Give Industry Status to MSME Real Estate Companies

Despite inflationary pressures and global headwinds, the real estate sector has demonstrated resilience to achieve sustained growth with high demand and robust sales. G Hari Babu, President, of NAREDCO National, the apex body of developers in India, talks about the current real estate scenario, challenges faced by the sector, and the prospects ahead.   ….Vinod Behl

On the  current real estate landscape and the future outlook 

Despite facing various challenges, real estate has followed the path of high growth. With the Modi government’s committed efforts to boost real estate and infrastructure, the present real estate landscape is truly dynamic especially in view of a positive investment scenario.

Keeping in view the forecasted urban infra growth and the high potential of Tier 2-3 cities , the real estate sector is poised to touch USD 1000 billion by 2030, highlighting its crucial role in the government’s flagship mission of ‘Atma Nirbhar Bharat’.The growing interest of global investors and increasing volume of investments signal a positive growth of the real estate sector. The continuous focus on reforms has laid a roadmap for socially and environmentally responsible real estate,promising sustainable growth.

On Challenges & Prospects of RERA

Ever since RERA has come into force, it has covered a lot of ground in terms of regulating and professionalising real estate with a lot of transparency by bringing various stakeholders including developers and homebuyers on a common platform.

However, RERA still faces few challenges and there is a need to plug loopholes to strengthen this law in order to make it more effective to realize its desired aims.As President NAREDCO, I will be specially stressing on title insurance within the ambit of RERA to protect builders and buyers from the ill effects of defective titles. RERA prescribes a clause for title insurance but it has proved to be a non-starter. There is an urgent need to address this problem.

There is no agency to extend title Insurance. Digitization has not been of much help either. States have not come forward to implement Land Title Guarantee law, leading to litigations and adding to the woes of builders and buyers due to anomalies in public records, undisclosed liens ,  unavailability of key documents besides frauds. Clear land titles are much needed for the speedy and sustained growth of real estate for which  NAREDCO will work aggressively.

On Housing For All & Affordable Housing

Affordable housing is a key to realize the government’s flagship mission of ‘Housing For All’ . But affordability is a real concern as it has been hit due to spurt in land prices and rise in input costs. The high interest rates have  further aggravated the matters, making it difficult for the middle class to fulfill their dream of owning a home.

Under Pradhan Mantri Awas Yojana (PMAY), the government’s focus has been on LIG housing. It promoted low-income housing by giving enough incentives for homes measuring 60m or below. On the part of developers, they pushed the supply of premium housing.  However because of the flawed definition of affordable homes, the advantage of government scheme could not be fully realized for affordable housing.  Moreover, there’s  no reward for developers to do affordable housing. There is a need to seriously promote affordable housing (Rs 25-30 lakh) and mid segment housing , catering to families with a monthly income of Rs 40000- Rs 1.5 lakh.

In the interim budget, the government has taken a positive initiative to boost affordable housing by announcing a scheme to build 2 crore more houses under PM Awas Yojana in the next 5 years to enable middle-class people living in rented premises to have their own home. But beyond that we require income tax and other incentives to developers and homebuyers to boost affordable housing. There is a need to provide capital at low interest rates and cheaper construction materials for affordable housing. One hopes that the upcoming full-fledged budget for 2024-25 will take the desired measures for promoting affordable housing.

On Growing Urbanization & Exploding Cities

The rapid urbanization is having an adverse impact on the infrastructure in existing cities, leading to congestion and pollution. By 2030 India’s urban population is set to reach 60 crore. This will put a further burden on our cities which are bursting at seams. We have to find ways to unburden our cities. We need strong physical and social infrastructure to improve the quality of life in our cities.

There are only 7 big cities and we need to reduce the load on existing cities. New greenfield cities is the way forward. We will advocate the government to effectively work towards building new cities Along with the Centre’s efforts, every state needs to go for new greenfield cities as the collaboration is the key to unfolding the full potential of urbanization.   There is a need for sustainable, livable and inclusive cities to foster business and economy and improve the living standard of people. It is good that the government’s massive thrust on infrastructure is boosting Tier2 &3 cities which are going to be  the future growth drivers.

Of Construction Workers & Real Estate Growth

The welfare of construction workers and their upskilling  is a key to the growth of real estate sector. States are collecting labour cess of one percent of the total cost of the construction of the building for the purpose of the welfare of  construction workers. Every year anywhere between Rs 15000-30000 crore is collected in the name of labour cess. However, this money is not being spent on their health and insurance. The construction workers need to be empowered and their wellbeing needs to be taken care of as quality, delivery and the growth of real estate to a large extent  depends on the overall welfare of construction workers. Keeping this in mind, NAREDCO is taking initiatives on this front.

On Budgetary Boost to Real Estate

The government should provide support to the real estate sector in the upcoming budget. The input tax credit under GST should be reintroduced and incentives should be given for rental housing to boost affordable housing for achieving the goal of Housing For All. The budget should address the crucial issue of priority sector lending for real estate, especially for affordable housing. There is a need to give industry status to MSME  real estate companies having turnover of up to Rs 50 crore. The budget should take care of the  income tax incentives to homebuyers by increasing the limit of interest deduction on home loan. The developers of affordable housing should be given income tax relief to boost supply of affordable housing while the home loan interest subsidy to affordable housing homebuyers under Credit Linked Subsidy Scheme (CLSS) under PMAY should be extended.