Real Estate Developers in India Hope for Tax Cuts and Affordable Housing Support in 2024
A recent survey by the real estate association CREDAI and investment management company Colliers reveals that most real estate developers in India are looking forward to tax rationalization, support for affordable housing, and single window clearance in the upcoming Union Budget 2024.
Key Expectations from Developers
Developers are also hoping for GST-related input tax concessions and interest rate reductions to improve the financial viability of their projects. Over the past 2-3 years, there has been an increase in housing demand in tier I and II cities, and developers are optimistic that this trend will continue in 2024.
Survey Insights
The Developer Sentiment Survey, conducted by CREDAI and Colliers in April-May 2024, gathered responses from over 550 developers across 18 states in India. Key findings include:
- 53% of developers reported increased buyer enquiries and engagement in 2023 compared to 2022.
- 45% of developers saw a 10-20% rise in construction costs in 2023.
- About half of the developers expect residential demand to remain stable in 2024, with 27% predicting a demand increase of up to 25%.
- 52% of developers expect housing prices to rise in 2024.
- More than 80% of developers believe that NRI demand for residential properties will increase.
- Almost 50% of developers wish for a significant reduction in costs through tax rationalization or lower interest rates.
Challenges and Future Outlook
Boman Irani, President of CREDAI, highlighted that while the current sentiment among developers is positive, rising construction costs and tax rationalization remain key concerns. Badal Yagnik, CEO of Colliers India, noted that with significant new launches over the past two years, unsold inventory levels have expanded, leading developers to be more strategic with new projects.
Commercial Real Estate Insights
CBRE, a commercial real estate services firm, has requested the government to lower the GST on steel and cement, which are crucial inputs for construction. They also seek a reduction in TDS rates on coworking spaces to help manage cashflows better.
Anshuman Magazine, Chairman and CEO of CBRE for India, South-East Asia, Middle East, and Africa, emphasized the need to bring coworking spaces into the 2% TDS slab, similar to other services, to support the segment’s financial health.
