Budget 2024-25: Transformative Measures For The Real Estate Sector

Budget 2024-25: Transformative Measures for the Real Estate Sector

Image: Business Today

The Union Budget 2024-25, presented by Finance Minister Nirmala Sitharaman, outlines a series of ambitious initiatives aimed at revitalizing the real estate sector and fostering urban development. These measures are a part of the government’s vision for a ‘Viksit Bharat’ (Developed India), positioning cities as the primary engines of growth. This comprehensive analysis delves into the key announcements, their detailed impacts, and expert opinions from industry stakeholders.

Pradhan Mantri Awas Yojana (PMAY) 2.0: Expanding Affordable Housing

Image: pmmodiyojana.in

Announcement: The government has announced an expansion of the Pradhan Mantri Awas Yojana (PMAY) with a commitment to constructing an additional 3 crore houses in rural and urban areas. Under PMAY-Urban 2.0, the housing needs of 1 crore urban poor and Middle-Income Group (MIG) families will be addressed with an investment of ₹10 lakh crore, including central assistance of ₹2.2 crore over the next five years.

Impact:

1. Housing Supply and Economic Growth: The expansion of PMAY will significantly increase the housing supply, reducing the housing deficit and stimulating the real estate market. The substantial investment will also create numerous job opportunities in construction and allied sectors, fostering economic growth.
2. Social Equity: By focusing on affordable housing, PMAY aims to enhance homeownership rates among lower-income groups, promoting social equity and stability. This initiative ensures that every citizen has access to a safe and affordable home.
3. Rural and Urban Development: The inclusion of both rural and urban areas in the PMAY expansion ensures a balanced development approach, catering to the diverse housing needs across the country. This holistic strategy will drive comprehensive urban and rural development.

Creative Redevelopment of Brownfield Cities: Revitalizing Urban Spaces

Image: DD News

Announcement: The budget introduces a framework for the creative redevelopment of brownfield cities, emphasizing policies, market-based mechanisms, and regulations to facilitate this transformation.

Impact:

1. Orderly Development of Peri-Urban Areas: The focus on economic and transit planning will ensure the orderly development of peri-urban areas. This planning will enhance connectivity, reduce congestion, and promote balanced urban growth by integrating these areas with existing urban centers.
2. Modernization of Infrastructure: Creative redevelopment will attract investments in older urban areas, leading to the modernization of infrastructure and the revitalization of communities. This approach can increase property values and enhance the quality of life for residents.
3. Comprehensive Urban Services: The inclusion of water supply, sewage treatment, and solid waste management projects and services for 100 large cities will address critical urban infrastructure needs. This ensures sustainable urban living by improving public health and environmental conditions.
4. Support for Affordable Housing: The creative redevelopment framework supports the PM Awas Yojana Urban 2.0, which aims to cover 1 crore urban poor and middle-class families. This ensures that affordable housing remains a central focus of urban redevelopment efforts.
5. Economic Opportunities: The establishment of 100 weekly ‘haats’ or street food hubs in select cities will create economic opportunities for small vendors and enhance the cultural vibrancy of urban areas. These hubs can become significant attractions, boosting local economies.
6. Workforce Housing: Rental housing for industrial workers will be facilitated in Public-Private Partnership (PPP) mode, addressing the housing needs of the working population. This initiative ensures that industrial growth is supported by adequate housing infrastructure, enhancing workforce stability and productivity.

Stamp Duty Reforms: Enhancing Affordability and Equity

Announcement: States with high stamp duty rates are encouraged to moderate these rates. Additionally, the government is considering further reductions in stamp duties for properties purchased by women. These measures will be integrated into urban development schemes

Impact:

1. Affordability: Lower stamp duty rates will make property transactions more affordable, particularly in metropolitan areas where costs are high. This reduction can stimulate the real estate market by making it easier for individuals to buy and sell properties.
2. Gender Equality: Reducing duties for women can promote gender equality in property ownership and encourage more women to invest in real estate, empowering them economically and socially. This measure supports the government’s broader goals of gender equity and women’s empowerment.
3. Market Stimulation: By reducing transaction costs, the government can stimulate more frequent and higher-value property transactions, boosting market activity and overall economic health.

Transit-Oriented Development: Sustainable Urban Growth

Image: pib.gov.in

Announcement: The budget proposes transit-oriented development plans for 14 large cities with populations over 30 lakh. This includes strategies for implementation and financing

Impact:

1. Improved Connectivity: Transit-oriented development will enhance connectivity, reduce commute times, and make cities more sustainable. Improved public transportation can lead to higher property values in well-connected areas and spur new real estate developments along transit corridors.
2. Environmental Benefits: This approach promotes environmental sustainability by reducing reliance on private vehicles, lowering carbon emissions, and promoting walkability and cycling. It aligns with global trends towards greener and more livable cities.
3. Economic Efficiency: Better connectivity can attract businesses and investors, driving economic efficiency and productivity. Enhanced transportation infrastructure can lead to more vibrant and economically robust urban centers.

