The current government’s progressive work implemented during its first term has helped in the sector’s revival. While it has helped in the residential segment’s revival, it has put India’s office and retail segments, and emerging segments such as logistics and warehousing on a global map. The continuity of reforms for the next five years is sure to infuse growth and improve buyers’ and investors’ sentiment.
Implementation of real estate regulation three years back followed by the Goods & Services Tax, the next year, brought in the required structural reforms in the economy.
Government programmes such as ‘Housing for All by 2022’, credit subsidies offered under the Pradhan Mantri Awas Yojana (PMAY), tax incentives for first time home buyers and special projects such as Smarts Cities Mission, and Atal Mission for Rejuvenation and Urban Transformation (AMRUT), have the potential to transform the urban landscape in the country. As a result, while cities will become liveable, there will be an increased supply of affordable housing.
Various tax incentives offered so far has been helping prospective homebuyers with improved affordability and credit accessibility.The implementation of reforms like Real Estate (Regulation and Development) Act, Goods and Services Tax Act (GST) and Benami Transactions (Prohibition) Act has contributed to increasing transparency in real estate sector.
Investors, both domestic and foreign, have taken note of these developments. The impact of reforms has been reflected in the investment flows received by the real estate sector. Of the total institutional investments of US$ 30 bn during 2009-2018, US$ 20 bn was invested in 2014-2018. During the same period, the share of foreign investments more than doubled to 70% in 2018 from 31% in 2009.
Development of infrastructure and real estate has been one of the key priorities of the government. Fiscal and monetary measures adopted so far along with initiatives to rationalise the GST for the affordable housing sector proves the point. The real estate sector is hopeful that the upcoming Union Budget 2019-20 will again give some good news as we have witnessed at previous similar occasions.
Further sops in the form of tax incentives for home buyers and fiscal measures can boost liquidity in the system.
By; Ramesh Nair, CEO & Country Head, JLL India