DLF, Macrotech, other realty stocks in focus as sector awaits tax relief, Industry status in Budget 2024

Budget 2024 is poised to drive real estate stock growth with anticipated reforms, tax benefits, and increased funding for affordable housing.

The real estate industry is anticipating Budget 2024 to contain a range of tax reliefs and other measures to stimulate demand, improve affordability, and address various structural challenges.

A major expectation is granting industry status to the real estate sector. This would simplify access to funding and attract foreign investments, thereby enhancing liquidity and project execution.

In terms of affordable housing and reviving stalled projects, additional funding through the SWAMIH scheme and new subsidy schemes, such as the Credit Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY), are anticipated.

Revising the definition and upper limit of affordable housing to match current market conditions would also improve affordability.

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Regarding tax benefits, key revisions expected include adjusting tax slab rates, increasing the standard deduction, raising deduction limits for home loan interest, and reducing the long-term capital gains tax rate to make real estate investments more appealing.

Another critical reform expected is the digitization of land records to enhance transparency, minimize disputes, and streamline transactions.

Required Reforms

An increased allocation for PMAY is essential to boost demand in Tier 2 and Tier 3 cities. Implementing an “Interest Subvention Scheme” for middle-class housing could encourage homeownership among this segment.

Revising income tax rates and raising the limit for eligible home loan interest deductions to at least Rs 3 lakh, along with removing the Rs 2 lakh cap on interest set-off against salary for rented or deemed-to-be-let-out properties, would significantly benefit homeowners.

Realty Stocks on Radar

The real estate sector has performed exceptionally well in 2024, with strong demand improving cash flows and strengthening the balance sheets of property developers.

This has led to increased investor interest in realty shares, driving key stocks to record highs. The Nifty Realty index has surged 38 percent so far this year.

Axis Securities anticipates continued emphasis on affordable housing schemes and digital infrastructure improvements, which would benefit major real estate companies.

They recommend stocks such as Prestige Estates, Macrotech Developers, and Godrej Properties. Additionally, data center-focused companies like Anant Raj and urban developers like MICL and TARC are expected to perform well.

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Fisdom also predicts increased funding for affordable housing and the development of satellite townships near metro cities to enhance urban infrastructure. Stocks like DLF Ltd., Godrej Properties, and Oberoi Realty are expected to be in the spotlight.

Analysts at Sharekhan are particularly positive on DLF and Sunteck Realty, expecting them to benefit from the Budget’s focus on real estate growth.

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