<p>Bengaluru: While there is no denying that it is a boom time for luxury housing, it is the affordable segment that remains a thorn in the side for realty developers. Clearly, the past attempts by the government to incentivise affordable housing have been ineffective. The rising cost of land and the increasingly scarce urban land in prime locations have not helped. And now, realtors have come up with novel solutions to the problem, which they hope will be heeded to in the upcoming Union Budget to be presented on February 1.</p>.<p>“Free market forces will never allow lower prices for properties in desirable locations, hence the market price need to be government regulated. Government owned surplus land in urban areas owned by the railways, defense forces or other government entities can be used for high density rental housing development,” pointed out Shishir Baijal, Chairman and MD, Knight Frank India.</p>.<p>Avneesh Sood, Director of Eros Group added that the vacant commercial spaces could also be reused for rental housing. </p>.Union Budget 2025: 'Long-term perspective on tax structure for auto technologies to aid product development'.<p>Developers are also asking for easier floor space index (FSI) approvals to increase the number of floors on the same piece of land, along with incentives for redeveloping old buildings into affordable units through higher FSI. </p>.<p>“Urban planning reforms allowing smaller unit sizes and shared amenities in budget housing can improve feasibility while maintaining Real Estate (Regulation and Development) Act (RERA) quality standards,” suggested Sahil Verma, COO of Shray Projects.</p>.<p>Taxation or its waiver are seen as another mode for pushing through affordable housing. “The first home-buyer must have benefits. For affordable homes below 50 lakhs or even 1 crore, there should be mechanisms to own homes such as no stamp duty. Without this, the affordability for many could be a serious issue in the coming decade,” cautioned Anand Moorthy, Co-founder and CBO, Capital Market and Services, Square Yards.</p>.<p><strong>Rental properties</strong></p>.<p>Apart from buying homes, rental housing also needs to be addressed especially when considering India’s lower-income classes, the realty observers pointed out.</p>.<p>“There are houses in the sub- Rs 50 lakh ticket size that have been acquired as an investment but remain unoccupied as owners do not find it viable to rent out due to the prevailing low yields. The budget could introduce a 100% exemption for rental income up to Rs 3 lakh for houses costing up to Rs 50 lakh,” urged Baijal.</p>.<p>Avneesh Sood, Director of Eros Group, said, “Creating a National Rental Housing Fund with contributions from institutional investors and tax-efficient real estate investment trust (REIT) structures could provide sustainable financing for rental projects,” he added.</p>.<p><strong>Rural housing</strong></p>.<p>Government interventions require a particular focus on rural housing as current initiatives are running short, according to experts. </p>.<p>Verma insisted, “Rural housing development in India requires targeted interventions beyond the existing Pradhan Mantri Awas Yojana - Gramin (PMAY-G) scheme, including land at subsidised rates, fast-tracking approvals for rural housing projects, and infrastructure support through schemes like MGNREGA.”</p>.<p><strong>Commercial realty</strong></p>.<p>The last calendar year saw a major uptick in the office space - supported by both traditional and flexible orientation. More importantly, it ushered in steep rise in the global capability centres (GCCs), which is expected to sustain. Even so, developers are looking for ease of doing business.</p>.<p>“A game changer will be initiatives for foreign MNCs to have a single-window clearance of setting up a unit, especially with a lot of GCCs coming into India, along with AI,” said Manish Khedia, a Managing Director at The Executive Centre.</p>.<p>Even as foreign investments dominate the realty sector, realtors look for further ease in foreign investment regulations, which will further boost GCCs.</p>.<p>Coming to REITs, which are considered highly underpenetrated in the market, Verma said, “The government needs to expand REIT regulations beyond commercial and retail assets to include residential portfolios and data centers. Reducing the minimum asset size requirement from Rs 500 crore could enable more REITs.”</p>.<p><strong>Tax breaks & other demands</strong></p>.<p>Developers widely and unanimously are reiterating their long-time asks such as industry status for the sector, increasing the affordable housing cap beyond Rs 45 lakh and reducing borrowing interest, transparent property records, and infrastructure development.</p>.<p>Tax reforms across segments are also requested, including increasing the deduction limit on home loan interest, tax reliefs on under-construction properties, and tax incentives for REIT investments.</p>.<p>There is also the Confederation of Real Estate Developers’ Associations of India (CREDAI) recommendation for extending the lower 15% corporate tax rate, currently available to manufacturing companies, to realtors engaged in affordable housing.</p>
