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Union Budget 2024: Real Estate Investment Wishlist

With the Union Budget 2024 on the horizon, the real estate sector is buzzing with anticipation. Investors, developers, and homebuyers alike are eagerly waiting to see what the Finance Minister has in store. This year, the real estate sector’s wishlist includes a few key expectations that, if met, could significantly boost the industry and address some of the most pressing issues.

Expectations For The Union Budget 2024

1.Enhanced emphasis on economical housing

The desire for budget-friendly residences remains strong, particularly in urban and semi-urban regions where housing expenses are soaring. The industry is eagerly awaiting more substantial backing from the Government to accelerate the ‘Housing for All’ mission.

The real estate sector is optimistic about a rise in budgetary provisions for affordable housing schemes, similar to the notable surge observed in previous years. This would not only ensure the progress of ongoing projects but also stimulate fresh developments, offering essential housing choices for families with modest incomes. Such a step would also play a role in closing the divide between demand and supply, resulting in the possibility of homeownership for a wider demographic of society.

2. Enhanced Tax Benefits For Homebuyers

Tax benefits are incredibly important in making the idea of owning a home more appealing and financially feasible. The real estate industry is optimistic that the upcoming Union Budget 2024 might bring about improved tax benefits for homebuyers, which would bring much-needed relief and encourage more investors in the housing market. One key hope is that the tax deduction limit for home loan interest under Section 24(b) of the Income Tax Act will be raised.

Increasing this deduction limit would be a great help for homebuyers, especially in cities where property prices are high. This step could ease some of the financial challenges that come with taking out a home loan, making it simpler for people and their families to buy their own properties. Additionally, providing tax benefits for second homes could boost the market even more by motivating more investments in real estate.

First-time homebuyers stand to gain considerably from targeted tax incentives. Introducing additional deductions or rebates for first-time buyers could spur a wave of new homeownership, particularly among young professionals and newly formed families. Such measures can boost the real estate market and contribute to the overall economic health of the country by promoting financial security and stability among citizens.

3. Reduction in GST Rates

The current Goods and Services Tax (GST)  rates on residential properties, particularly under-construction residences, impose a huge economic burden on homebuyers.  The real estate sector is fervently hoping for a reduction in GST rates to make homeownership more affordable and to drive demand in the market. Lowering GST rates on residential properties would reduce the overall cost of purchasing a home, making it more accessible to a broader segment of the population.

A reduction in GST rates could also encourage buyers to invest in under-construction properties, which often face slower sales compared to ready-to-move-in homes due to the higher tax component.

Uniformity and clarity in GST rates across different types of real estate projects are also crucial. The sector is looking for simplified tax structures that eliminate ambiguities and help developers plan their projects better. This would ensure that the benefits of reduced taxes are passed on to homebuyers, leading to a more transparent and efficient market.

4. Ease of Access to Financing

The upcoming budget is expected to implement measures that streamline credit flow to the real estate sector. For developers, enhanced credit availability means they can secure funding for large-scale projects more readily. This could include the introduction of new financial instruments tailored to the needs of the real estate industry, such as Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

5. Expansion of Single-Window Clearance System

In FY2023-24, the SWCS was implemented in major urban centres and selected regions. The expectation for FY2024-25 is a broader rollout, encompassing more cities and towns across India. Bringing the SWCS to Tier 2 and Tier 3 cities can stimulate real estate development in these areas, supporting regional economic growth, reach a larger number of developers and projects.

6. Public-Private Partnerships (PPPs)

By putting in place strong risk mitigation frameworks, the government can address concerns regarding project viability and financial stability. Guarantees and insurance mechanisms can safeguard private investors from unexpected risks, making PPPs more appealing. The renewable energy sector remains an attractive option for lucrative investments. Particularly, solar and wind energy projects are expected to receive considerable budgetary allocations, presenting appealing opportunities for private sector involvement. Infrastructure projects in transportation and logistics, such as highways, ports, and airports, hold promise for high returns due to the growing demand for efficient movement of goods and people. PPPs in this field have the potential to deliver significant economic advantages and provide reliable income streams for investors.

As India’s real estate sector continues to advance, fueled by economic changes, technological progress, and sustainable approaches, there are plenty of opportunities for investors. Whether you are interested in residential projects, commercial properties, or hospitality ventures, making well-informed decisions and actively participating will be key. Approach the future with optimism, using knowledge and skills to navigate the market’s intricacies. By staying updated, forming valuable partnerships, and embracing new ideas, you can contribute to India’s development journey and achieve lasting financial success in real estate ventures.

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