The rising expenditure on raw materials has triggered the need for a transparent and cost-effective housing budget. In the Union Budget 2022, Finance minister Nirmala Sitharaman has focused on infrastructure and low-cost housing. It is a boon for real estate projects.
A revised estimate for FY2022 has increased the share towards the flagship Pradhan Mantri Awas Yojana (PMAY). Rs 48,000 crore has been allocated to complete 80 lakh houses in FY2023, which is relatively high compared to Rs 28,000 crore allocated in FY2022.
The pandemic has significantly impacted the housing market, and real estate is still trying to cope with the downfalls. But, the Union Budget hoards the power to unlock the potential to rebuild the real estate market.
Let’s take a closer look at how the Union Budget is planned to pave the way towards progress:
There have been no repercussions for expanding the income tax deduction on housing loans in earlier budgets. And, this is the most noteworthy aspect of Budget 2022 so far. It is time to reform and boost the industry with blooming real estate projects.
The most highlighting reform is the proposal for one-nation-one-registration in the country. And, this will streamline land transactions and sale deed registration from any part of the country. Further, the new SEZ legislation would give the commercial real estate sector a substantial direction.
The Budget has a direct as well as indirect effect on the commercial estate –
The Gati Shakti framework will focus on developing multimodal logistic parks and cargo terminals, which is a favourable aspect for warehouses. There are other micro niches that will act towards elevating the inducement of real estate transactions. Further, the vision of Housing For All and digitalisation implementation is capping 15% on long-term capital gains tax.
Leverage on raw materials
Several units join together to form the real estate sector. And, based on the Budget, there has been a reconsideration of the rising metal prices. There will be a relief in the steel industry, and the prime agenda is to induce domestic manufacturing and reduce imports from China.
Land records management facilities
Budget 2022 will facilitate the adoption of the “Unique Land Parcel Identification Number” (ULPIN). And, every state needs to participate in promoting digital land record management. Owing to the addition of IT-based facilities, the entire process will be seamless.
Introduction of schemes
Various measures will be taken, such as the ‘National Generic Documents Registration System (NGDRS)’ for a ‘One Nation-One Registration Software’. This will bring uniformity in the ‘Anywhere Registration’ process for deeds and documents. And, these are indirectly bound to leave a massive impact on the logistics and manufacturing entities.
New planning for the development of cities
The Union Budget 2022-23 also mentions the development of Mega Cities, whose focal point is Tier 2 cities and Tier 3 cities. There has been a mention to turn these cities into an economic hub for real estate projects. The government will work along with the state to initiate a change in ‘Urban Planning’. There is an announcement about forming a high-powered committee and structuralizing the policies on urban infrastructure development.
The government plans to create 6 million jobs within the next 5 years, whose results will reflect in the commercial real estate sector. With the increase in employment, there will be a rise in office space requirements, which will have an accelerating influence on the market size and the doubling of the real estate sector. Vineet Taing, President of Vatika Business Centre, stated that the Budget would act as the nucleus in commercial real estate growth.