By AAKASH PATEL
In 2023, the Indian real estate landscape, encompassing both housing and commercial sectors, experienced significant growth. This upswing, driven by heightened demand, supply, and absorption rates, places the sector at the forefront of expectations from the upcoming budget, with hopes to sustain this positive momentum.
The Indian government’s strategic reforms, aimed at revitalizing the economy, have infused the market with liquidity, showing promising long-term economic benefits. These measures have painted an optimistic picture for India’s economic prospects in the years ahead.
However, the expiry of several incentives for developers and consumers in the past one to two years has highlighted the need for renewed and extended benefits. Critical measures, such as tax breaks for affordable housing development and acquisition, are seen as crucial for the sector’s continued vitality.
The forthcoming budget is also poised to play a pivotal role in attracting foreign investments. Given the current performance of the rupee, it presents an opportune moment for reforms targeted at foreign capital inflows, including anticipated reductions in interest income tax and liberalization of foreign investment norms in the real estate sector.
The residential real estate market in India has become increasingly appealing to Non-Resident Indians (NRIs), thanks to improved transparency from the Real Estate Regulation and Development Act (RERA) and relaxed investment norms. NRIs are looking forward to the budget, hoping for incentives such as easier tax compliance and reduced withholding tax rates.
Additionally, the commercial and retail real estate segments have gained momentum this year, thanks to increased investor and developer sentiment. The focus on Real Estate Investment Trusts (REITs) highlights this growth, offering better cash flow visibility for developers and funders. The global rise of REITs, along with India’s burgeoning REIT market, indicates a bright future for the nation’s commercial real estate sector. The government’s efforts to enhance liquidity and bolster investor confidence in REITs are eagerly anticipated.
As a major driver of the Indian economy, the real estate sector stands at a crucial juncture. The government is expected to announce measures in the upcoming budget that will not only attract foreign investments but also contribute significantly to job creation, further cementing the sector’s role in India’s economic expansion. (The author is Director, Atul Projects India Pvt. Ltd.)