Efficient and Transparent Rental Housing Markets: Boosting Rental Supply

Announcement: To address rental housing challenges, the government plans to implement enabling policy regulations to ensure efficient and transparent rental housing markets. This includes enhanced availability of rental properties

Impact:

1. Increased Rental Supply: Strengthening the rental housing market will provide more options for tenants, stabilize rental prices, and attract more investment in rental properties. Efficient and transparent rental markets can reduce conflicts between landlords and tenants, improve tenant satisfaction, and ensure fair rental practices.
2. Urban Mobility: This initiative can address the housing needs of a growing urban population, particularly young professionals and migrant workers, enhancing workforce mobility and flexibility.
3. Economic Stability: A robust rental market contributes to overall economic stability by providing flexible housing solutions that can adapt to changing economic conditions and demographics.

Digital Public Infrastructure Platform for Urban Governance: Enhancing Transparency and Efficiency

Image: t20ind.org

Announcement: The budget outlines the creation of a digital public infrastructure platform for urban governance. Special capital assistance in the form of interest-free loans for capital expenditure will be provided to states for reforms such as digitization of urban land records with GIS mapping and property tax governance

Impact:

1. Transparency and Efficiency: Digitizing urban land records and property tax systems will improve transparency, reduce disputes, and enhance the efficiency of property transactions. This can attract more investors and streamline real estate operations.
2. Better Urban Planning: By integrating advanced technologies such as GIS mapping, the government can ensure accurate and up-to-date land records, facilitating better urban planning and management. This leads to more efficient use of land and resources.
3. Financial Ecosystem: Enhanced property tax governance will strengthen the financial ecosystem of urban local bodies, ensuring better revenue collection and financial management. This supports the long-term sustainability of urban infrastructure projects.

Working Women Hostels and Rental Housing for Industrial Workers: Addressing Workforce Housing Needs

Image: indiafilings.com

Announcement: In collaboration with the industry, the government plans to establish working women hostels and rental housing with dormitory-style accommodation for industrial workers. This will be done in a Public-Private Partnership (PPP) mode with Viability Gap Funding (VGF) support

Impact:

1. Workforce Mobility: Providing safe and affordable housing for working women and industrial workers will address a critical need and support workforce mobility. It can also lead to the development of new housing projects catering to these demographics.
2. Economic Productivity: By ensuring secure and convenient housing options, the government can enhance productivity and job satisfaction among workers, contributing to economic growth.
3. Social Welfare: This initiative supports social welfare by ensuring that vulnerable populations, such as working women and industrial workers, have access to safe and affordable housing options.

Long-term Capital Gains Tax: Encouraging Real Estate Investments

Image: YouTube

Announcement: The budget proposes that long-term gains on all financial and non-financial assets be taxed at a rate of 12.5%. This measure is expected to boost investment in the real estate sector, given the inherently long-term nature of real estate investments

Impact:

1. Investor Confidence: A favorable long-term capital gains tax rate can attract more investors to the real estate market, increase liquidity, and support the growth of the sector. By providing a stable and predictable tax environment, the government can encourage both domestic and foreign investments in real estate, driving development and innovation.
2. Market Stability: Lowering the tax burden on long-term investments can lead to greater market stability, as investors are more likely to hold onto their assets for longer periods. This can reduce market volatility and promote sustainable growth.
3. Economic Growth: Increased investment in real estate can drive economic growth by stimulating related industries such as construction, finance, and services, creating a multiplier effect throughout the economy.

Skilling Initiatives: Building a Skilled Workforce

Announcement: The government aims to skill 20 lakh youth in five years and set up 1000 Industrial Training Institutes (ITIs). This initiative will supply a skilled workforce across industries, including the real estate sector

Impact:

1. Enhanced Productivity: A skilled workforce is crucial for the real estate sector’s growth. Enhanced training and education will improve the quality of construction, increase productivity, and support the sector’s expansion.
2. Employment Opportunities: Investing in skill development will create employment opportunities for millions of young people, contributing to economic growth and social stability.
3. Sectoral Growth: A steady supply of qualified professionals will meet the growing demands of the real estate industry, ensuring that the sector can continue to grow and innovate.

