Finance Minister Nirmala Sitharaman presented the Union Budget 2022-23 to the Parliament on 1st, Feb 2022. The Union Budget 2022-23 focuses heavily on digitization, urban development, and sustainability. Like any other business, Indian Real Estate was also looking forward to any path-breaking announcements in Budget 2022. This year’s budget was based on a vision of the next 25 years and it focuses a lot on Infrastructure & Development. The budget seems quite optimistic for realty space as the Government has tried to uplift the economy by planning on bringing a paradigm shift towards a usual business approach.
How Budget Empowers Real Estate & Infrastructure Development
- Inadequate housing is a concern for all. To put things in perspective, this means that about one in four people in urban areas is forced to live in conditions that affect their health and safety. This naturally makes adequate housing imperative for the sustainable growth of cities and communities. Housing for All is the target of the Govt. The Finance Minister announced the completion of 8 million homes under the Pradhan Mantri Awas Yojna (PMAY) scheme, and an allocation of Rs 48,000 crore under the PMAY (Urban) and the PMAY (Gramin). (PMAY).
- This allocation will help create opportunities for jobs in all the sectors related to real estate. After a challenging period induced by the pandemic, the real estate sector was hoping for more fiscal and policy support. This will now contribute significantly to the creation of 60 Lakh jobs by the government and the big target of $5 trillion.
- Also, this time, urban planning will take the centre stage. With increasing work from home (WFH) or work from anywhere (WFA) policies, employees have returned to their hometowns or are choosing to buy a second home in tier 2 and 3 cities, thus spiking demand. The past few months also witnessed the trend of new townships in small towns to promote a community-driven lifestyle — a realization that has been reinforced in the months of the lockdown. A high-level committee for urban planners and institutes will be framing policies for development. This will provide essential impetus to the real estate sector and help transform Tier 2 and 3 cities. The mass transit systems will bridge the gap between the big cities and the small ones. It means that we can expect to see tier 2 and 3 cities becoming important economic growth centers. This will further accelerate real estate penetration, both residential and commercial.
Read more – Union Budget 2021 brings a Boost for Real Estate & Home Buyers
- To meet the increasing issues arising from urbanization, the Union Budget 2022 proposes establishing a high-level committee of planners, economists, and institutions to provide recommendations on urban sector policies, capacity building, and planning, which can see an increase in commercial real estate. This step will address inadequate urban housing, which will drive residential real estate in urban areas.
- The budget focuses on increased spending on logistics & infrastructure spending which will be of substantial benefit for commercial real estate. The addition of 25,000 kilometers for national highways, multimodal logistics parks, and capacity building for infrastructure projects will reduce logistics costs, propel the manufacturing sector, and ensure a smoother supply chain. This, in turn, will promote sales and consumption, which would require more commercial space, increased warehousing needs, and data center capacity, all of which will drive commercial real estate.
- Union Budget 2022 has commendably increased the expenditure to boost demand and investment. Direct real estate measures focus on providing infrastructure status to Data Centres. Also, there was a profound focus on urban capacity building, digitization of land records, and proposed Special Economic Zone (SEZ) law.
- Apart from the above, boosting employment, employing tax exemption, single-window environmental clearances, better coordination between the Centre and State governments for approvals, and uniform registration of deeds will help augment the real estate sector in a significant way.
No matter what, it looks like the real estate sector is gearing up for brighter days in the coming months.