Budget 2024 Brings Promising Changes to Real Estate Sector

The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, has introduced several transformative measures aimed at boosting the real estate sector. These initiatives focus on affordable housing, infrastructure development, and urban planning, offering a significant push to the industry.

Affordable Housing Initiatives

The PM Awas Yojana-Urban 2.0 aims to meet the housing needs of 1 crore poor and middle-class families. This initiative is expected to increase demand for affordable housing, stimulating construction activities and benefiting developers and construction companies in this segment. Additionally, the budget has allocated Rs 2.2 lakh crore for urban housing over the next five years. This funding will speed up urban housing projects, improve urban infrastructure, and enhance living conditions in cities, attracting more investments into the urban real estate market.

Focus on Industrial Workers

To help industrial workers get affordable houses to live in, the budget lays out rental housing in Public-Private Partnership (PPP) mode with dorm-like facilities. The hope is that it will boost the industrial sector and its development as well as foster stability in the labour-intensive areas while also opening new opportunities for real estate developers to focus on renting business premises and affordable housing units.

Boost to Industrial and Urban Development

The development of an industrial node on the Amritsar-Kolkata Industrial Corridor, including Gaya, is a significant step towards boosting real estate development in these regions. This will create demand for commercial and residential properties, enhancing connectivity and economic activity. Additionally, transit-oriented development plans for 14 large cities with populations above 30 lakhs will promote the development of mixed-use properties around transit hubs, leading to increased real estate activity and better urban planning.

Investment in Infrastructure

The budget’s announcement to set up one hundred new investment-ready plug-and-play industrial parks in or near 100 cities will foster Industrial investments, which in turn will create demand for industrial real estate. This initiative supports the growth of ancillary services and residential developments in these regions.

Tourism and Cultural Development

The upgrade of the Vishnupad and Mahabodhi Temple Corridors as major pilgrimage and tourist attractions will advance the tourism and hospitality industries, leading to the demand for hotels, restaurants and retail and commercial complexes. Likewise, turning ‘Nalanda’ into a tourist hub as well as reopening ‘Nalanda University’ will contribute more to the cultural and educational values of the region and thus increase the flow of investments into educational structures and correlated actualisation of real estate.

Rural Connectivity and Development

The launch of Phase IV of the PM Gram Sadak Yojana in 25 rural habitations will help enhance the road infrastructure in the rural area thus helping in overall rural developments and making the region attractive for investment. When new roads are put in place, real estate activity is most probably going to pick up in those regions.

Long-Term Interest-Free Loans

The aspect of the budget is the provision of Rs 1.5 lakh crore in long-term interest-free loans to states for infrastructure will improve the connectivity and facilities, which should have a beneficiary impact on real estate. This will promote regions for residential and commercial investments.

Indexation benefit on real estate

The proposal by Union Finance Minister Nirmala Sitharaman to do away with indexation benefits for determining the long-term capital gain (LTCG) tax on real estate is expected to have a significant negative impact on the real estate industry. The revised standards will take effect immediately, on July 23, 2024.

The finance minister declared that in order to rationalise the capital gains tax system, the LTCG rate would be adjusted to 12.5% for both financial and non-financial assets. As a result, the LTCG tax, which was previously 20%, would no longer apply to real estate.

Overall Impact

Housing, infrastructure, and urban planning sectors that the 2024 proposed budget seeks to accelerate with growth. Thus, concerning the budget, it might be regarded as an attempt to make the growth environment even more balanced and inclusive by supporting segments such as affordable housing, industrial workers, and urban infrastructures. In the next few years more opportunities and a favourable regulation and policy framework will likely continue to rise for real estate developers, investors, and stakeholders.

The comprehensive measures introduced in budget 2024 reflect the government’s commitment to the all-round development of the real estate sector, making it a significant contributor to the nation’s economic growth.