The Union Budget 2023-24 has offered more intangible benefits than tangible gains for the real estate sector. It is hence no surprise that while the average home buyers got busy in their tax calculations immediately after the Finance Minister’s budget speech, the industry stakeholders have by and large given a thumbs up to the budget. A Track2Realty report.
The real estate sector in its collective consciousness seems to be convinced with the long-term growth prospects of the business along with the vision of the government that the budget intends to focus on. The Union Budget 2023-24 makes a commitment towards green growth, while focusing on augmentation and enhancing urban infrastructure, technology, and inclusive development. Though the long-standing demands of the sector remained untouched, yet there is a feeling of déjà vu with the last full-budget of the incumbent government.
Key takeaways for realty with Union Budget 2023-24
Steep hike of 66% in outlay for PM Awas Yojana to INR 79,000 crore
Deduction from capital gains on investment in residential house under sections 54 and 54F to INR 10 crore
Credit Guarantee Scheme to enable collateral-free guarantee credit of INR 2 lakh crore
Increased capital outlay to INR 10 lakh crore; 33% of the GDP
50 more airports to fuel housing demand in Tier II and III cities
Focus on Artificial Intelligence and Machine Learning to fuel Proptech growth
The green growth priority sector could help the real estate sector to achieve net zero carbon footprint
Dedicated investment of INR 10,000 crore through urban infra development to fuel commercial real estate & housing
Higher disposable income with new income tax slabs to find capital being parked into real estate
Boosting start-ups to fuel demand for more commercial spaces
Ashish Puravankara, Managing Director of Puravankara Ltd. points out that the government’s focus on infrastructure, investment and housing for all in today’s budget is commendable. The steep hike in outlay for the PM Awaas Yojana by 66% to INR 79,000 crores will give the much-needed fillip to the affordable housing sector. Another steep hike of 33% in the capital investment outlay, which translates to 3.3% of the GDP, is a bold move which will help India in its goal to become a 5 trillion-dollar economy by fuelling investments and job creation.
“The government has shown its seriousness in building an environmentally sustainable economy by including ‘Green Growth’ as one of its priority areas and reiterating India’s goal to achieve net zero carbon emissions by providing INR 35,000 crores for priority capital investments. The green credit program is unique and will incentivise companies to take environmentally responsible actions. We think today’s announcements will help ensure continued economic growth and hence positive sentiments for housing demand in 2023,” says Puravankara”
Harsh Vardhan Patodia, President, CREDAI National believes that an increased capital outlay for a third year in a row to INR 10 Lakh crores amounting to 3.3% of the GDP, a hike of 66% to over 79,000 crores for PM Awas Yojana and the INR 9000 crore Credit Guarantee Scheme for MSMEs, will have a positive multiplier effect on economic growth and help realize the PM’s vision for ‘Housing for All’.
“Continuing its focus on urban planning reforms to develop sustainable cities for tomorrow, the allocation of INR 10,000 crores to the NHB for infrastructure development, the highest ever railway outlay at INR 2.4 lakh crore and increased regional connectivity through 50 more additional airports, helipads, water aero drones, advanced landing grounds will also boost affordable regional connectivity and will add impetus for infrastructure development, especially in Tier-II and III cities which will help the Indian economy to remain less impacted by a global slowdown, says Patodia.”
Dhruv Agarwala, group CEO, Housing.com, PropTiger.com & Makaan.com agrees that the allocation of INR 79,000 crore in the Budget 2023-24 for the Pradhan Mantri Awas Yojana (PMAY) is a significant step towards fulfilling the government’s commitment to provide affordable housing to the urban poor. The 66% increase in funding for PMAY, compared to the previous budget, will provide a much-needed boost to the program and contribute to the growth and development of the country.
“The extension of the Credit Linked Subsidy Scheme (CLSS) will give homebuyers the financial flexibility to make their purchase, thereby helping to achieve the government’s goal of completing 80 lakh houses under PMAY. The hike in funding for PM Awas Yojana is a positive development in the affordable housing market and an important step towards creating a more inclusive society,” says Agarwala.
However, there are industry stakeholders who believe that the glass has been half empty for the sector. Sachin Bhandari, Executive Director & CEO, VTP Realty categorically says that the budget this year is as expected, on the lines of pleasing the general population through various incentives in the run up to 2024 General Elections. Specific to the real estate industry in India, the HNI customers will have more money in hand because of this budget. The budget is effectively reducing their tax outflow from 43% to 39% ensuring a net savings of 4% for the HNIs. As an example, if an HNI is having an annual income of INR 5 crore, his or her net savings due to this change will be approximately INR 15 lakh rupees per annum. This 15 lakhs saved will give that person an additional INR 1.5 crore of home loan eligibility thereby allowing that customer to buy a more costlier home.
“Increase in infrastructure investments has gone up by 33% to INR 10,000 crores. This will create huge employment across all levels, especially in the labour class. Therefore, money circulation in the economy is expected to increase drastically. This will lead to increased spending in the consumer segments, from FMCG, to real estate to consumer retail. Lastly and most importantly, the real estate sector is completely ignored in the entire budget speech. Real estate sector is the second largest contributor to the GDP of our country, it is also the second largest employer in the country. It has a phenomenal cascading effect on multiple allied industries. In spite of all that, there is not a single initiative to incentivize the real estate sector and that is disappointing for the whole sector,” says Bhandari.
Within the built environment of Indian real estate, there is a general consensus that the dedicated investment of INR 10,000 crore through the urban infra development fund will result in creation of quality of urban infrastructure and hence translate into higher demand for housing and commercial real estate. The expected changes in income tax slabs will result in higher disposable incomes, boding well for prospective homebuyers, mainly in the affordable and mid segment. The announcement to set up 100 labs for developing 5G service applications in India will give a boost to start-ups; and hence fuel the IT sector that could spark the demand for commercial spaces.
Ravi Sinha
#RaviTrack2Media
Track2Realty is an independent media group managed by a consortium of journalists. Starting as the first e-newspaper in the Indian real estate sector in 2011, the group has today evolved as a think-tank on the sector with specialized research reports and rating & ranking. We are editorially independent and free from commercial bias and/or influenced by investors or shareholders. Our editorial team has no clash of interest in practicing high quality journalism that is free, frank & fearless.
Subscribe our YouTube Channel @ https://bit.ly/2tDugGl
