Union Budget 2024: Why the real estate sector is looking forward to a boost

After a robust performance in 2023, the real estate sector in India is now eagerly looking forward to the upcoming Budget to be presented by Finance Minister Smt. Nirmala Sitharaman.  

The real estate sector's contribution to India's GDP is poised to rise from the current 6-8 per cent to an estimated 13 per cent by 2025. The expectations for the forthcoming Budget are high, with stakeholders anticipating initiatives that will further propel the sector's growth. The industry believes that government support is crucial in maintaining the positive trajectory witnessed in 2023. 

Looking at the long-term prospects, NITI Aayog forecasts a remarkable trajectory for the Indian real estate sector. It is projected to reach a market size of $1 trillion by 2030, constituting 13 per cent of India's GDP by 2025. While the residential sector has seen significant demand, the commercial sector is also evolving by introducing new models, such as hybrid spaces. 

Despite the positive sentiments surrounding the industry, challenges persist, especially in the price-sensitive affordable segment. 

One of the long-standing demands from the real estate sector is the conferment of industry status and the establishment of a single-window clearance system. These measures are crucial for streamlining processes and fostering a more conducive environment for growth. Additionally, developers are urging the government to introduce incentives that can reduce prices for first-time homebuyers, thus making homeownership more accessible to the masses. 

To address the industry's concerns, stakeholders are also calling for a reduction in input costs, particularly for essential materials such as steel and cement, along with a focus on lowering fuel costs. Tax incentives are also on the wishlist, with the sector advocating for favourable provisions under the capital gains tax for investors and increasing tax concessions for homebuyers. 

A significant aspect that underscores the importance of supporting the real estate sector is its role as a major employer, providing jobs to a substantial number of casual labourers. Developers argue that incentivizing the sector would have far-reaching implications beyond just the economic numbers, positively impacting the livelihoods of many. 

The year 2023 showcased the potential of the real estate sector when supported by a combination of low prices, moderate interest rates, and ample supply. Developers and industry experts are hopeful that the government will take proactive measures at the policy level in the upcoming Budget to sustain this momentum. 

The real estate sector is optimistic about the forthcoming Budget's potential to address its concerns and provide the necessary impetus for sustained growth. As the industry awaits the finance minister's announcement, the hope is that the Budget will be a catalyst for furthering the real estate sector's vital role in India's economic landscape. 

Views are personal. The author is, Director, Raheja Developers