Mr. Prashant Sharma, President, NAREDCO Maharashtra
As we approach the upcoming budget, the real estate sector, particularly in Maharashtra, holds several key expectations that can significantly impact our industry’s growth and sustainability. NAREDCO Maharashtra, under the leadership of Mr. Prashant Sharma, presents the following pre-budget expectations:
Tax Incentives for Homebuyers: Enhancing tax benefits for homebuyers, especially under Section 80C and Section 24(b), would provide a much-needed boost to housing demand. Increasing the limit of deduction on home loan interest will make home ownership more attractive and affordable for the common man.
Single Window Clearance: The introduction of a single window clearance system for all real estate projects would streamline the approval process, reducing delays and costs. This measure would accelerate project completions and enhance the ease of doing business in the sector.
Incentives for Affordable Housing: Continued focus on affordable housing is crucial. We urge the government to extend the benefits under the Pradhan Mantri Awas Yojana (PMAY) and provide additional incentives to developers engaged in affordable housing projects. Also, there’s a need to redefine the definition of affordable housing, proposing an increase in the cap from Rs. 45 lakh to Rs. 1 crore, particularly in metro cities. This will help bridge the housing gap and provide homes to the economically weaker sections of society, boosting both affordable and mid-segment housing.
Addressing Liquidity Issues: The real estate sector continues to face liquidity challenges. We expect the budget to introduce measures that ensure easier access to financing for developers, especially small and medium-sized enterprises. Enhancing the flow of funds through banking and non-banking financial institutions is essential for sustaining project momentum. Also, there’s a need for an increase in the SWAMIH stress fund and the creation of a second tranche with a corpus of ₹50,000 crore, aimed at completing stalled realty projects and ensuring adequate liquidity.
Reforms in Land Acquisition: Simplifying land acquisition processes and reducing the costs associated with it will be instrumental in boosting real estate development. Transparent and fair land acquisition policies will encourage more developers to undertake new projects.
Focus on Rental Housing: To cater to the urban population and the migrant workforce, policies promoting rental housing should be prioritized. Incentives for developers to build rental housing projects will help address the housing needs of a diverse population.
Digital Transformation: Encouraging the digital transformation of the real estate sector through technological advancements and digital infrastructure will lead to greater transparency and efficiency. Incentives for adopting PropTech solutions will further modernize the sector.
Mr. Prashant Sharma, President of NAREDCO Maharashtra, emphasizes that these measures, if incorporated in the budget, will not only revitalize the real estate sector but also contribute significantly to the overall economic growth of the country. We are hopeful that the government will consider these recommendations and take proactive steps to support one of the largest employment-generating sectors in the economy.
As we approach the upcoming Union Budget, the real estate sector is keenly anticipating measures that will catalyze growth and address longstanding challenges. The real estate industry, being a pivotal contributor to the nation’s GDP, requires focused attention to ensure sustainable development and enhanced economic activity. Here are the key expectations from the forthcoming budget:
Enhanced Tax Benefits for Homebuyers: Increasing the limit of tax deductions under Section 24(b) for home loan interest from the current ₹2 lakh to ₹5 lakh will provide a significant impetus to homebuyers. This move will not only enhance affordability but also stimulate demand in the residential segment.
Single-Window Clearance System: The implementation of a single-window clearance mechanism is crucial for expediting project approvals and reducing bureaucratic delays. This will enable faster project execution, thereby ensuring timely delivery and boosting investor confidence.
Incentives for Affordable Housing: Further incentives for affordable housing projects, such as extended tax holidays and increased allocation under the Pradhan Mantri Awas Yojana (PMAY), will be instrumental in achieving the government’s vision of ‘Housing for All’. This will also help in addressing the housing deficit in urban and rural areas.
Rationalization of GST: The real estate sector urges the government to rationalize the GST rates on under-construction properties and ensure that Input Tax Credit (ITC) benefits are passed on to the developers. A reduced and simplified GST structure will encourage more homebuyers to invest in under-construction properties.
Infrastructure Status for Real Estate: Granting infrastructure status to the real estate sector will facilitate easier access to funding at lower interest rates. This move will not only reduce the cost of capital for developers but also accelerate the pace of infrastructure development, leading to overall economic growth.
Focus on Sustainable Development: The budget should prioritize policies that promote green and sustainable real estate developments. Incentives for using eco-friendly construction materials and technologies will encourage developers to adopt sustainable practices, contributing to environmental conservation.
