Impact of Budget 2022-23 on Real Estate
The Union Budget for the year 2022-23 which was announced recently by the Finance Minister, Ms. Nirmala Sitharaman might actually be a turning point for the real estate sector. many of the announcements that were made are expected to give a boost to the sector. The real estate sector has had to bear with the challenges of delays in project completion, a slowdown in housing sales, and a decrease in site visits as a result of the Covid-19 pandemic. The main emphasis was given to the government policy of promoting and facilitating affordable housing schemes under ‘Housing for all’. The announcements made in the Union Budget 2022-23 have certainly given a push to the affordable housing sector. Read on to find out in detail about the announcements which have been made and the impact of the budget on Real Estate sector.
Budget 2022-23 – Expectations for Real Estate
With the Covid-19 pandemic still continuing, the real estate sector was in the hope of some announcements that will boost the demand. Let us look at some of the Budget 2022 expectations for the real estate sector in detail. There were some expectations like changes in the tax slabs like waiving off the property taxes. And encouraging rate tax deductions which would have resulted in increased demand for the real estate sector. The benefits of the affordable housing scheme should be extended to even the lenders and developers. Apart from the homebuyers by accelerating the completion of projects and allowing cash access.
The developers wanted new regulations for rented housing and single window permits. There were some expectations that there will be a reduction in the GST and the input tax rates of the construction raw materials will be go down to 5 percent. If the input costs continue to rise, the developers might increase the prices of property. The GST should also be waived off for the under-construction projects and the tax rebate on home loan interests can be increased from Rs 2 lakh. This would result in an increase in demand from the affordable housing market. The real estate sector is a sector that will rely heavily on raw materials for completing the projects.
The government should encourage investments in green buildings. The impact of budget on real sector is crucial as even in the ongoing Covid-19 situation, the market for housing continues to be upbeat. The demand for good infrastructure and big homes is expect to continue to rise in 2022. We will continue to see increasing demand for ready-to-move homes in the coming year as well. The last year’s budget saw some significant proposals like giving a boost to affordable housing by way of the rate tax deduction on home loans. There were some other proposals as well like debt financing and improving infrastructure. These measures have provided an impetus to the real estate sector.
Announcements made in the Budget 2022-23
The finance minister has estimated the economic growth to be at 9.2 percent for 2022-23. With a planned capital expenditure of Rs 7.5 lakh crore. These estimates can lead to improvement in the cash liquidity. Which would surely have a direct impact on the real estate sector. The proposed high allocation to the capital expenditure would help in increasing employment in the sectors like real estate and infrastructure. The Finance Minister has withdrawn the Countervailing Duty. And Anti-dumping duty on stainless steel, coated steel, bars of alloy steel, as well as high-speed steel.
This is a vital decision as it provides a lot of relief to the steel industry during the rising metal prices in recent times. It will also reduce imports from China and promote local manufacturing. It will also have a direct impact on the construction industry that uses steel and steel products extensively in the construction of houses.
For providing a boost to affordable housing. The FM has announced Rs 48,000 crore towards the Affordable Housing Scheme (Pradhan Mantri Awas Yojana). The FM announce that 80 lakh homes were complete under the PMAY. Other than this, Rs 60,000 crore was allocate under the Har Ghar Nal program. The Impact of the Budget on Real Estate sector will see the real estate sector playing an important role in the economy as the demand for affordable housing schemes has been continuously rising. The government has also made an announcement about an outlay of Rs 20,000 crore toward Gati Shakti for the development. And implementation of the infrastructure connectivity projects. The FM also emphasized the importance of sustainable development.
The expansion of the National Highways has been announce to exceed 25,000 km. The PM Gati Shakti plan calls for a coordinated strategy to develop the cargo terminals and expressways along with the other infrastructure. The New SEZ Act would give a vital boost to commercial real estate. The impact of the budget on real estate will be constructive. The Announcement of the Gati Shakti will focus on the development of multimodal logistics as well as cargo terminals.
Have all the Budget 2022 expectations for the Real Estate sector been met?
Some demands of the real estate sector have not been address in the budget. The real estate sector has had to bear with the challenges of delays in project completion. A slowdown in housing sales, and a decrease in site visits as a result of the Covid-19 pandemic. There was a demand to grant industry status for the real sector. And the single-window clearance to ensure smooth operations but these demands have not been met. The focus on the expansion of Tier 2 and Tier 3 cities. And the propose infrastructural improvements can be see as promising developments. All the Budget 2022 expectations for the Real Estate sector have not been met and it looks like the budget is a mixed bag from a real estate point of view.
Takeaway
In conclusion, the Union Budget 2022-23 has proposals to improve the affordable housing scheme. And also strengthen the multimodal infrastructure across India. Even though some Budget 2022 expectations for the Real Estate sector like single-window clearance, industry status, and reduction in taxation have not been, the overall impact of Budget on Real Estate has been promising.
