Photo Credit: ANI
With the Union Budget 2024-25 approaching in July, the real estate sector is looking to the Modi 3.0 regime with renewed optimism.
Anuj Puri, Chairman of Anarock Group, highlighted expectations for tax reliefs and other sentiment boosters in a recent note on budget expectations. He emphasized the urgent need for unfettered infrastructure deployment to enhance urban living standards and promote development in newer areas.
Puri queried whether the government would finally confer industry status on the entire housing sector and implement substantial measures to revive the declining affordable housing segment post-pandemic.
Despite a robust performance in 2024 to date, with housing sales and launches hitting new highs in major cities, Puri noted a predominant focus on mid-range and premium housing. He underscored the unsustainable nature of this trend if affordable housing continues to lag, particularly in meeting the needs of lower-income groups.
According to Anarock Research, the share of affordable housing sales plummeted after COVID-19, dropping from over 26% in 2022 and over 38% in 2019 to around 20% in Q1 2024. This decline extended to just 18% of total housing supply in the top seven cities, down from nearly 40% in 2019 due to diminished demand.
Puri highlighted that incentives for affordable housing buyers and developers had lapsed over the past two years, necessitating high-impact measures like tax breaks to reignite focus on affordability.
He advocated for reviving schemes like the EWS/LIG incentive to stimulate demand among first-time buyers, thereby rejuvenating the affordable housing sector. The reintroduction of the ‘100% Tax Holiday’ under section 80-IBA could further incentivize developers to build affordable housing.
Puri recommended revising the criteria for affordable housing to widen benefits, aligning it more closely with city-specific market dynamics. While the current definition’s unit size of 60 sq. m. is deemed appropriate, he suggested revising the ₹45 lakh price cap upwards for major cities like Mumbai to reflect realistic market conditions.
As India braces for Budget 2024, expectations are high across sectors. The budget promises reforms aimed at bolstering economic growth, encouraging investment, and supporting sustainable development. Key areas of focus include tax reforms, green technology incentives, PLI scheme expansion, and significant sectoral investments.
Anticipated measures also include potential reforms in GST, such as bringing petroleum products under its purview, and adjustments in customs duties to stimulate domestic manufacturing.
