the Government to take substantial measures to strengthen the real estate sector as well as the entire economy, by addressing critical issues, ensuring job creation, and sustaining growth.

Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty and Hon. Secretary, CREDAI MCHI
The sector is seeing a strong recovery from the pandemic crisis. Residential sales in the top 8 cities have bounced back to near pre-COVID levels. While the real estate sector is looking at a robust housing demand revival in 2022. The developers expect the Union Budget 2022 to play a supportive and enabling role.

The upcoming budget shall bring a lot of hope to the real estate sector. The budget shall offer the much-needed push to the infrastructural development of the country. Falling housing inventory levels and a much healthier banking system are the perfect platforms for the budget to anchor a strategic roadmap for the next decade.

We should look at a multi-dimensional approach focused on the availability of improved & low-cost credit, forward-looking FDI inflow which allows foreign investment in completed housing, and inclusive participation in the start-up ecosystem through a dedicated fund focused on real estate innovations and digitization could go a long way in making the sector excel in 2022.

The outlook is a positive upsurge because of the strategic decisions and changes that the Government brought into action to tackle the Covid crisis that gave an overall boost to the home buying sentiment especially in these difficult times with the onset of the third wave.

Additionally, developers are hoping for provisions that will benefit the growth that includes the deduction of loss under house property, reduction in the income tax burden on rental housing and long-term capital gains on capital assets, relaxations in provisions for REITs for faster recovery in commercial real estate.

We have also written to the government to urge for a reduction in tax for investments on Real Estate Investment Trusts (REITs) and, also demanded tax-neutral consolidation of businesses through the mergers, in order to help the homebuyers who got trapped in delayed housing projects.

Shraddha Kedia-Agarwal, Director, Transcon Developers
Amid the pandemic, the Government has recalibrated its approach towards remobilizing the economy and introduced various reforms to ensure adequate liquidity in the system such as keeping the interest rates low, additional liquidity support to NBFC and HFCs. RBI’s accommodative stance for such a long duration too helped mitigate the effects of Covid-19 on businesses and was a key to the recovery of real estate and the overall economy. These reforms have eventually proven to be positive for the economy in the long run. The outlook on India’s economic growth in the coming years looks very positive with the way the Government has tackled the Covid crisis.

The upcoming budget needs to be more attractive to foreign investors as it will be an ultimate platform to announce further incentives which will attract more foreign investments into the sector. Considering the rupee’s recent muted performance, this budget is an ideal time for reforms targeted at foreign inflows into India. We expect the government to reduce the tax on interest income which will help accelerate capital inflows to India. Liberalizing foreign investment norms in real estate is another widely expected move.

The residential real estate market in India has become more lucrative for NRIs as a result of the increased transparency due to RERA and ease in investment norms. Given their efforts towards nation building, the NRIs expect the forthcoming Budget to reward them with sops such as ease of compliance under the Income-tax Act and reduction in withholding tax rates, among other relaxations.

Real estate acts as a major growth driver for the Indian economy. The government must announce encouraging moves that can further attract foreign investments into the sector and help in huge employment generation.

Himanshu Jain, VP – Sales, Marketing and CRM, Satellite Developers Private Limited (SDPL)
The real estate sector was already in focus for the government in 2021, we expect a similar and a more refined response this year.

The government has already played an immense role in driving the momentum of the industry with various announcements which benefited the developers and homebuyers last year. We have already addressed the positive outcome of the decisions, with a huge hike in sales all across the country.

The budget 2022 will bring further relaxation to the sector if the government plans on further extending the already introduced relaxations.

Additional benefits like GST waiver for under-construction homes hike in Rs 2 lakh tax rebate and incentives for private sector investments in the affordable housing segment; among others can be some of the measures Finance Minister Nirmala Sitharaman should consider in the upcoming Union Budget.

