No big-bang announcements for real estate sector
Some announcements will benefit the real estate sector, both directly and indirectly
image for illustrative purpose
The industry has been requesting industry status for years, believing that it would unlock benefits like easier access to credit, tax breaks and infrastructure development. This wasn't explicitly addressed in the interim budget
As anticipated, the Interim Budget 2024 made no big-bang announcements, but it continued its focus on infrastructure upgrades and building connectivity across the country. This will benefit real estate growth in not just the top cities but also in the country’s Tier 2 & 3 cities.
The Finance Minister made some announcements that are bound to benefit the sector both directly and indirectly:
PM Awas Yojana (Gramin): Despite all the challenges, the implementation of this scheme continued, achieving the target of close to three crore houses and now aims for a further two crore in the next five years.
Housing for the middle class: The government will launch a scheme to help deserving sections of the middle class, living in rented houses or slums, or chawls and unauthorized colonies, to buy or build their own houses. This is likely to free encroachment areas like slums for easier redevelopment.
Capex outlay allocation: This is being increased by 11.1% to Rs. 11,11,111 lakh crore, accounting for 3.4 % of GDP. This will unlock the potential for real estate development across assets because a major part of this allocation will be used for various infra upgrades and new projects.
Transit-oriented development in urban areas: This may give a boost to housing demand in cities and lead to rise in residential prices.
Development of iconic tourist centres: There is every reason that this is likely to favourably impact the hospitality sector with hotels and restaurants across categories. Moreover, long-term loans proposed to states for tourism.
Extending tax benefit to startups: The one year extension may help office real estate to rejuvenate.
Key Unmet Expectations-Industry status: The industry has been requesting industry status for years, believing that it would unlock benefits like easier access to credit, tax breaks and infrastructure development. This wasn't explicitly addressed in the interim budget.
Tax benefits: Tax incentives for homebuyers, such as increasing the deduction limit on home loan interest under Section 24, were expected. The interim budget remained silent on this as well.
Affordable housing: Boosting allocations for schemes like PMAY (Urban) to improve affordability and encourage new projects in this segment was a key expectation. No major announcements appeared in the interim budget regarding this either.
While the interim budget did not directly address the real estate sector's key demands, the Union Budget might hold more concrete measures addressing industry concerns and potentially impacting market trends.
(The writer is Chairman of ANAROCK Group)
