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With the Union Budget 2024-25 on the horizon, India’s real estate sector is advocating for either the provision of input credit in GST for all construction activities or a reduction of GST on under-construction properties from 5% to 1%, bringing it in line with ready-to-move-in properties. Additionally, they are calling for the revival of the Credit-Linked Subsidy Scheme (CLSS) under PMAY, which expired in 2022, to support economically weaker sections and low-income groups in transitioning from ‘kaccha’ to ‘pucca’ homes.
Read the expectations of Real estate sectors in detail:
Rudrabhishek Enterprises Limited (REPL), from CMD, Mr. Pradeep Misra
The Indian real estate sector is expecting the Union Budget 2024–25 to improve liquidity, such as enhanced funding for the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund, which has been crucial in reviving stalled projects. Raising the home loan interest deduction limit from INR 2 lakh to INR 5 lakh would significantly benefit middle-income homebuyers. Either allowing input credit in GST for all types of construction activities or, reducing GST on under-construction properties from 5% to 1%, aligning it with ready-to-move-in properties, could stimulate demand.
We also expect the government to revive the Credit-Linked Subsidy Scheme (CLSS) under PMAY, which expired in 2022. This scheme previously benefited EWS/LIG homebuyers and supported the conversion of ‘kaccha’ homes into ‘pucca’ ones under PMAY (Rural). Reintroducing a 100% tax holiday for affordable housing developers under Section 80-IBA and updating the definition of affordable housing to reflect current market dynamics are crucial. To promote SM REITs, long-term capital gain on SM REITs should be exempted from the investment made in the year.
Additionally, streamlined approval processes and digitization in land records can significantly reduce project delays, benefitting both developers and end-users. On the commercial front, incentives for green building practices and sustainable infrastructure development will drive urban regeneration and attract investments.
Anurag Goel, Director at Goel Ganga Developments
So, the upcoming budget putting an extreme focus on infrastructure could turn the tables synonymously for real estate investment opportunities. With the government’s ambitious investment target to the tune of ₹111 lakh crore in infrastructure up to 2025 under the National Infrastructure Pipeline, we expect a significant spillover in real estate investments.
The proposed ₹25 lakh crore just for road infrastructure could unclog new real estate hotspots along significant corridors. Besides, there was also the planned investment of ₹19 lakh crores in urban infrastructure, which could act as a harbinger of change in the entire landscape of urban regeneration projects and open up lucrative opportunities in the city center. Emphasis on affordable housing, with a promise to build 2 crore houses by the year 2025, may certainly create new vistas for investors in the mid-income segment.
In addition, with the expected ₹3 lakh crore allocation for digital infrastructure being a reality, data center real estate and smart city projects sprung up, promising 14-16% returns for early investors.
LC Mittal, Director, Motia Group
The infrastructure push in Budget 2024-25 might revolutionize real estate investment landscapes. The planned expansion of metro rail networks in 25 cities by 2025, which is pegged to see investment worth ₹4 lakh crore, is expected to create prime opportunities in transit-oriented development.
We might see integrated townships come up along these corridors providing returns of 20-25% over 5-7 years. The expected allocation of ₹1.5 lakh crore to the renewable energy infrastructure may give rise to the development of green buildings and sustainable communities — a segment expected to grow at a 13% CAGR till 2027.
However, further wood behind the arrow would include if a budget turned its focus to addressing the ₹16 lakh crore funding gap in infrastructures through measures, for example, a credit enhancement of municipal bonds, opening new avenues for REITs in the infrastructures asset space.
It may potentially provide stable yields of 7-9% a year, which may make it slightly appetizing for risk-averse investors in a particularly volatile market.
Aman Gupta, Director, RPS Group
The real estate sector mostly focused on the expectations of further reforms in the next 2024-25 budget to solve the existing issues. We are expecting that a single-window clearance will be finalized and implemented to avoid more delays and increased costs for the projects.
The industry also awaits policies that promote rental housing, including tax incentives for owners and the framework for the Model Tenancy Act for the states. Another emerging area is the bid to raise the permissible statutory regulations about home loan interest deductions, which holds the potential to bring homeownership within the reach of a middle-income earner.
We are also expecting policies that will help with the implementation of new technologies for the construction industry, for instance, through offering grants for research and development or subsidies for integrating PropTech into the construction industry.
Finally, the sector wants such policies and measures to lure foreign Investment through a change of FDI policy or via tax exemption for large-scale development of urban infrastructure projects. More such support would undoubtedly help further develop the sector and bring about a more rapid turnaround in its development for modernization.
Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara Private Limited
The 2024-25 budget may prove to be a golden chance to meet the new challenges of the real estate sector. Looking closer, measures to stimulate the commercial real estate segment which has been weakened by shifting work patterns are anticipated. This could involve offering tax credits to businesses intending to occupy offices or to developers offering versatile commercial spaces.
The industry also wishes to see policies to kick-start redevelopment; possibly, there may be some specific incentives for overhauling older portions of cities. Another important expectation is that governments should work towards the proper and consistent taxation of stamp duty for the upliftment of property demand.
We are also anticipating measures that would create added vitality in the logistics and warehousing segment like the infrastructure for large-scale approval. Last but not least, the sector expects initiatives to boost the digital transformation of real estate transactions, potentially by encouraging the use of blockchain technology in property registration. Policies such as these would lock the real estate sector into long-standing development trajectories and long-term sustainable growth paths.