The real estate sector in India is one of the country’s economic cornerstones, and it is the country’s second-largest business generator after agriculture, with more than 230 affiliated businesses. Despite disruptions and market upheavals during the pandemic, the real estate sector has achieved a remarkable recovery. The recovery will continue in the coming years as well. The industry has developed into a buyer’s market, and today’s buyers are focusing on tailored offers to make the best investment selections possible.
Expected growth
According to reports, when compared to 2019, the sale of housing units fell by 60% in 2020, with only 1.38 lakh units being sold. Between July 2021 and September 2021, however, the real estate market had a robust rebound. Further growth is expected, but nothing can be predicted now that the third wave of Omicron variant is wreaking havoc across the county lately.
The nation’s real estate sector is pinning its hopes yet again on this year’s budget for some more relief in the measures. The sector has reasonable expectations from the Budget 2022, given that it contributes more than 8% to the Indian GDP. However, this year real estate sector’s budget wish list might not be long this year. Furthermore, a combination of positive factors such as low home loan interest rates, customer-centric regulation, affordable property prices, developer options on new products, and payment flexibility has motivated even those on the fence to buy sooner rather than later.
Lockdowns and limitations
With an increase in COVID-19 cases due to the new Omicron variant, India’s economic recovery could be threatened once more. As a result of the lockdowns and limitations imposed by numerous states to regulate the COVID-19 cases, the real estate sector expects the government to increase capital spending to give the economy a boost. The government should give a boost by providing more exemptions to end consumers who are driving affordable housing purchases.
The government can enhance the tax deduction for principal repayment on house loans under Section 80C of the Internal Revenue Code. It should also concentrate on providing unique incentives to real estate building laborers. Realtors have been pushing for the sector to be given infrastructure status for a long time. It will undoubtedly aid in the development of industry liquidity and the determination of supply-side costs.
The Union Budget this year can play a supporting role in the real estate sector, by offering some key relaxations in taxes and waivers, reductions on GSTs on raw materials. As the sector is one of the biggest contributors to the nation’s GDP, strengthening the sector will also boost the allied economic activities, thereby bringing a positive turnout to the economy as a whole. We would expect the focus to be on providing a push to both affordable and rental housing to accommodate the rising demand in the housing sector due to the pandemic-induced change in home buying preferences. Hopefully the long due of giving the sector infrastructure status will help in building liquidity in the sector.
The recent performance of the residential sector, along with good execution, are important indicators that the current momentum in home buying will continue in the near future. The real estate business is roaring back thanks to pent-up demand, an uptick in the job market, the widespread use of vaccines, and decreasing infection rates.
The writer is Managing Director, Poddar Housing & Development Ltd.
