Changes in the real estate sector for 5-fold growth in the economy

Economy: Union Finance Minister Nirmala Sitharaman will present the first full-year budget of the Modi 3.0 government on July 23, 2024. All eyes are on what the Finance Minister will present for everyone, including the real estate sector. However, real estate developers unanimously believe that significant changes and radical changes are necessary in the real estate sector to achieve five-fold growth in India’s economy and contribute to the transformation from a $250 billion to a $1 trillion economy. Sameer Jasuja, Founder and CEO of PropEquity, said that to achieve a $1 trillion real estate economy, many radical reforms will have to be done to achieve the desired goal. Giving an example, he said that Dubai recorded sales of Rs 12,86,880 crore in the real estate sector, while it is an area of ​​​​only 35 sq km, i.e. half of South Mumbai (70 sq km). The main catalyst for such induced growth is the real estate laws in Dubai, such as no capital gains tax, no tax on property rental income and no tax on property purchases.

“Removing capital gains tax on real estate will eliminate the tax paid on profits from selling a property. This can boost real estate transactions, increase liquidity and potentially reduce housing costs,” Jasuja said. He added that it would be beneficial for homeowners if rental income can be directly offset against home loan EMIs. This policy change will reduce the burden of double taxation on property owners. Such a measure is expected to boost real estate transactions. Reducing GST rates can potentially reduce overall housing costs. Rationalisation of GST remains a popular wish that developers want the Finance Minister to fulfill to take the sector into a new era. Mohit Malhotra, Founder and CEO, NeoLiv, said, “Our expectations are shaped by our understanding of the expanding middle-income segment and its housing needs. An important aspect of this is the proposal related to input tax credit under GST. Providing developers access to input tax credit is not just a financial incentive but a strategic measure that can boost sectoral growth for homebuyers and drive economic recovery.” He believes that the sector’s long-standing demand of single window clearance and industry status will provide much-needed transparency and speed up the project execution cycle.

Vivek Singhal, CEO, Smartworld Developers, said, “The industry wants a favourable industry status for the housing sector and emphasises the need to maintain single-window clearance for housing projects, both of which remain critical this year as well. There is optimism around anticipated policy changes, such as potential cuts in goods and services tax (GST) rates and efforts to reconcile material prices.” Angad Bedi, MD, BCD Group, said, “The government should consider strengthening regulations around the sector, including RERA, single window clearance for all approvals and faster resolution of stuck projects, to accelerate the growth of the sector. These initiatives, along with greater public and private investment in infrastructure, attracting more foreign direct investment and promoting emerging areas of real estate such as student and senior living, will significantly contribute to the expansion of the sector. We hope the Finance Minister will address the needs of this fast-growing industry and recognise its important role in India’s growth story. Vijay Harsh Jha, Founder and CEO, VS Realtors (I) Pvt Ltd, a Gurugram-based property brokerage firm, said, “The government should increase the deduction limit for interest payments on home loans from the current Rs 2 lakh per annum to Rs 5 lakh, which will boost housing demand. This is especially important given the substantial increase in housing prices and mortgage rates in the last 1-2 years.”