Policy changes have added momentum to Indian real estate sector

April 6th, 2017

New Projects in Bangalore

Evolution is the term that comes to mind, when one examines the real estate sector in India. Regular developments in the sector have not only propelled the Indian Real Estate to the second largest employment generator in the country but also marked its prominence as an industry that contributes to 6 percent of India’s gross domestic product.

The industry is swiftly moving towards becoming a more organized one, especially with affordable housing being accorded industry status in Budget 2017. Overall business sentiment has been positive towards the steps taken by the government to boost the economy and improve governance. With the influx of global players, investment from overseas and Indian corporate houses, the real estate scenario is advancing exponentially.  

The implementation of GST (Goods and Service Tax) has also been long awaited by the real estate developers and buyers together.  The Union Government of India has set a closing date of April 2017 for its roll out, to bring about an amendment in the sector. Looking at the present scenario, transparency is the need of the hour for the industry. By improving taxation transparency, tax compliance is expected to rise and create a more stable tax base for state and national governments. This move would be a step forward in the “Make in India” initiative which aims to develop the country’s manufacturing base.

The development of the infrastructure sector of the country is something that tops the chart of Government of India. Innumerable proposals were announced as part of Budget 2017-18. Rs 2.41lakh crore has been allocated to boosting infrastructure for transportation in India. This includes the Indian railways, shipping and roadways. If there is an improvement in transportation, people will not mind buying houses in city outskirts.

A key highlight of the Budget was the step taken by the Indian government to offer infrastructure status to the affordable housing sector. Announcement of infra status for the affordable housing segment post  the Budget has opened up new avenues for developers planning to offer affordable homes and will make it uncomplicated and comfortable for them to get finance from lending agencies. Budget housing developers will be qualified for a variety of government incentives and subsidies, where this infra status could also mean that the government might come out with land parcels for such development in future.  The announcement of National Housing Bank refinancing individual loans of about Rs 20,000 crore in 2017-2018 is likely to further set the pace for affordable housing. This will make the affordable housing segment more lucrative for both, developers and buyers.

In addition, lowering the tax liability of the salaried class, especially in the 3-5 lakh per annum segment has boosted disposable income, made the sector inclusive and already driving investment in residential real estate. More Indians will now be able to invest in homes or even look at realty sector as a lucrative investment option.

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