Media Real Estate Sector Anticipates Policy Reforms and Affordable Housing Initiatives from the New Government

Real Estate Sector Anticipates Policy Reforms and Affordable Housing Initiatives from the New Government

08 June 2024
Real Estate Sector Anticipates Policy Reforms and Affordable Housing Initiatives from the New Government

Real Estate Sector's Expectations from the New Government

With the results of the 2024 Lok Sabha elections granting a majority to the National Democratic Alliance (NDA), real estate sector stakeholders anticipate tax reforms, a boost to affordable housing, infrastructure development, and initiatives to simplify business operations from the new government.

They are also advocating for provisions to reduce homebuyers' EMIs (equated monthly installments) and the introduction of sustainability incentives for the sector.

Focus on Loan Burden and Affordable Housing

G Hari Babu, National President of the National Real Estate Development Council (NAREDCO), emphasized the need to ease the loan burden, particularly for affordable housing.

“The increase from 6.25 percent before COVID-19 to around 8.75 percent at present has made home loan EMIs very expensive. We urge the government to provide relief by offering lower interest rates for affordable housing loans. This can be achieved by setting the first Rs 20 lakh or Rs 25 lakh of a home loan at a 5 percent interest rate for the first five years,” he said.

Babu added that specific policy reforms are necessary to stimulate growth in the real estate sector, particularly in the affordable housing segment. “Raising the affordable housing limit from Rs 45 lakh to Rs 60 lakh would address challenges faced by builders and buyers. This change would help maintain the momentum in the affordable housing market,” he said.

Reforms and Sustainability Incentives

Babu mentioned that other reforms could include financial incentives for sustainable building practices and subsidies or tax breaks for developers focusing on affordable housing projects. This could involve tax incentives for green buildings, subsidies for using eco-friendly construction materials, and policies that promote energy-efficient practices. These measures would help the sector meet its goal of becoming a net zero carbon industry by 2047.

Stable Government and Infrastructure Development

Anuj Puri, Chairman of ANAROCK Group, a real estate consultancy, expressed the industry's desire for a stable government that will ensure no interruptions in ongoing schemes and investments into infrastructure development.

“The interim budget indicated that with the government’s policies unchanged, the mid-segment housing sector would witness targeted action and policy alignment that would lead to further growth of India's housing sector. With government continuity, we can look forward to a major boost for the affordable housing sector, this being a flagship scheme that had not fared well over the last term,” Puri said.

According to ANAROCK data, the mid-end (homes priced between Rs 40 lakh and Rs 80 lakh) and high-end (Rs 80 lakh to Rs 1.5 crore) segments together recorded sales of 76,555 units in the first three months of 2024, accounting for nearly 59 percent of the total. The cumulative share supply for these segments in the same three months of 2019 was 47 percent.

The data showed that sales of affordable housing (homes priced under Rs 40 lakh) between January and March 2024 stood at 26,545 units, or just 20 percent of total sales. Concurrently, supply in this segment had also dropped from 44 percent in January-March 2019 to 18 percent in the same period of 2024.

Tax Benefits and Business-Friendly Environment

Samir Jasuja, CEO and Managing Director of real estate consultancy PropEquity, suggested reintroducing tax benefits that were previously available. “For example, landlords could deduct their entire rental income against the interest paid on the property's mortgage. Restoring such benefits would encourage investment and boost overall property purchases,” he said.

Suraj Morajkar, Managing Director of Sun Estates Developers, emphasized the importance of policies that foster economic growth, innovation, and a business-friendly environment. “Key measures include tax reforms, infrastructure development, and initiatives to simplify business operations. Stability in governance and a reliable regulatory framework are fundamental in creating a conducive environment for business expansion and investment,” he said.

Sunil Sisodiya, Founder of Geetanjali Homestate, highlighted the significant influence of government policies on the sector, shaping growth and opportunity. “We advocate for policies that foster economic vibrancy, innovation, and a business-friendly ecosystem. Measures such as streamlined regulations and tax reforms propel the sector forward, amplifying the potential for expansion and investment,” he said.

Policy Stability and Commercial Real Estate

Aryaman Vir, CEO of WiseX, a platform specializing in investments in office and other commercial spaces, noted that post-election policy stability is expected to drive growth and investor confidence in India's commercial real estate sector.

“We expect that post the government formation after the 2024 Lok Sabha election results, the real estate sector will continue to see steady growth in new project launches, particularly in commercial real estate. Policies promoting business growth, infrastructure development, and ease of doing business can lead to increased demand for commercial spaces,” he said.

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