Boost to Rental Housing: Introduction of policies and incentives to promote rental housing will help address the housing needs of a growing urban population. This includes tax benefits for rental income and schemes to encourage private participation in rental housing projects.
Revival of Stressed Projects: Special provisions and financial packages for the revival of stalled and stressed real estate projects will help in protecting the interests of homebuyers and ensuring the completion of projects. This will also aid in clearing the unsold inventory and reviving the real estate market.
In conclusion, the real estate sector looks forward to a budget that addresses these critical areas and paves the way for a robust and resilient industry. With supportive policies and reforms, the sector is poised to contribute significantly to the nation’s economic recovery and growth.
There are several key areas that we hope the government will address to foster the growth and development of the real estate sector.
The current Goods and Services Tax (GST) structure for the real estate industry needs to be rethought. Real estate is the most capital intensive industry and we feel that by allowing input tax credit for expenses made by real estate companies can not only help real estate developers manage their cash flows better, but also help rationalize prices for end users and make it more affordable. We also advocate for the rationalization of GST rates to ensure they are more straightforward and affordable. A streamlined GST system will reduce the overall cost burden on homebuyers and developers, promoting greater activity in the sector.
We urge the government to revise capital gains taxation to make it more favourable for real estate transactions. For instance, the current holding period for long-term capital gains tax on real estate should be reduced from 24 months to 12 months. Moreover, increasing the exemption limit under Section 54 and Section 54EC of the Income Tax Act can provide substantial relief to property sellers, encouraging more investments in the sector.
Enhanced infrastructure not only improves connectivity but also increases the value of properties. We urge the government to prioritize and allocate substantial funds towards these developments as well as enable infrastructure financiers with a reduced capital reserve ratio to spur growth in this sector. Such initiatives will spur real estate development in both urban and semi-urban areas, making them more attractive to potential homebuyers & investors and move our country towards a developed country status.
Non-Resident Indians (NRIs) have always been significant contributors to the Indian real estate market. We recommend the introduction of policies that make it easier for NRIs to invest in Indian properties. Simplifying regulations, providing tax benefits, and ensuring a hassle-free repatriation process will attract more NRI investments, thereby boosting the sector.
With an estimated combined spending power of over US$330 billion, India’s millennials, who form 36 per cent of the population, accounted for 54 per cent of homebuyers in 2023. The average age of a first-time buyer in 2022 was 33–36 years and one out of every three homes sold was to such a buyer. The younger generation is increasingly looking to invest in real estate. To support this trend, the government should introduce incentives such as reduced stamp duty, lower interest rates on home loans, and tax benefits for first-time homebuyers. These measures will make home ownership more accessible and attractive to young professionals and families, driving demand in the residential real estate market.
With an aging population, there is a growing need for senior living solutions. We urge the government to provide incentives for the development of senior-friendly housing projects. This could include tax benefits, subsidies, or grants for developers who focus on creating inclusive and accessible housing for senior citizens. Such initiatives will ensure that the needs of our elderly population are met, promoting their well-being and independence.
We look forward to policies that support the overall growth and stability of the real estate market that is a cornerstone for the development of our nation. This includes introducing measures to enhance transparency, reducing regulatory bottlenecks, and promoting sustainable development practices. Such initiatives will build trust among investors and buyers, fostering a healthier and more robust real estate environment.
Following a year marked by impressive performance, stakeholders emphasize the importance of additional support to sustain this upward trajectory from the upcoming budget. This includes tax benefits, easier access to credit, and measures to improve liquidity in the market. A robust real estate sector not only benefits homebuyers and developers but also has a multiplier effect on the broader economy, fostering growth and stability.
Millennials represent a substantial portion of potential homebuyers today. However, increasing property prices and stringent financing options often make homeownership a distant dream for many. We urge the government to introduce targeted schemes that cater specifically to millennials and first-time homebuyers. Making homeownership more accessible to this demographic will not only fulfill their aspirations but also inject fresh demand into the housing market.
Furthermore, there is a pressing call for increased budgetary allocation towards infrastructure development in cities like Mumbai. We expect the budget to allocate more funds towards infrastructure projects. Enhanced infrastructure not only makes urban areas more livable but also unlocks new regions for development. This, in turn, can lead to the creation of new real estate hubs, driving economic activity and providing a boost to the sector.
We anticipate a budget that addresses these key areas, fostering a conducive environment for the real estate sector to thrive. Such measures will undoubtedly contribute to the overall economic growth and development of the country.
