Realty sector dubs 2023 as turning point in post-Covid era, experts pin high hopes on Budget 2023-24

Amid tailing off inflation but growing insecurities related to the unexpected spike in Covid-19 cases stoking fears of the probable emergence of the fourth wave of coronavirus, the real estate sector is looking forward to the Union Budget 2023-24 to get support to sustain the sales surge and peak in residential housing demand ushered in 2022 despite growth stoppers.

Positive economic indicators are plentiful, with many real estate experts dubbing 2023 as the turning point for the housing sector in the post-Covid era. With the Union Budget 2023-24 expected to be tabled in less than a month, the realtors are pushing forward the demand for an increase in tax exemptions and rebate allowances on the interest paid on home loans. 

The repo rate was hiked five times in 2022 by the Reserve Bank of India to plummet the inflationary crisis, which was a conspicuous economic reality then and now. Its countereffect was seen in the stark rise in home loan mortgage rates, which had become a cause of ire for homebuyers and developers alike. 

For homebuyers, it had led to a sharp increase in home investment costs, which at that time, was not a feasibly digestible situation as it went beyond the upper limits of their budgets. Developers faced an inimically similar issue. Rising project expenditure costs due to high-interest rate payouts coupled with below-par inventory sales created hurdles for them, leading to project delays and halts in construction activity. The Budget will be crucial in mitigating the strenuous factors impeding the sector's growth.

Commenting on the expectations from Budget 2023-24, Mr. Ankit Kansal, Founder & MD, 360 Realtors, "This Budget, the real estate is looking forward to more industry-centric policies for the sector. Already the demand is booming in the sector and the industry wants the governing agencies to take concentered efforts to further enable growth. The government should increase the limit of claiming an income tax deduction, under the home loan interest policy. Presently, it is INR 2 lakhs and should be increased to INR 5 Lakhs. Likewise, capital gain taxes can be reduced to further boost demand. Meanwhile, GOI should also think of single window clearance for the developer fraternity. Presently a developer has to seek close to 80 licenses and registrations, which decelerates the overall process. A single window can be of great help."

Deepak Kapoor, Director, Gulshan Group said, "The Budget should mirror the aspirations of the realty sector and support growth-inducing factors. GST rates on construction materials like steel, cement, and tiles should be rationalised, keeping in view the overall health of the sector. The government should help distressed developers and allocate funds for the completion of stuck projects. The current stand of RBI on the repo rate should also take the views of developers into account. The Budget should offer a premise of agents of development and progress and stamp out hindrances impeding the growth of the sector."

Increasing the price cap of residential units from the current limit of 45 lakhs to be qualified as affordable housing has been one of the categorical demands of realtors in tandem with the growing upsurge in input costs, labour wages, and project construction costs. The price revisions of the affordable housing project are in line with the ubiquitous increase in prices of input costs, as the world is slowly progressing towards a dreadful recession.

Expectations of Commercial RE Players 

Voicing the expectation of the commercial real estate sector, Dushyant Singh, Director,  Orion One32, "The CRE has come out of the pandemic headwinds and projected a strong recovery with many calling 2023 as the year of commercial real estate sector with remarkable retail leasing sale growth. The sector expects some incubatory measures to increase the sale velocity and stamp out impeding problems currently plaguing the sector, which include high mortgage rates on home loans. There is also a strong wave in favour of providing industry status to the real estate sector, which would also approbate taking easy loans and financial amenity assurances from banks. An apparatus of single-window clearance should be set up to augment the real estate sector’s growth in the right direction."

What does the Union Budget mean for Luxury Real Estate?

A week ago, a government flash report on infrastructure projects for November 2022 observed that the road and highway sectors accounted for the maximum number of delayed projects; out of 769 projects, 358 road and highway projects are facing delays.

Highlighting the same issue, Mr. Narayan Bhadana, Managing Director, 4S Developers, said, “Steady work on the road and infrastructural projects are needed to accentuate the value of real estate offerings which are located in the vicinity. I hope some action-based policies are formulated in the Budget to expedite the construction pace and operational process of such projects. The real estate sector, especially luxury realty, will majorly benefit as the homebuyers’ demand continues to be buoyant and absorption levels remain high.”

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