Impact of 2023-24 Budget on Real Estate
The Indian finance minister recently announced the Union Budget for 2023-24. Based on the principles of ‘Amrit Kaal’, she reported on the proportions of progress and development in the financial plan for the coming fiscal year. The proposed budget just might turn out to become a crucial turning point for the real estate industry as several initiatives have been announced that could affect the realty industry.
And with the real estate industry being a major contributor to the country’s overall economic growth, keeping the sector alive and healthy is essential. The real estate industry contributes about 7% to the country’s GDP and this figure is expected to rise to 10% of the country’s total GDP by 2025. In 2019, the Indian real estate market stood at $1.72 billion and is expected to hit $9.3 billion by 2040. Along the same vein, the real estate sector which stood at $200 billion by 2021, is expected to hit $1 trillion by 2030! And all this is in spite of the hiccups the real estate industry has suffered in the past decade – ranging from demonetization, GST, RERA, and lastly the COVID-19 pandemic. Here’s a look at the effects of the Union Budget 2023-24 on real estate developers:
The Downsides
Some of the crucial areas of concern mentioned by the real estate sector have unfortunately not been addressed by the new budget. A few measures were expected by the builder community to address the rundown in the industry; for example, it was expecting to be part of the infrastructure status – which hasn’t happened. Aside from this, there was a demand by the fraternity for a single window clearance mechanism – something which has also been ignored. Then there was the expectation of tax relief for the sector, and this has not been addressed either.
Favorable News
Affordable Housing
The good news is that INR 3,000 crores have been set apart for affordable housing schemes. This is good news as it will assist builders in constructing more affordable or budget apartments and boosting the real estate marketing – while fulfilling the goal of ‘housing for all’.
Responsible Construction
In accordance with the global push for carbon footprint reduction and sustainable practices, the new budget also pushes for green energy, green infrastructure as well as green housing practices. This includes using environment-friendly, sustainable materials and green construction practices. This will also lead to tax incentives, and benefit builders in the affordable housing market, leading to greater business profits.
Framework Reforms
According to new regulatory frameworks, builders would be assisted in purchasing land at cheaper rates to boost their profit margins. There are reforms announced in the budget too that herald changes to the construction process. They are designed to streamline the process of getting permits and certifications and speed up project completion. This will help builders complete their projects on time and incur fewer losses due to delays.
Land Procurement
The budget has also put in place a land-pooling policy system where the government would help builders procure land from farmers at cheaper rates. This would boost profit margins for real estate developers and boost business.
In conclusion, it can be said that the Union Budget 2023-24 has its merits as far as the real estate industry is concerned. Developers can make gains through affordable housing funding, adoption of land-pooling policy, regulatory framework reforms, tax breaks and sustainable building practices. All-in-all, it’s a positive budget!
This budget is good news for Vishraam builders too, as they are into building sustainable budget apartments in Thrissur. Come, have a look at them!
