Finance minister Nirmala Sitharaman said on February 1 that the government will launch a housing scheme for the middle class to buy or build their own houses and it will be constructing close to 2 crore homes under the PMAY rural scheme, a move that is expected to give a push to the Housing for All agenda.
Real estate experts said that while the interim budget didn’t directly address the real estate sector’s key demands such as granting industry status, tax incentives for homebuyers such as increasing the deduction limit on home loan interest under Section 24, it focused on affordable housing, infrastructure, and green energy initiatives.
In the interim Budget for 2024-25, Finance Minister Nirmala Sitharaman announced that the government will launch a scheme to help deserving sections of the middle class ‘living in rented houses, or slums, or chawls and unauthorised colonies’ to buy or build their own houses.
Also Read: Real Estate Budget 2024: Govt to launch housing scheme for the middle class
The finance minister also said 2 crore more homes will be built for the rural poor in the next five years under the continuing PM Awas Yojana (Grameen).
According to government statistics, the allocation for the government’s signature mission, the Pradhan Mantri Awas Yojana (PMAY), has been increased by 49 percent to ₹80,671 crore. As much as ₹54,103 crore was allocated (as per revised estimates) in 2023-2024.
The allocation for PMAY Rural in the Interim Budget 2024-2025 is ₹54,500 crore. It was ₹32000 crore as per the revised estimates last year. The allocation for PMAY (Urban) is ₹26170.61 crore for 2024-2025. It was ₹22103.03 as per revised estimates last year.
As for urban rejuvenation and smart cities mission, there is a 21 percent dip in allocation. As much as ₹13,200 crore was allocated (as per revised estimates) in 2023-2024 and ₹10,400 crore has been allocated for 2024-2025.
For the Swachh Bharat Mission, ₹2550 crore was allocated (as per revised estimates) which has now been increased to ₹5000 crore.
For Metro Projects too there is a 9 per cent increase in allocation. ₹19508 crore was set aside in 2023-2024 (as per revised estimates) and ₹21336 crore has been allocated for 2024-2025.
Middle class housing scheme to boost demand
The emphasis on social housing for EWS and LIG segments will further strengthen homebuying sentiments and will help in boosting both supply and demand for affordable houses, said experts.
“The government’s announcement of a scheme to facilitate home ownership for deserving sections of the middle class is a commendable step in line with the Housing for All initiative. This not only addresses a crucial need for our young population but also propels the housing sector into a new era of growth, fosters inclusivity, and ensures that homeownership becomes a reality for a larger section of our society,” said Aditya Virwani – COO, Embassy Group.
“The measures for stronger urban and sustainable development will have a positive bearing on the domestic real estate landscape in the long run. The increase in allocation for urban and affordable housing, showcases the government’s commitment towards housing for all,” said Gaurav Pandey, co-Chairman, FICCI Committee on Urban Development and Real Estate and Managing Director and CEO, Godrej Properties Ltd.
Focus on infrastructure to boost housing and commercial demand
The FM in her Budget 2024 speech that the country has a fast-expanding middle class and rapid urbanization is taking place. “Metro Rail and NaMo Bharat can be the catalyst for the required urban transformation. Expansion of these systems will be supported in large cities focusing on transit-oriented development.”
Also Read: Budget 2024: No support from Sitharaman, real estate stocks take a beating
The Government, through the interim budget, has increased allocation to infrastructure especially in Tier 2 and 3 cities. “Infrastructure will be the key focus for inter-connectivity across larger and smaller towns. This is likely to have a positive impact on housing and commercial development in these areas. In fact, the Government’s massive spend on infrastructure is one the main drivers of recent economic growth we saw in India, and that benefit will continue to accrue in the near future,” said Anshul Jain, Managing Director, India & Southeast Asia and Head of APAC Tenant Representation, Cushman & Wakefield.
“The unwavering commitment to infrastructure development stands as a cornerstone for fostering economic growth, extending tangible impact on real estate sector in the longer run. The strong 11.1% YoY increase in infrastructure outlay to over ₹11 lakh crore signals a steady and significant wave of upcoming developments and opening of vast opportunities for all stakeholders including real estate,” said Badal Yagnik, CEO, Colliers India.
Hospitality and retail sectors in tourist destinations stand to gain
The FM also said that tourism, including spiritual tourism, has tremendous opportunities for local entrepreneurship. “States will be encouraged to take up comprehensive development of iconic tourist centres, branding and marketing them at global scale. A framework for rating of the centres based on quality of facilities and services will be established. Long-term interest free loans will be provided to states for financing such development on matching basis.”
The hospitality and retail sectors in tourist destinations also stand to gain significantly from the Government’s renewed focus on promoting tourism through various circuit activations and potential state-level incentives. said Jain.
Samantak Das, Chief Economist and Head of Research & REIS, India, JLL, said that the announcement on creating and enhancing tourist centres and a ranking framework based on support infra creation will bring hospitality-related development in sharp focus while creating the need and opportunity for associated real estate development (holiday homes, second homes, commercial and social infrastructure) in such locations. The same holds true for improving island tourism.