Union Budget: Real estate sector calls for renewed push towards affordable housing in metros

New Delhi: Riding on supportive policy interventions and rising disposable incomes, India’s real estate sector is growing and needs a renewed push for affordable housing, especially in and around metro cities, from the Union Budget 2024-25, industry experts said on Thursday.

Expectations are high for tax reliefs and other sentiment boosters as the future of the overall industry also depends on unfettered infrastructure deployment to support and improve urban living standards as well as to develop and promote newer areas.

According to Anuj Puri, Chairman of Anarock Group, the Indian housing sector remained upbeat in 2024 to date, with housing sales and new launches creating new peaks in the top 7 cities.

Sales reached an all-time high at about 4.93 lakh units in FY23-24, while 4.47 lakh units were launched.

“However, this momentum must continue in the future too and the current growth trajectory is skewed towards mid-range and premium housing,” said Puri.

Considering the specific housing needs of India’s lower-income groups, this momentum cannot ride solely on higher-priced homes while affordable housing continues to languish.

Many interest stimulants previously extended to buyers and developers of affordable housing have expired in the last two years.

“This important segment must be revived with high-impact measures like tax breaks - for developers, so that they will focus more on affordable housing, and for buyers to improve affordability,” Puri noted.

Credit-linked subsidy scheme under PMAY, re-introducing 100 per cent tax holiday for affordable housing developers and tweaking the definition of affordable housing criteria to widen additional deductions benefits to more buyers can help the affordable housing players.

“The government must seriously reconsider revising the pricing of homes within the affordable housing budget, taking into consideration city-specific market dynamics.

“As per the current definition, the size of units at 60 sq. m. carpet area is appropriate. However, prices of units (up to Rs 45 lakh) are not viable across most cities,” Puri emphasised.

Meanwhile, according to a latest report by CRISIL Ratings, net leasing of commercial office space will see demand growth of 8-10 per cent in this fiscal and the next, amid the rising demand for residential and commercial real estate.

The primary drivers of the same will be global capability centres eyeing India’s large talent pool and competitive rentals, as well as healthy demand from domestic sectors.

Demand growth for residential real estate will sustain at 8-12 per cent this fiscal and the next, aided by favourable affordability and premiumisation, according to the CRISIL report.