Reality of Realty: Did the Union Budget 2024 stand up to the expectations of the real estate market?

Union Finance Minister Nirmala Sitharaman presented the Union Budget for the financial year 202425 on Tuesday While the real estate market had high hopes for tax incentives and industry status the bill told a different story Despite differing from expectations the provisions have the potential to impact the realty sector both directly and indirectlyIndustry experts weighed in to break down what this Budget means for the future of the real estate marketldquoA close look at this Budget shows that the government has put special consideration on affordable housing infrastructure development and urban planningrdquo said LC Mittal Director of Motia Group The Finance Minister announced that three crore additional houses under the PM Awas Yojana will be constructed in rural and urban areas Additionally under PM Awas Yojana Urban 20 the housing needs of one crore urban poor and middleclass families will be addressed with an investment of Rs 10 lakh crore ldquoThis will provide a muchneeded impetus to the affordable housing segment in Mumbairdquo anticipates Domnic Romell President of CREDAIMCHI Experts say this push towards urban housing will stir up demand and construction activities However Mittal also highlights that increased demand can lead to rising property prices and possible overcrowding in urban centres as more people are drawn to citiesBefore the Budget announcement experts anticipated tax incentives on homebuying and subsidisation of home loans Similarly Sitharaman stated that the government will encourage states that continue to charge high stamp duty to moderate the rates Additionally the government will consider further lowering duties for properties purchased by women making this reform an essential component of urban development schemes Romell calls this a progressive step ldquoIn a city like Mumbai where real estate prices are among the highest in the country reducing stamp duty can make property transactions more affordable and stimulate market activityrdquo he explainsAccording to Romell the increase in the longterm capital gains tax rate to 12537 from 1037 along with a new exemption limit of Rs 125 lakh per year and the rise in the shortterm gains tax rate to 2037 from 1537 will have a mixed impact Real estate which has had a 2037 longterm capital gains tax rate so far will benefit however it increases the tax burden on investors in other sectors He adds that this could lead to a more stable and less speculative real estate market in the long term ldquoIndexation is removed so effectively the tax may be the same or even higher than today especially for historical propertiesrdquo he saidThough the Budget strayed away from making any bigticket announcements that would put the sector into the hopskipjump path to inundated growth immediately key announcements in the infrastructure and transport sector are also likely to influence the realty market Experts share that with the betterment of overall infrastructure real estate markets will also receive a boostAccording to Mr Ravindra Pai Managing Director Century Real Estate the Interim Budget for 202425 which was presented in February emphasised infrastructure development putting significant money into improving connectivity and urban living conditions which are critical for real estate growth Similarly the Union Budget allocated Rs 1111 111 which is 3437 of the GDPldquoInvestments in infrastructure are likely to enhance the attractiveness of real estate in developing and underdeveloped areas that were previously inaccessiblerdquo Pai says expressing confidence Since the Budget seeks to promote private sector investment in infrastructure through viability gap funding along with enabling policies and regulations he believes that it will further catalyze the growth of the real estate market He adds that enhanced infrastructure in these areas will make them more desirable for both residential and commercial investmentsldquoInfrastructure improvement has traditionally escalated property value opening new locations for development and augmenting existing connectivityrdquo says Mittal He anticipates that it may lead to further places turning out to be feasible for real estate either residential or commercialThe finance minister also announced the initiation of Phase IV of the PMGYS which is estimated to provide allweather connectivity to 25000 rural habitationsldquoFor real estate improved infrastructure will reduce logistical challenges and construction costs making projects more viable and profitablerdquo he says adding that homebuyers can anticipate enhanced property values and better access to essential amenities and services due to improved connectivity and urban developmentTalking about TransitOrientedDevelopment which is a focus of this Budget for 14 large cities including Mumbai Romell suggests that TOD plans will not only improve connectivity and reduce congestion but also enhance the livability and attractiveness of urban areas He specifically highlights that Mumbai lately ridden with space congestion may forward to more sustainable and efficient urban developmentThe development of industrial parks with complete infrastructure in partnership with state and private players across 100 cities under the National Industrial Corridor Development Program is anticipated to spur industrial growth create employment opportunities and boost economic activity ldquoFor Mumbai known as a financial and commercial hub these developments will enhance its industrial and logistical capabilitiesrdquo says RomellThe Union government proposed lsquoBhuAadharrsquo in rural areas a UID number for land and digitization of all urban land records as part of several landrelated reforms in the Budget Romell expresses that for developers in Mumbai this means smoother and more secure transactions reducing the risks associated with property disputes and unclear titles He also anticipates that it will also facilitate better urban planning and management by providing accurate and accessible land dataOne of the key expectations this year by industry experts included the sector being granted industry status Conferring industry status basically entails an inclusion in the StateCentral industrial policy ldquoGranting industry status to real estate is another critical step we anticipate This move will attract more investments streamline processes and elevate the sectors overall credibility fostering a more robust and reliable industryrdquo says ABC However it remains an expectation for yet another Union Budget seasonSimilarly many other key expectations by experts like rationalisation of GST incentivising foreign direct investment a significant reduction in regulatory bottlenecks etc remain topics for the next Budget Regardless experts maintain that the current provisions introduced in this Budget will positively impact the real estate market boosting growth directly or indirectly