Bhushan Nemlekar, Director, Sumit Woods Limited
The government and the Reserve Bank of India (RBI) have done enough to bail out the real estate sector from depression, as it remains one of the most precise bellwethers of the state of India’s economy. The budget for 2022 will surely bring a positive outlook for the sector and we look forward to further emphasis on tax incentives, GST waivers, and Affordable housing this financial year. A series of key decisions taken by the government recently to revive the realty sector has improved consumer confidence and the impetus given to the residential sector is expected to yield positive results in the near future.

Meanwhile, the Economic Survey was announced on Monday.

Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers had this to say on the survey report.
The 2022 Economic Survey infuses optimism for what lies ahead. The projection of 8-8.5% GDP growth for fiscal 2022-23 will be led by supply-side reforms and easing of regulations. The survey also indicates that consumption is growing and inching closer to the pre-pandemic levels. Total consumption is estimated to have grown by 7.0 per cent in 2021-22 with a significant boost from government spending. The Survey spells out that rising capital expenditure by the government on infrastructure and an uptick in the housing cycle has been responsible for reviving the construction sector. This has resulted in the consumption and production of steel and cement consumption to reach pre-Covid levels. We expect Budget 2022-2023 to announce reforms and incentives that will continue to boost consumer spending and thus aid in the overall revival of the real estate sector.

Also Read: Bhushan Kumar Of T-Series Paid Rs 167 Crore For Juhu Bungalow

The post Budget 2022: Will these expectations of Realty Industry come true today? appeared first on Square Feat India.

The residential sector witnessed a strong comeback in 2021, with housing sales in the top 7 cities rebounding to 90% of pre-COVID levels and new launches reaching 2019 levels. While the housing sector’s prospects generally look upbeat in 2022, it remains to be seen to what extent, if any, the new COVID-19 variant Omicron impacts real estate activity.

So far, it has not had any seriously dampening impact. However, the sentiment revival in residential real estate during the worst parts of the first and second waves hinged heavily on policy support. The RBI and the government have proactively aided the sector with various demand boosters. The stamp duty cuts, tax benefits extension on affordable housing in last year’s budget were strong moves that made a difference.

Despite rising inflation, the RBI kept the repo rates unchanged for the last nine consecutive bi-monthly monetary policies, thereby extending the benefit of lower interest rates to homebuyers. These measures helped the housing sector, which plays a significant role in the overall economy, to maintain an even keel during a very rough phase.

The residential sector looks forward to further support beyond the mainstay demands of industry status, easy availability of finance, and GST rates reduction. With regards to the upcoming Union Budget 2022-23, some of the significant moves which would help spur up residential demand include:

•             Home loan deduction limit (u/s 24)

There is a need to hike the INR 2 lakh tax rebate on housing loan interest rates under Section 24 of the Income Tax Act to at least INR 5 Lakh. This could instantly infuse robust demand for housing, especially in the affordable and mid-segment categories.

•             Deductions for home loan principal repayment, over and above the existing 80C

Personal tax relief, either via a cut in tax rates or revised tax slabs, would be a welcome move – especially since the last increase in the deduction limit under Section 80C (to INR 1.5 lakh a year) took place in 2014. The time is certainly ripe for a further upward revision, but there is no denying that the government currently lacks the elbow space for such a move. Instead, it may focus on providing more incentives to MSMEs and SMEs struggling post the pandemic. Also, the government spending on infrastructure may further get a boost.

•             Redefine the definition of affordable housing criteria to extend the benefit of additional deductions to more buyers

According to the Ministry of Housing and Urban Poverty Alleviation, affordable housing is defined based on the property size, its price, and the buyer’s income. For instance, affordable housing is a unit with carpet area up to 90 sq. m. in non-metropolitan cities and towns, and 60 sq. m. in major cities and valued up to INR 45 lakh for both. The central bank’s definition, on the other hand, is based on the loans given by banks to people for building homes of buying apartments.

