India’s real estate has pinned hopes on the upcoming Union Budget, which is an opportunity to address issues faced by India’s housing sector in 2023 and beyond.
Neral Karjat has been the fastest growing non-polluting and eco-friendly urban conglomeration in the Mumbai Metropolitan Region (MMR), and its real estate is poised for better growth in days to come. The multi-faceted real estate development of not just Neral Karjat but, what is also referred to as Mumbai 3.0 – Panvel, NAINA, Pen, Karjat and Neral – has been largely scripted by developers who have worked towards ensuring a structured approach to the development of the region, whose economic growth is defined by carbon-neutral industry and real estate which is environment-friendly.
The upcoming budget needs to incentivize investments in non-polluting industry, to generate more inflow of funds in carbon neutral industries. Hopefully, the incentives will be attractive to foreign investors as well. Considering the rupee’s recent muted performance, this budget is an ideal time for reforms targeted at foreign inflows into India.
The hope is that the Finance Minister comes up with policies which reduce the tax on interest income which will help accelerate capital inflows to India.
Liberalizing foreign investment norms in real estate is another move which will be welcomed.
In regions which comprise Mumbai 3.0, efforts of the government in promoting affordable housing We in the Budget will be welcome. In line with this policy, the government needs to consider increasing the cap of Rs. 2 lakh per annum to at least Rs. 5 lakh against interest rate deduction under section 24(b) of the Act. This will be a big relief to home buyers in the affordable property segment.
Additionally, removing or increasing the Rs 45 lakh cap in the affordable housing segment for metro cities would also be a positive step – this, especially considering that construction costs and other allied materials are rising and so is the cost of buying a home.
In the Budget, we expect revision of the cap up to Rs. 1 crore in metro cities for first time home buyers in the affordable housing category, to those availing credit link subsidy scheme benefits. We expect the government to announce tax reliefs for rental housing projects, which will attract huge investment in these schemes; thereby promoting rental housing in India.
The SWAMIH Fund needs to be expanded, to not just ensure completion of stressed projects but also broaden the scope across property segments and assist developers with stressed projects in delivering these to the home buyer. This will ultimately boost the confidence of the homebuyers.
The real estate sector across the MMR is looking at robust housing demand through 2023 and we expect the government to play a more constructive and supportive role. A robust housing sector will complement infrastructure development and will be a catalyst to the growth of the economy too.
Another point from the perspective of affordable housing is about direct tax / GST/ subsidy, as input cost has increased and the trend suggests supply of affordable housing in next 2 years as being too slow as compared to the past 5 years.
From the perspective of all residents of the MMR, the hope is that the Budget increases the outlay for development of infrastructure projects in Mumbai and the MMR. This will improve connectivity and ease of travel for especially for Mumbai 3.0. Improved infrastructure has a cascading effect on the real estate sector with an expected surge in demand for housing across the MMR.
Urbanization is on the rise, and as pressure grows on Metro Cities, it is the right time to plan and develop new cities which offer affordable as the basis. Mumbai 3.0 is the ideal location from where this can be started, even as demand for housing is all set to rise. Timely government intervention in the form of proper planning and execution is needed to tap this enormous upward trajectory envisioned in the real estate sector.