Pre-Budget Quote on Real Estate Sector & Housing by Sharad Mittal Founder & CEO, Arnya RE AIF - Ex-Motilal Oswal
Below the Pre-Budget Quote on Real Estate Sector & Housing by Sharad Mittal Founder & CEO, Arnya RE AIF - Ex-Motilal Oswal
Real Estate Industry Eyes Key Measures in 2025 Union Budget to Boost Growth and Stability
As India prepares for the 2025 Union Budget, the real estate industry has several expectations that could drive growth and stability. The industry is anticipating policy measures to address issues related to financing, taxation, and infrastructure, crucial for the sector's continued recovery and long-term growth.
A key expectation is the extension of Section 80-IBA for affordable housing projects, which offers tax incentives for developers in this segment. There is also a call to raise the current Rs 2 lakh limit on interest deductions for homebuyers to make housing more affordable and encourage demand. Additionally, the industry is pushing for the redefinition of affordable housing by raising the ceiling from Rs 45 lakhs, better aligning it with current market conditions and inflation. This would stimulate demand and encourage developers to focus on this critical segment. The sector also hopes to reduce GST on raw materials like cement and steel, which would lower construction costs and make it more feasible for developers to complete projects at competitive prices. This could benefit end-users by potentially lowering home prices. Moreover, reducing GST on under-construction properties would make homes more affordable and boost sales.
On the financing front, developers seek easier access to credit and lower interest rates to ease liquidity challenges. Policies can be outlined for priority financing for affordable housing projects to incentivize the developers to take up such projects and bridge the demand-supply gap. Further investment through schemes such as SWAMIH (The Special Window for Affordable and Mid-Income Housing)to enable the completion of stuck projects will instill confidence in buyers to make purchase decisions. These measures would allow developers to secure long-term funding for their projects. Further, reducing housing loan interest rates would also boost consumer demand for houses.
The real estate industry is also urging the government to prioritize infrastructure development. As India’s urbanization rate continues to rise, there is a growing demand for better infrastructure, including metro connectivity, expressways, and smart cities. These projects would improve urban living quality and drive residential and commercial real estate demand.
In conclusion, the 2025 Union Budget has the potential to catalyze the growth of the real estate sector by reducing construction costs, incentivizing affordable housing, enhancing infrastructure development, and providing a stable financing environment. These strategic interventions would benefit both the real estate sector, contributing to India's broader economic growth while addressing the housing needs of a rapidly urbanizing population.
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