The government should seriously consider revising the city-wise pricing parameters to include a broader customer base under the benefits of extended to this segment. While the size of units as per its definition (60 sq. m. carpet area) is relatively appropriate, prices of units (up to INR 45 lakh) are not viable across most cities. For instance, a

As for other top cities, the budget range should be increased to at least INR 60-65 Lakh. With this price revision, more homes will fall within the affordable price tag, allowing more buyers to avail of multiple benefits like lower GST rates at 1% without ITC, government subsidies, and the tax deduction of a total INR 3.5 lakh on interest repayment of home loans.

Also, more government-controlled land needs to be unlocked to create affordable housing. Some portions of land across cities falling under the Department of Heavy Industries, Indian Railways, Port Trusts, etc., can be released by respective government bodies. Increased availability of low-cost land will also help rein in property prices significantly.

•             Extend benefits of Affordable Housing

Affordable and rental housing got a big boost in the last Union Budget, with the government extending the period for extra deduction of INR 1.5 lakh for loans up to 31st March 2022. A further extension of this benefit will ensure buoyant demand for affordable housing in 2022. Further, extending the tax holiday for affordable housing projects by another year will help bring in more new supply within this segment. As per ANAROCK Research, affordable housing in 2021 accounted for approx. 26% of the overall supply across the top 7 cities. Tax exemption for ARHC will also help stave off labour shortage challenges in case of any future disruptions.

Note: Anuj Puri, is the Chairman – ANAROCK Group, views expressed in this article belongs to him.

Also Read: Reverse migration a challenge in post COVID India

The post Real Estate Pins Hope on Union Budget 2022-23 appeared first on Square Feat India.

By Varun Singh

Affordable homes is the only sector in the real estate industry that has gained the most from the Union Budget 2020-21.

The marathon budget presented by the finance minister Nirmal Sitharaman on Saturday was watched and heard by the real estate sector with a lot of hope. However, a majority of them returned upset. The sector while had expected tax cuts, deduction on home loan interest, better benefits like infusion of more money in the sector. However, their morale is not completely down because at least the budget focused on one sector of housing extensively.

Affordable homes, has been the biggest marketing tool by the Narendra Modi led government at the centre since its inception in 2014 and has been carried forward after the return in 2019.

The budget has focussed on affordable homes and the developer community, which also very hard to be pleased has given a thumbs up to this particular move.

They feel the move will boost sales in this sector and help revive the demand. Affordable homes doesn’t have a universal definition. But builders in Mumbai have come up with a definition of their own. Smaller compact homes within Rs 1 crore budget is what they normally term as affordable. The price of the homes go down as you move more in the suburbs and extended suburbs, but the compact home concept still remains.

Meanwhile, on the budget presentation and the biggest takeaway for the real estate community, the affordable housing sector has made developers happy and here are some of the comments from them.

Sangeeta Prasad, MD & CEO, Mahindra Lifespace Developers Ltd, says, “A year’s extension on both the additional reduction of ₹1.5 lakhs for interest paid on affordable housing home loans; and the tax holiday provided to developers of affordable homes will boost supply and revive demand in the segment. This segment also stands to gain from the increase in disposable income due to lower personal tax rates on income of up to Rs. 15 lakhs. The allowance of a higher difference between transaction value and stamp duty rates can also stimulate growth.”

Dr Niranjan Hiranandani, President Naredco, says, “Tax benefits extended to both homebuyers and Developers in affordable housing sector will encourage more launches in this segment.”

Mayur Shah, Managing Director, Marathon Group, says, “The announcement on affordable housing augurs well for the industry and customers as well. Home-buyers will be benefitted with the extension of additional deduction up to Rs. 1.5 lakhs for interest paid on loans taken for an affordable house till 31st March, 2021.”

Anuj Khetan, Director, Vijay Khetan Group, says, “The announcement proposed to extend Rs 1.5 lakh benefit on interest paid on affordable housing loans by a year is a move to encourage the developers to invest more in affordable housing. Also, the tax holiday provided on profits earned by developers is a big relief to the sector.”

Also Read: Budget 2020-21 Misses Real Estate ‘Quick Fixes’.

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