Government focuses on housing sector to stimulate real estate market: Developers – Money News

The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman on Tuesday, gave a major boost to the real estate sector by emphasising urban development as a pillar of ‘Viksit Bharat’. The commitment to address the housing needs of one crore urban poor and middle class families with an investment of Rs 10 lakh crore under PM Awas Yojana-Urban could prove to be a game-changer.

“This allocation, with Rs 2.2 lakh crore in central assistance over the next five years, shows the government’s serious intention to address the housing crisis in urban areas and stimulate economic growth. Setting up industrial parks with Plug & Play model in around 100 cities and giving emphasis on rental housing with hostel-type accommodation for industrial workers on PPP mode with VGF support will further strengthen infrastructure and provide affordable accommodation options. These initiatives will not only boost the construction sector but also generate millions of jobs,”positively impacting related industries. In addition, a focus on urban development and transparent rental markets will benefit both developers and buyers, supporting a more robust and inclusive real estate market“- said Avneesh Sood, Director, Eros Group.

The government’s major focus on the housing sector in this year’s budget will not only address the housing needs of 10 million urban poor and middle-class families but will also boost the real estate market, creating huge opportunities for both developers and home buyers.

“The inclusion of interest subsidy to facilitate loans for affordable housing is particularly welcome as it will make home ownership more accessible to many. Further, the push towards rental housing through PPP dormitory accommodation is a strategic move. This will provide much-needed housing solutions for industrial workers, supporting a more inclusive housing market. This initiative will also encourage the private sector to invest in rental housing projects, further increasing the housing supply,” said Shiwang Suraj, Director and Founder, InfraMantra.

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The real estate sector is experiencing a speculative bubble, characterized by an excess of real estate supply in relation to demand from buyers.

“The government’s proposal to the states to further reduce the civil law transaction tax for women buyers of real estate is a welcome intervention in this regard,” said Haroon Asrar, partner at Solomon & Co.

The Pradhan Mantri Awas Yojana (PMAY) Urban 2.0 scheme, which aims to attract Rs 10 trillion of investment in urban construction, marks a significant leap forward for Indiaapproach to the urban housing crisis. This significant commitment to provide housing for one crore families demonstrates the unwavering commitment of the Central Government to support inclusive urban development.

“The government’s proposal to implement policies and regulations will enable the creation of an efficient and transparent housing rental market. This will lead to a streamlined and well-functioning housing rental market in urban centres. Moreover, land records in urban areas will be digitised using GIS mapping technology. Moreover, an IT-based system will be set up to manage land records and tax administration. This initiative is a welcome step towards efficient land records management, which would facilitate access to land-related documents by the common man,” Asrar added.

Here Let’s take a look at the budget responses of some of India’s leading developers:

Manoj Gaur, Chairman, CREDAI National and Managing Director, Gaurs Group: “The biggest announcement regarding the real estate sector is the provision of an investment of Rs 10 lakh crore in urban housing for the poor. This will be a milestone for affordable housing in the country, catering to the needs of 1 crore urban poor and middle class families. Despite high demand, progress in this segment has been slow due to lack of budgetary support. This funding is expected to lead to a number of new projects in the affordable housing segment. Provision of rental housing for industrial workers through a PPP model is also commendable. Moreover, the focus on transport-oriented development for urban centres with a population of 30 lakh and above will strengthen urban infrastructure. With an expected 30-40% increase in the number of people moving to urban areas, this budget shows a long-term vision. Overall, this budget is a significant boost for the real estate sector.”

Yogesh Mudras, Managing Director, Informa Markets, India: “The announcement by Finance Minister Nirmala Sitharaman of Rs 11.11 lakh crore for capital expenditure in fiscal 2024-25 is a significant milestone. This large investment, equivalent to 3.4% of India’s GDP, underlines the strong commitment to infrastructure. The government’s focus on increasing capital expenditure, particularly on infrastructure and road projects, is aimed at improving connectivity across the country. While initiatives such as Phase 4 of the Pradhan Mantri Gram Sadak Yojana aim to improve access to rural areas, broader infrastructure improvements will also benefit urban areas and industrial estates. For the trade exhibition sector, improved infrastructure — including better roads, transport networks and facilities — is essential for the successful execution of large-scale events. Improved infrastructure supports smoother logistics,”better access for exhibitors and visitors and an overall better event experience. This strategic focus on infrastructure development will support the development of the industry growth and contribute to a more dynamic economic environment, benefiting sectors like ours and the economy as a whole.”

Uddhav Poddar, MD, Bhumika Group: “The focus on infrastructure development by allocating Rs 11.1 lakh crores along with employment generation and skill development will boost real estate development and provide a boost to the commercial segment. Introduction of PPP model for rental housing in urban centres along with Transit Oriented Development (TOD) will also promote real estate development.”

Sandeep Chhillar, Founder and CEO, Landmark Group: “The Finance Minister said the government is committed to maintaining significant financial support for infrastructure development. This year’s capital expenditure allocation of Rs 11.11 lakh crore, which is 3.4 per cent of India’s GDP, underlines this commitment. The allocation of Rs 2 lakh crore for job creation over the next five years is expected to boost demand, thereby accelerating growth in the sector. The presentation of the Union Budget for fiscal 2025 also highlighted the government’s focus on improving housing affordability, with an aim to address the challenges in this sector through a significant investment of Rs 10 crore in urban housing, increasing housing supply and availability, which will positively impact the real estate market dynamics.”

Ramani Sastri, Chairman and Managing Director of Sterling Developers:The real estate sector has witnessed significant growth in recent times and we appreciate the targeted measures taken by the government to further boost the growth of the real estate market and unleash its full potential. The government’s concentrated efforts on infrastructure development promise to significantly increase the demand for housing and benefit around 250 ancillary industries, generating numerous employment opportunities and strengthening the overall economic growth. Generous financial assistance for urban housing and provision of more houses under the PMAY scheme will go a long way in meeting the housing needs of the urban poor and middle class families. Moreover, further reductions in taxes on properties purchased by women will strengthen the housing sector. From a buyer’s perspective, addressing the key issue of reducing the civil law transaction tax will make housing more affordable.”

Rajiv Gupta, Managing Director, Wave Group: “The Budget 2024-25 is very encouraging for the real estate sector with a focus on infrastructure development in rural and urban areas. The push for construction of three crore additional housing units under the PM-AWAS scheme is a necessary step in bridging the housing gap for the poor and middle class. The total allocation of Rs 10 lakh crore for urban housing will boost the growth momentum. The suggestion to state governments to reduce stamp duty, especially in case of properties purchased by women, will undoubtedly boost sales. The Budget lays the foundation for sustainable growth of the real estate market by promoting cities as the growth hubs of new India.”