ArticleSheth Realty

Budget 2024: Implications for the Indian real estate sector by Mr. Chintan Sheth, Chairman & Managing Director, Sheth Realty

The real estate industry welcomes the Union Budget 2024, recognising its focus on providing a strategic economic stimulus to strengthen India’s macro growth trajectory amid global uncertainties. With priorities in skilling, tourism, MSME, education, urban development, and infrastructure, along with initiatives for women and youth development, this budget injects much-needed vitality into the economy.

Equitable and forward-looking

The budget’s focus on fiscal incentives and structural reforms that prioritise employment-centric sectors, as well as the emphasis on skilling through private sector internships, salary support and CSR-funded training highlights a strong commitment to youth employability, positioning them as key drivers of economic growth. The substantial allocation of ₹10 lakh crore under the PMAY Urban Scheme targeting 3 crore houses, along with the focus on rental housing through dormitories in industrial parks via the PPP model and the approval of 12 new industrial parks, reflects a robust vision for urban development. The ₹11.11 lakh crore Capex allocation is expected to significantly boost affordable rental housing for industrial workers.

Innovative initiatives such as digitising land records, GIS mapping and urban housing for the middle class, combined with workforce skilling, are anticipated to have a profound impact on the growing real estate sector. The budget’s focus on sustainable development through solar and renewable energy, and water and solid waste management, aligns with the goal of climate-resilient real estate development.

Incentives for investment

The reduction in long-term capital gain tax to 12.5% without indexation benefits will have to be monitored; but aligning the holding period for long-term capital gains with equity shares by reducing it to 24 months is expected to boost investment and sector competitiveness. Encouraging state governments to reduce stamp duty and other development premiums is a decisive step that will bolster urban housing growth, make affordable housing more accessible, optimize development costs, and invigorate demand. The implementation of redevelopment and transit-oriented development schemes is crucial for driving urban growth, generating employment, attracting investments and boosting economic growth. Aligning the economic survey with budget outlays, combined with the objective of capping the fiscal deficit at 4.9% will help to manage inflation and encourage credit borrowing.

The way ahead

The Indian real estate sector is still awaiting industry status, which could open the doors to more affordable capital to the sector and, in turn, improve the affordability of housing in the country. Going ahead, we hope to see an increase in the interest deduction limits on home loans, which will empower Indian homebuyers with additional disposable income. While the real estate industry welcomes the progressive initiatives proposed by the budget, we hope that upcoming budgets will shine a stronger light on the domestic real estate sector, which continues emerge as an increasingly contributor to the country’s GDP.