With some significant moves in affordable housing, the overall Budget looks good. We expect a positive impact on the economy, including the real estate sector. Even though there were limited announcements for the real estate sector, there are likely to be indirect benefits. Let’s check what’s in it for the real estate and infrastructure sector in Budget 2023.
The economic stimulus from infrastructure
An increase in capital expenditure on infrastructure investment by 33 percent, i.e., Rs 10 lakh crore for 2023–24, which is 3.3 percent of GDP, will significantly boost the economy and create new job opportunities.
Growth in real estate is expected in line with the strengthening of the local economy. It proposes more commercial, residential, and retail development for tier II and tier III cities. Municipal bodies will also be able to raise more funds – these will have a cumulative impact on the real estate sector.
An increase in disposable income
A significant increase in allocation to capex coupled with encouraging taxpayers to opt for new tax regimes with comparatively lower taxes will increase the income at disposal in the hands of people. This will increase consumption and spending, increasing demand for housing and thus boosting residential real estate.
Housing affordability continues to be a focus
Housing for all with the PM Awas Yojana and the extended Credit-Linked Subsidy Scheme (CLSS) will further boost the real estate sector. As a means of addressing this gap in affordability, the central government will further boost its initiative to provide affordable housing by
●Increasing the outlay for PM Awas Yojana by 66% to ₹79,000 crores
●Extending the credit-linked subsidy scheme until 2027
Improved air connectivity
For regional air connectivity, a budget outlay of Rs 3,100 crore will be allocated to build 50 additional airports, helipads, water aerodromes, and advanced landing fields. Land prices may rise around the proposed sites, increasing real estate value.
Mission Smart Cities
A new initiative to develop “sustainable cities of tomorrow” and a massive allocation of Rs 16,000 crores could transform multiple cities in India by improving their quality of life and providing seamless infrastructure, mobility, and urban sustainability. As a result, such cities would be able to enhance their real estate potential in the long run.
Sanitizing real estate investments
A cap of Rs 10 crores is applied to capital gains in property transactions. This might help sanitize real estate investments, in which huge funds from businesses are invested in real estate. There may be a minimal impact on top-end residential transactions, even though the size of transactions is likely to be significant.
GIFT City
Single-window approval and registration systems are to be set up at data embassies. Data embassies are likely to attract countries looking for digital continuity solutions. A single window system is essential for making GIFT City a landmark global financial hub. The IFSCA may be given the power to avoid dual registration. In the end, this will have an impact on the real estate market.
The Union Budget 2023 has provided the real estate sector with crucial support and incentives. The government has announced several measures to stimulate investment and economic growth. In general, the budget presents a positive outlook for all the real estate players. With an expected CAGR of 9.2%, it will be interesting to see the real estate sector contributing to the Amrit Kaal of India.
The writer is the CEO and Founder of Homesfy.in and MyMagnet.io.