Expert Opinions: Real Estate Industry Reactions

1. Anuj Puri, Chairman, Anarock Property Consultants: “The Budget 2024-25’s focus on affordable housing and infrastructure development is a welcome move. The extension of PMAY and the emphasis on creative redevelopment will significantly boost the real estate sector. The reduction in stamp duties for women is a progressive step that will promote gender equality in property ownership.”
2. Dr. Niranjan Hiranandani, National President, NAREDCO: “The government’s commitment to transit-oriented development and the digitization of land records is a game-changer for urban development. These initiatives will enhance connectivity, improve transparency, and attract more investments### Budget 2024-25: Transformative Measures for the Real Estate Sector
3. Shishir Baijal, Chairman & Managing Director, Knight Frank India: “The announcement of measures like efficient rental housing markets and digitization of urban governance infrastructure will bring about the much-needed transparency and efficiency in the real estate sector. This will foster a conducive environment for investment and growth.”
4. Anshuman Magazine, Chairman & CEO, CBRE India, South East Asia, Middle East & Africa: “The introduction of a framework for the creative redevelopment of brownfield cities is a visionary step. This initiative, along with the focus on water supply, sewage treatment, and solid waste management for 100 large cities, will significantly improve urban infrastructure. The transit-oriented development plans for major cities will not only enhance connectivity but also boost real estate values along these corridors. The emphasis on affordable housing under PMAY Urban 2.0 will provide much-needed relief to urban poor and middle-class families, ensuring inclusive growth.”
5. Jaxay Shah, Chairman, CREDAI National: “The Budget 2024-25 has laid out a comprehensive plan for urban development that addresses key areas of concern. The focus on the orderly development of peri-urban areas through economic and transit planning is crucial for sustainable urban expansion. The proposed rental housing for industrial workers in PPP mode is a thoughtful approach to cater to the housing needs of the workforce, promoting industrial growth. Additionally, the establishment of weekly ‘haats’ or street food hubs will boost local economies and add vibrancy to urban life.”
6. Ramesh Nair, CEO, India & Managing Director, Market Development, Asia, Colliers: “The measures announced in the budget, such as the digitization of urban land records with GIS mapping and the creation of a digital public infrastructure platform for urban governance, will bring about much-needed transparency and efficiency in the real estate sector. The focus on skill development with the establishment of 1000 Industrial Training Institutes is a positive step towards building a skilled workforce, which is essential for the growth of the real estate and construction sectors. The government’s commitment to infrastructure development and urban planning reforms will create a conducive environment for real estate investment and growth.”

Conclusion

The Budget 2024-25 introduces comprehensive measures to boost the real estate sector and drive urban development. From expanding affordable housing under PMAY to promoting creative redevelopment and improving rental housing markets, these initiatives are set to transform India’s urban landscape. By addressing key challenges and leveraging opportunities, the government aims to create vibrant, sustainable, and inclusive cities, positioning them as engines of growth for a developed India.

1. What are the Main Goals of the Budget 2024-25 for the Real Estate Sector?

The Budget 2024-25 aims to rejuvenate the real estate sector by focusing on expanding affordable housing through the Pradhan Mantri Awas Yojana (PMAY), promoting innovative redevelopment projects, and improving the rental housing market. These measures are designed to address existing challenges, leverage new opportunities, and transform India’s urban landscape into vibrant and inclusive cities.

2. How Will the Expansion of Affordable Housing Under PMAY Benefit Citizens?

The expansion of affordable housing under PMAY is intended to provide quality housing solutions for low- and middle-income groups. By increasing the availability of affordable housing units, the initiative aims to improve living standards, reduce housing shortages, and make homeownership more accessible to a broader segment of the population.

3. What is Meant by “Creative Redevelopment,” and How Will it Impact Urban Areas?

Creative redevelopment refers to the innovative approach of revitalizing existing urban spaces and repurposing underutilized areas to enhance their functionality and aesthetic appeal. This can include upgrading old buildings, repurposing vacant lands, and integrating modern infrastructure. The goal is to make urban areas more dynamic, efficient, and attractive, leading to improved quality of life and economic activity.

4. How Does the Budget Address Issues in the Rental Housing Market?

The budget proposes several measures to improve the rental housing market, including regulatory reforms and incentives aimed at making rental properties more accessible and affordable. These measures are expected to enhance tenant protection, ensure fair rental practices, and encourage the development of more rental housing options.

5. What are The Long-Term Goals of The Budget 2024-25 for India’s Urban Development?

The long-term goals of the Budget 2024-25 are to transform Indian cities into vibrant, sustainable, and inclusive urban centers. By addressing current challenges and capitalizing on growth opportunities, the budget aims to create urban environments that drive economic development, support diverse communities, and contribute to the vision of a developed India.

Also Read:- Will Union Budget 2024 Boost Affordable Home Buying?