India’s real estate sector stands as the second-largest job creator in the country, following agriculture. Over the past decade, the Modi government has spearheaded the construction of over 40 million homes for the underprivileged through the PM Awaas Yojana (PMAY). As Narendra Modi prepares to embark on his third term as Prime Minister, the industry harbors a spectrum of expectations for Modi 3.0.
The interim budget, presented by Finance Minister Nirmala Sitharaman, unveiled plans to bolster India’s affordable housing sector by integrating an additional 2 crore homes into the flagship PMAYU scheme.Projections from experts suggest that by 2040, the Indian real estate market could be valued at Rs. 65,000 crore. Industry leaders stress the imperative need for sustained governmental backing to foster its expansion.
Niranjan Hiranandani, Chairman of NAREDCO (National Real Estate Development Council), asserts, “To enhance economic performance metrics, the real estate industry calls for policy and scheme realignments. The PMAY initiative should be consistently propelled to efficiently achieve all housing objectives within designated timelines. Measures such as reducing approval costs, development premiums, stamp duty, and ready-reckoner rates, alongside rationalizing tax and GST structures, will amplify its trajectory of growth.”
Furthermore, Hiranandani emphasizes the necessity to delineate land and approval financing methodologies to facilitate growth and ensure timely project completions.
India’s retail, hospitality, and commercial real estate sectors are experiencing notable expansion, providing critical infrastructure to accommodate the country’s burgeoning requirements. Advocates within the industry advocate for policy reforms and tax rationalization to streamline processes and stimulate growth.
In FY23, India’s residential property market witnessed record-breaking home sales, surging to an all-time high of Rs. 3.47 lakh crore (US$ 42 billion), marking a 48 percent year-on-year increase. Sales volume also exhibited robust growth, with a 36 percent rise to 379,095 units sold. Nonetheless, industry leaders underscore the necessity for governmental intervention to further bolster growth. Tax reforms, particularly within the GST framework, are among the primary requisites cited by industry stakeholders.
Anshuman Magazine, Chairman & CEO-India, South-East Asia, Middle East & Africa, CBRE, advocates, “The government must consider tax rationalization for construction raw materials, as this will significantly impact the industry. To propel the housing segment further, we advocate for a reevaluation of the affordable housing definition. Given the substantial fluctuations in construction costs, encompassing raw materials, labor, and overall development, it is imperative to reassess price, size, and income criteria to ensure the program’s inclusivity and efficacy.”
In the Union Budget 2023-24, the Finance Ministry pledged Rs. 79,000 crore (USD 9.64 billion) for the PM Awas Yojana, reflecting a 66 percent increase from the previous year. Additionally, the recent approval from the Securities and Exchange Board of India (SEBI) for the Real Estate Investment Trust (REIT) platform heralds a new opportunity, enabling diverse investors to participate in the Indian real estate market. This move is anticipated to create an opportunity worth Rs. 1.25 trillion (USD 19.65 billion) in the Indian market in the forthcoming years.
