The revival dose to the second largest labour-intensive Indian real estate sector went missing in Budget 2020. Though the Budget set a positive tone, it failed to evoke any fiscal stimulus to kick-start the $5 trillion economy.
The thrust on the increased use of renewable energies for sustainable development is well appreciated. Solar panels for power efficiency, recycling of water and renewable fuel is a motivational step to provide clean and carbon free environment. Such proactive steps to combat global warming are truly the need of the hour. The clean and green ecosystem will certainly ensure healthy living.
The emphasis on digitization, IoT and Artificial Intelligence also signifies futuristic tech embedded development for the real estate sector.
The emergence of new segments like co-living, co-working, data centres, logistics and warehousing are becoming popular and form an important part of the growth plans of the developer fraternity. The Central government also recognised the potential growth of these new segments by proposing that the National Data Centre and National Logistic policy would see the light of day soon.
The impetus on infrastructure sector with the announcement of Rs 103 crore worth of projects across the country is noteworthy. As many as 6,500 projects are proposed across sectors such as housing, safe drinking water, access to clean and affordable energy, healthcare for all, world-class educational institutes, modern railway stations, airports, bus terminals, metro and railway transportation, logistics and warehousing, irrigation projects among others.
The well-intended project aims to facilitate last mile connectivity which opens up a huge opportunity for real estate development across the new economic corridors and uncharted territory nationwide. This is also expected to lead to increased demand for residential, commercial, retail and warehousing.
Budget 2020 also proposes setting up of five more smart cities through the public private partnership model. This too would lead to some green shoots in real estate development. These measure are also directed towards enhancing the Ease of Living Index and improving the quality of life. Overall development in infrastructure and improvement in transportation networks should auger well for the emerging growth corridors of Indian real estate.
The Budget’s emphasis on the affordable housing segment with tax benefits for both homebuyers and the tax holiday for builders extended by another year, will surely lead to new project launches in this segment.
We had also recommended to the ministry of finance that the upper price limit in the definition of affordable housing for metro cities be raised from the current Rs 45 lakh to Rs 1 crore. Since land and construction cost come at a premium especially in metros, we had sought relaxation of the norms by amendments to the Real Estate (regulation and development) Act, 2016. Such an amendment would have brought more locations and projects under affordable housing, benefiting investors.
Initiatives directed at giving a push to rental housing were also clearly missing.
While we appreciate the tone set for Budget 2020 - socio-economic growth for citizens, it leaves much to be desired especially on the liquidity and the demand creation front.
We hope the needs of the second largest employment generating sector will be addressed at the earliest. After all, the future of 269 allied industries are linked to the recovery of real estate sector. GDP growth too depends on it and so does realization of the $5 trillion economy dream by FY 2024-25.The author is founder and managing director of Hiranandani Group and President, NAREDCO