Realty sector seeks a revival of affordable housing segment

Hyderabad: As there are only few days left for Union Finance Minister Nirmala Sitharaman to present the interim Budget of FY 2024-25 in the Parliament, the real estate sector experts have a host of expectations. Affordable housing is crucial for the real estate sector's sustained growth, as there is a limit to how much the mid and upper segments can absorb. Gulam Zia, Senior Executive Director - Research, Advisory, Infrastructure, and Valuation, Knight Frank India, said: "The primary concern in the real estate sector currently is the declining sales in the lower-income segment or the affordable housing segment, contrasting with a remarkable comeback in the mid and upper segments.”

“Out of approximately 3.3 lakh apartment flats sold in 2023, a significant 69 per cent have been sold to the upper and mid segments, marking a historical trend. The challenge lies in the fact that the lower-income segment is not participating in the market, raising apprehensions. If the government earmarks Rs 70,000 crore as a subsidy for the lower segment, it would greatly stimulate transactions,” he said.

Zia further said, “The key expectation during the budget is a government focus on revitalising affordable housing. Recommendations include extending the tenure of PMAY (Pradhan Mantri Awas Yojana) and broadening the criteria to identify the lower-income strata, particularly in cities like Mumbai and NCR. For cities like Mumbai, it would be prudent to expand the threshold to Rs 50-75 lakh.”

Expressing similar views on the affordable housing segment, Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE, said: “Our recommendations include broadening the criteria for affordable housing and revising the size criteria for metro cities to 90 sq m, and establishing flexible brackets of unit sizes and prices depending on city dynamics to ensure inclusivity.” “We urge the extension of the 100 per cent tax holiday for developers engaged in affordable housing projects, recognizing their inherent low margins. Extension of the PMAY (Urban) scheme must be considered aligning it with the government's vision to construct affordable houses. The government must increase the outlay on the scheme and extend the scheme by a few years,” he added.

Ramesh Ranganatham, CEO of K Raheja Corp Homes, said: “Elevating the real estate sector to industry status is the key. We anticipate impactful policies, fostering industry growth with tax incentives measures making it more lucrative for homebuyers. The holding period for residential properties as a long-term capital asset should be shortened to 12 months, aligning with market dynamics.”

“In the forthcoming 2024 budget, we anticipate that the Prime Minister's vision of 'Housing for All' will continue to be prioritized in order to continue providing the supply-side stimulus and boost end-user demand. The government is expected to set up a tax relief plan to make housing affordable enough to increase the demand,” says Pushpender Singh, MD, JMS Group.

Deep Vadodaria, CEO of Nila Spaces, said: "I observe a concerning trend in the diminishing enthusiasm among private developers to embark on affordable housing projects nationwide. The deceleration is palpable, especially following the cessation of PMJAY subsidies and benefits for beneficiaries in the affordable housing sector. Tax benefits under Section 80 have not been extended and led to slowdown.”