The real estate sector in India has been a significant contributor to employment, second only to agriculture. Under Prime Minister Narendra Modi’s leadership, the government has constructed over 4 crore houses for the economically disadvantaged through the PM Awaas Yojana (PMAY). Now, as Modi is set to take oath as Prime Minister for the third time, industry leaders have high expectations for the future of the sector in what they call “Modi 3.0”.
Affordable Housing Sector to Receive a Boost: In the recent interim budget, Finance Minister Nirmala Sitharaman announced plans to add another 2 crore houses to the PMAY-U flagship scheme, further strengthening the affordable housing sector in India. This move is projected to propel the Indian real estate market to an estimated worth of Rs. 65,000 crore by 2040. Leaders in the real estate industry emphasize the need for continued government support to ensure the sector’s growth. They urge a reorientation of policies and schemes, along with necessary reforms to reduce the cost of approvals, development premiums, stamp duty, and ready-reckoner rates. Additionally, tax rationalization and the overall simplification of the Goods and Services Tax (GST) are considered essential for efficient growth and expansion.
Growing Retail, Hospitality, and Commercial Real Estate Sectors: India’s real estate industry is not only witnessing growth in the affordable housing segment but also expanding in the retail, hospitality, and commercial sectors. These sectors play a crucial role in catering to the country’s increasing infrastructure requirements. To streamline processes and stimulate growth, experts recommend policy changes and tax rationalization. With the residential property market reaching an all-time high of Rs. 3.47 lakh crore (USD 42 billion) in FY23, it is evident that demand is strong. However, industry leaders argue that the government needs to play a more decisive role in driving growth, including consulting on GST reforms and expanding the definition of affordable housing.
Government Measures for Real Estate Sector: Reflecting the government’s commitment to the real estate sector, the Union Budget 2023-24 allocated Rs. 79,000 crore (USD 9.64 billion) for the PM Awas Yojana – a substantial 66 percent increase compared to the previous fiscal year. Furthermore, the Securities and Exchange Board of India (SEBI) has approved the Real Estate Investment Trust (REIT) platform, opening up investment opportunities for all kinds of investors in the Indian real estate market. This move alone is expected to create an opportunity worth Rs. 1.25 trillion (USD 19.65 billion) over the coming years. As India progresses with Modi at the helm for a third term, the real estate industry is optimistic about the sector’s prospects. Continued government support, policy revisions, and tax rationalization are crucial elements required to foster sustainable growth, safeguarding the interests of developers, investors, and ordinary citizens alike.
