Budget 2020: A mixed bag for the real estate industry

The Indian real estate industry had a mixed reaction to Union Budget 2020. Many have expressed disappointments with the budget not bringing any significant relief to the sector, especially the liquidity crisis which is pulling down the sector for the past many months.

Industry experts aren’t seeing any major thrust that has been given to the ailing sector as well as the ‘smaller reforms’ which could have been beneficial for the industry as a whole. The slowed-down economy needed more impetus to be given to the real estate sector, which is a major contributor to the country’s GDP.

On the brighter side, by analyzing Budget 2020, it’s evident that ‘affordable housing’ remains at the center of the Government’s agenda for real estate growth. The previous tax exemptions for both home buyers and developers have been extended for one year. Personal tax relieves announced for various income slabs will increase disposable funds at the hands of the middle class, which, consequently boosts their purchasing capability. This may translate into higher demands for homes in the affordable sector.

The Government has also proposed to extend by one more year the additional deduction of Rs. 1,50,000 for interest paid on home loans (for affordable homes), which is going to ease the home buyer’s burden a bit. In order to simplify complexity in real estate transactions, Budget 2020 proposed to increase the circle rate limit of 5% to 10%.

Infrastructural development gets Rs 100 lakh crore in the next five years. It consists of more than 6500 projects across sectors including housing, access to green and affordable energy, modernizing railway network, airports, metro transportation etc. This is a good sign for real estate development as a whole as a holistic approach to improve the lifestyle quotient for the citizens will result into better demand in coming time.

Besides infrastructure, finance minister laid focus on warehousing, data centers, schools, hospitals etc. Building such facilities across the country will boost demand for real estate. Besides bringing push to real estate properties, this move will open up new employment opportunities which would indirectly push demand for the sector.

However, the industry had more expectations from this Budget. These expectations included ask for an industry status, single window clearance and reinstatement of Input Tax Credit in GST etc. Clearly, this was a crucial Budget in the wake of economic slow-down, and though, the Government has lined up several steps for overall growth, the real estate sector hasn’t got the attention it needed from Budget, 2020. 

[The author of this article is a senior Real Estate evangelist and runs multiple organizations specializing in Real Estate Marketing, Strategy, Sales, Digital Communication & Content marketing. He is also the brain behind Brandniti a branding and digital agency, 9amstories a content marketing portal and Ishtaan Real Estate Advisory; an expert consultancy service for real estate industry. One may contact him at [email protected] for any query or discussion]