Union Budget 2022: 23: Real Estate Hopes For Industry Status

As real estate recovering from the rude shock of the pandemic, the sector is pinning hopes on the upcoming Budget. The realtors are looking for stimulus packages, streamlining of GST rates, industry status, and a host of other demands. The latest report "Knight Frank-FICCI-NAREDCO Real Estate Sentiment Index" highlighted that the real estate sector's sentiment Index Score was an all-time high of 65 in Q4 2021 due to reduced economic uncertainty leading to demand stability in real estate.

While the sector is seeing strong demand, stakeholders are taking a cautious stance in the aftermath of the COVID -19 third wave uncertainty. The real estate sector has exhibited an indomitable spirit in the last five quarters, with the residential segment leading the way. In terms of commercial real estate, the sector maintained its momentum from the previous year, as corporations continue to sign up for new premises for future expansion, as evidenced by the strong hiring in the last three to four quarters.

The sector is demanding that the Government should focus on extending infrastructure status to the sector that has been contributing significantly to the country's GDP. Developers say that the industry status will help the sector get low-cost funding, which in turn will reduce cost overruns. The sector is also highlighting the price issue and cement cartelization as the probable demand hurdles.

"The buyers expect that prices remain stagnant, but it is becoming difficult for the developers to hold on to the current prices owing to the increased cost of raw materials. The Government should take steps in the upcoming Budget to ensure that real estate gets relief from the cartelization, ensuring that prices remain under control and benefits can be passed on to the buyers," says Harvinder Singh Sikka, Managing Director, Sikka Group.

The need is to have measures and steps to help the sector sustain demand. The growth would depend on tax rationalization, and initiatives to solve stuck projects issues. Real estate growth will also depend on the overall measures to boost economic growth, including an increased focus on overall infrastructure development," says Sagar Saxena, Project Head, Spectrum Metro.

According to Uddhav Poddar, Managing Director, Bhumika Group, "The commercial real estate has managed to sustain itself despite the adverse circumstances that occurred due to the pandemic. Some of the major commercial projects in Tier-I and Tier-II cities of the country are on the verge of successful completion. However, we seek the following reforms in the upcoming budget like real estate sector to get awarded with industry status, GST input tax credit on development of leased properties. We also seek the government's intervention to decrease the number of approvals for real estate projects and also availability of finance for real estate development projects. Providing industry status will be the much needed boost for the sector, as it will be clearing multiple hurdles related to capital procurement and will be much appreciated by the entire developer community and associated industries for fast-tracking deals. The end result will be faster construction and deliveries which will be majorly reviving the nation's economy overall."

Realtors feel that the sector needs handholding when sales are picking up pace at this crucial juncture. "The sector needs handholding when sales are picking up pace at this crucial juncture. The need is for steps to boost demand and enable buyers to have increased disposable income. We expect the Budget to have more income tax exemptions to empower the common man. We are seeking Finance Ministry to reduce the GST rates on commercial properties; our suggestion is to bring it down to 5% from the present prevailing rate of 12%. The Budget should also take stock of the long pending demand of industry status to the real estate sector, which will streamline several things, including ease of financing and ultimately generating scope of more employment opportunities in the sector and associated industries," says Pawan Sharma, Director, Trisol RED Infraventures Pvt Ltd.