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As Prime Minister Modi prepares for a third term, the real estate sector, India's second-largest employment generator, anticipates continued government support. Over the past decade, the Modi administration has significantly advanced affordable housing, constructing over 4 crore homes under the Pradhan Mantri Awaas Yojana (PMAY). The interim budget includes an additional 2 crore houses under the PMAY-U scheme. Experts project the Indian real estate market will be worth INR 65,000 crore (USD 7.92 billion) by 2040. To sustain growth, industry leaders call for policy reorientation, tax rationalization, and improved financing methods. In FY23, home sales reached INR 3.47 lakh crore (USD 42 billion), a 48% year-on-year increase.
The real estate sector in India, the second-largest employment generator after agriculture, is looking forward to continued support from the government as Prime Minister Narendra Modi prepares to take oath for his third term. Over the last decade, the Modi government has made significant strides in affordable housing, constructing over 4 crore houses for the poor under the Pradhan Mantri Awaas Yojana (PMAY). Advertisement
The interim budget by Finance Minister Nirmala Sitharaman has given a boost to India's affordable housing sector, announcing an addition of 2 crore more houses under the PMAY-U scheme. Experts estimate that the Indian real estate market will be worth INR 65,000 crore by 2040. Industry leaders emphasize the need for continued government support to maintain this growth trajectory.
Niranjan Hiranandani, Chairman of the National Real Estate Development Council (NAREDCO), highlighted the industry's expectations, stating that to boost economic performance indicators, the real estate industry demands a reorientation of policies and schemes. He emphasized that the PMAY scheme needs to be continually pushed to achieve all housing goals efficiently and in a timely manner. Additionally, reducing the cost of approvals, development premiums, stamp duty, and ready-reckoner rates, along with rationalizing tax and GST, will accentuate its growth.
Hiranandani also pointed out the need for better land and approval financing methodologies to facilitate growth and ensure timely project completions. The Indian retail, hospitality, and commercial real estate sectors are also expanding rapidly, providing vital infrastructure to meet the country's growing needs. Policy changes and tax rationalization are crucial to streamlining processes and boosting growth.
In FY23, India's residential property market witnessed a record high in home sales, reaching INR. 3.47 lakh crore (USD 42 billion), a 48 percent year-on-year increase. The volume of sales also grew by 36 percent, with 379,095 units sold. However, industry leaders believe that the sector requires further government support to sustain this growth. Reforms in the GST are one of the primary demands from the industry.
Anshuman Magazine, Chairman and CEO of CBRE for India, South-East Asia, Middle East, and Africa, stated that the government must consider tax rationalization for construction raw materials, as this will significantly impact the industry. To boost the housing segment further, he emphasized that the definition of affordable housing needs to be revisited. Given the substantial changes in construction costs, including raw materials, labour, and overall development, it is necessary to reassess the price, size, and income criteria to ensure the program remains inclusive and effective.
In the Union Budget 2023-24, the Finance Ministry announced a commitment of INR. 79,000 crore (USD 9.64 billion) for the PM Awas Yojana, representing a 66 percent increase compared to the previous year. This substantial financial commitment is expected to drive further development in the affordable housing sector.
Additionally, the Securities and Exchange Board of India (SEBI) recently approved the Real Estate Investment Trust (REIT) platform. This approval will allow all kinds of investors to invest in the Indian real estate market, creating an opportunity worth INR 1.25 trillion (USD 19.65 billion) in the coming years. The REIT platform is expected to bring more liquidity into the market, providing a boost to both commercial and residential real estate sectors.
As the Modi government gears up for its third term, the real estate sector remains optimistic about receiving the necessary support to continue its growth. Continued focus on affordable housing, policy reorientation, tax rationalization, and increased investment opportunities are crucial for sustaining momentum in the industry. With these measures, the real estate sector aims to contribute significantly to India's economic growth and provide affordable housing solutions to millions of citizens.
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