The real estate sector has always been a cornerstone of the Indian economy, driving growth and employment. We anticipate policies that will provide a substantial stimulus to the housing market, such as tax benefits for homebuyers, reduction in GST rates for under-construction properties, etc. Such measures will not only invigorate the real estate sector but also have a ripple effect, benefiting ancillary industries and creating numerous job opportunities.
Foreign Direct Investment (FDI) plays a crucial role in the development of infrastructure and real estate. We hope the government will introduce reforms that simplify the FDI process and make it more attractive for foreign investors. By enhancing transparency and easing regulatory compliances, we can expect increased foreign inflows, which will bring much-needed capital into the sector and support large-scale developments.
Non-Resident Indians (NRIs) form a significant part of the real estate investment community. We look forward to policies that make it easier for NRIs to invest in Indian real estate, such as streamlined processes for property purchases, attractive loan schemes, and tax incentives. By creating a more NRI-friendly investment environment, we can tap into this vast potential market, thereby driving growth in the sector.
Robust infrastructure is the backbone of real estate development. We expect the budget to allocate substantial funds towards the development of infrastructure such as roads, metro projects, and urban development schemes. These steps will collectively contribute to a stronger economy and a brighter future for the real estate industry in India.
As the Union Budget for 2024-25 approaches, it is imperative that the real estate sector’s needs and expectations are addressed comprehensively to ensure sustainable growth and development. One of the pivotal aspects that can stimulate demand in the real estate sector is the enhancement of the tax deduction limit on home loan interest. Increasing this limit from ₹2 lakhs to ₹5 lakhs under Section 24(b) would significantly alleviate the financial burden on homebuyers, encouraging more individuals to invest in housing.
Robust social infrastructure is the backbone of urban development. We hope the budget allocates substantial funds for the development of educational institutions, healthcare facilities, and recreational spaces. Investment in social infrastructure not only improves the quality of life for residents but also enhances the attractiveness of a region, thereby driving real estate demand.
To sustain the momentum in the real estate sector, it is crucial to attract both domestic and international investments. Simplifying the Foreign Direct Investment (FDI) norms and providing tax incentives to investors can make the sector more appealing.
Sustainable development should be at the core of our urban planning. We urge the government to introduce policies that promote green buildings and the use of renewable energy in construction. Offering tax rebates and incentives for developers who adopt sustainable practices would encourage the industry to align with global environmental standards, ensuring a greener future.
We hope to see substantial budget allocations for enhancing infrastructure which is paramount for the real estate sector’s growth. Improved connectivity and infrastructure lead to the expansion of cities and open up new areas for development, providing more opportunities for both developers and homebuyers. These measures are anticipated to create a more conducive environment for the real estate sector, promoting affordability, sustainability, and its overall growth.
From the upcoming budget, we have high hopes for continued government support in key areas that drive the growth and sustainability of the real estate sector.
The government’s commitment to “Housing for All” has been commendable, and we look forward to further emphasis on affordable housing initiatives. Strengthening policies and providing additional incentives to developers engaged in affordable housing projects will ensure that more citizens can achieve their dream of homeownership. Metro cities, particularly Mumbai, face unique challenges due to high land and construction costs. We urge the government to introduce special schemes and subsidies tailored for affordable housing in metropolitan regions. This can significantly bridge the gap between supply and demand, making housing more accessible to the urban population.
Enhancing tax benefits for homebuyers, especially first-time buyers, can provide a substantial boost to the real estate market. Increasing the deduction limits for home loan interest and principal repayments will not only encourage more individuals to invest in property but also support the overall economic growth through increased real estate transactions.
We anticipate increased budget allocations for the development of infrastructure as improved infrastructure enhances the livability quotient and makes real estate investments more attractive.
The commercial real estate sector is a significant contributor to the economy, providing employment and supporting various industries. We expect the budget to introduce reforms and incentives that facilitate the growth of commercial real estate, including the relaxation of FDI norms and tax benefits for commercial property investments. REITs have emerged as a crucial instrument for attracting investment into the real estate sector. We hope for measures that promote the growth of REITs, such as favorable tax treatment and easing regulatory requirements. This will not only provide investors with more opportunities but also bring in much-needed capital to the sector.
A budget that addresses these focal points will undoubtedly foster a more robust and resilient real estate market, benefiting homebuyers, investors, and developers alike.
