There is a boom in the real estate sector in 2021
For the real estate sector, Budget 2022-23 depends on demand-supply market dynamics to propel growth in the coming fiscal, with the expectation that the benefits of structural reforms set in motion over the past five years will continue . Second largest employer after agriculture in motion.
The sector has boomed in 2021 resulting in falling inventory levels in markets and increased stamp duty collections in key states, visible results of budgetary initiatives since 2018 on REITs, affordable housing, exemptions on capital gains and is shown in the areas of Better Developer. funding. The theme of this budget for real estate is in line with the overall theme of keeping the core of the economy active with high government spending, direct exemptions for sectors riding a four- to five-year cycle of structural reforms.
The Finance Minister has clarified the popular industry expectations of further rationalization of the tax regime in the form of GST exemption for under-construction properties, reduction in key items of raw material, providing infrastructure status and a huge interest subvention for home buyers . The budget has managed to retain the core of the sector’s demand drivers through a mix of direct and consequential benefits derived from building related infrastructure. Echoing similar sentiments in a pre-Budget survey conducted by Grant Thornton India, 78 per cent of respondents said they expect an increase in the tax exemption limit on home loan interest to boost consumption.
The Prime Minister’s Gati Shakti and other government announcements to set up a multi-modal logistics park to connect urban transport with railways will result in significant investment in logistics and warehousing. The infrastructure conditions for the data centers will further propel the industrial and commercial sectors of real estate through increased institutional investment. The proposed new legislation around Special Economic Zones (SEZs) should enhance capacity building for industrial and commercial development. This is expected to accelerate the real estate investment trust (REIT) story, with the emergence of large industrial and commercial properties.
With the continued focus on meeting the demand in the affordable housing category, the Rs 48,000-crore incentive for this segment will ensure the momentum of the Pradhan Mantri Awas Yojana (PMAY) and several initiatives to provide affordable housing in the last budget will not be lost. The government has also maintained its long-standing commitment to support the creation of smart and sustainable real estate in Tier 2 and 3 cities, by setting up centers of excellence for urban planning.
The budget also depends on the strong inter-dependence of real estate with the overall economy. A 35 per cent increase in government capital expenditure from Rs 5.5 lakh crore to Rs 7.5 lakh crore over the budget estimates of 2021-22, will continue to propel all the engines of the economy and the real estate sector in particular, taking into account the demand for housing . Industry and commercial real estate high. However, it can be argued that for the sector most directly affected by tighter interest rates, which is the likely outlook for 2022-23, the sector should be largely supported by direct support from the budget rather than a structural support approach. You will feel more confident together. seen in this budget.
(Disclaimer: These are the personal views of the authors.)
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