Focus on infrastructureto drive Real Estate growth, writes AnujPuri. 

“Thegovernment’s aim to create six million new jobs over the next five years willenable growth of residential real estate across the country.”

AnujPuri, Chairman, ANAROCK Group. 

Providing abroad-spectrum booster shot to the economy, Union Budget 2022-23 is progressive– especially with its emphasis on building the infrastructure of the country. TheFinance Minister clearly emphasised the top priorities of the government – PMGati Shakti for sustainable growth, inclusive development, productivityenhancement, and financing of investments.

Notably,the government also expanded the Capex target by 35.4 per cent – from `5.54-lakh-croreto `7.50-lakh-crore– which may help boost overall spending towards economic growth. The budgetalso emphasises on the need for proper urban planning, provides some relief tostates while keeping the fiscal deficit well under control.

In anothermajor positive, the government’s aim to create six million new jobs over thenext five years will enable growth of residential real estate across thecountry.

Some of theother major highlights of the Budget which will directly or indirectly impact thereal estate sector are:

• The government’s unwavering focuson infrastructure and sustainability will drive real estate growthover the next one year. For instance, the National Highway network will beexpanded by 25,000 kms in 2022-23. PM Gati Shakti will encompass the sevenengines for multi-modal connectivity for the states with speedierimplementation of development projects through technology to facilitate fastermovement of people and goods through `20,000-crore financed by the govt tospeed up this project. Further, the 100 PM Gati Shakti Cargo terminals tobe developed over next three years will provide much impetus to the logisticssector.

• Allocation of `48,000-cr forPMAY Urban and Rural will push forward its ‘Housing for All’ initiative.Under PMAY, the government plans for eight million houses in FY’23.

• As anticipated, the FM also tried torejuvenate the MSMEs sector which has a multiplier impact on thegrowth of the overall economy. The ECLGS scheme has been extended till March2023 for the MSMEs. Besides providing an impetus to the industrial development,this move is likely to have a rub-off effect on the real estate sector as wellgiven that the catastrophic impact of the pandemic on this sector (MSMEs)slowed down the demand for affordable housing in 2021. We saw the home loaneligibility for many affordable housing buyers impacted by the pandemic due toloss of jobs and many MSMEs being shut down – resulting in significantly lowersales in this category.

• Ifwe consider numbers in terms of the new supply as well, back in the pre-Covidyear of 2019, affordable housing share stood the highest – 40 per cent of thetotal 236,560 units launched across the top seven cities then. While in 2021,we saw the affordable new supply share come down to 26 per cent for nearly thesame number of units launched in the top seven cities (approx. 236,700 units).Well, not to say that demand for affordable homes had diminished because itstill has the maximum demand in India. It is just that buyers went into a waitand watch mode. Affordable housing demand will gain momentum once the economicimpact of the pandemic begins to subside for this target audience. 

• To facilitate digital inclusion and aidfund transfer, 100 per cent of 1.5 lakh post offices will come under thecomplete banking system. This will enable smooth and transparent realestate transactions in the rural areas and also encourage loan disbursalto the semi-urban population.

• Increased focus on tier 2 and tier 3cities for urban development. A high-level panel to be set up for urbanplanning.

• Data Centres given infrastructurestatus will give an impetus to this segment of the real estate sector.