<p>Bengaluru: While there is no denying that it is a boom time for luxury housing, it is the affordable segment that remains a thorn in the side for realty developers. Clearly, the past attempts by the government to incentivise affordable housing have been ineffective. The rising cost of land and the increasingly scarce urban land in prime locations have not helped. And now, realtors have come up with novel solutions to the problem, which they hope will be heeded to in the upcoming Union Budget to be presented on February 1.</p>.<p>“Free market forces will never allow lower prices for properties in desirable locations, hence the market price need to be government regulated. Government owned surplus land in urban areas owned by the railways, defense forces or other government entities can be used for high density rental housing development,” pointed out Shishir Baijal, Chairman and MD, Knight Frank India.</p>.<p>Avneesh Sood, Director of Eros Group added that the vacant commercial spaces could also be reused for rental housing. </p>.Union Budget 2025: 'Long-term perspective on tax structure for auto technologies to aid product development'.<p>Developers are also asking for easier floor space index (FSI) approvals to increase the number of floors on the same piece of land, along with incentives for redeveloping old buildings into affordable units through higher FSI. </p>.<p>“Urban planning reforms allowing smaller unit sizes and shared amenities in budget housing can improve feasibility while maintaining Real Estate (Regulation and Development) Act (RERA) quality standards,” suggested Sahil Verma, COO of Shray Projects.</p>.<p>Taxation or its waiver are seen as another mode for pushing through affordable housing. “The first home-buyer must have benefits. For affordable homes below 50 lakhs or even 1 crore, there should be mechanisms to own homes such as no stamp duty. Without this, the affordability for many could be a serious issue in the coming decade,” cautioned Anand Moorthy, Co-founder and CBO, Capital Market and Services, Square Yards.</p>.<p><strong>Rental properties</strong></p>.<p>Apart from buying homes, rental housing also needs to be addressed especially when considering India’s lower-income classes, the realty observers pointed out.</p>.<p>“There are houses in the sub- Rs 50 lakh ticket size that have been acquired as an investment but remain unoccupied as owners do not find it viable to rent out due to the prevailing low yields. The budget could introduce a 100% exemption for rental income up to Rs 3 lakh for houses costing up to Rs 50 lakh,” urged Baijal.</p>.<p>Avneesh Sood, Director of Eros Group, said, “Creating a National Rental Housing Fund with contributions from institutional investors and tax-efficient real estate investment trust (REIT) structures could provide sustainable financing for rental projects,” he added.</p>.<p><strong>Rural housing</strong></p>.<p>Government interventions require a particular focus on rural housing as current initiatives are running short, according to experts. </p>.<p>Verma insisted, “Rural housing development in India requires targeted interventions beyond the existing Pradhan Mantri Awas Yojana - Gramin (PMAY-G) scheme, including land at subsidised rates, fast-tracking approvals for rural housing projects, and infrastructure support through schemes like MGNREGA.”</p>.<p><strong>Commercial realty</strong></p>.<p>The last calendar year saw a major uptick in the office space - supported by both traditional and flexible orientation. More importantly, it ushered in steep rise in the global capability centres (GCCs), which is expected to sustain. Even so, developers are looking for ease of doing business.</p>.<p>“A game changer will be initiatives for foreign MNCs to have a single-window clearance of setting up a unit, especially with a lot of GCCs coming into India, along with AI,” said Manish Khedia, a Managing Director at The Executive Centre.</p>.<p>Even as foreign investments dominate the realty sector, realtors look for further ease in foreign investment regulations, which will further boost GCCs.</p>.<p>Coming to REITs, which are considered highly underpenetrated in the market, Verma said, “The government needs to expand REIT regulations beyond commercial and retail assets to include residential portfolios and data centers. Reducing the minimum asset size requirement from Rs 500 crore could enable more REITs.”</p>.<p><strong>Tax breaks & other demands</strong></p>.<p>Developers widely and unanimously are reiterating their long-time asks such as industry status for the sector, increasing the affordable housing cap beyond Rs 45 lakh and reducing borrowing interest, transparent property records, and infrastructure development.</p>.<p>Tax reforms across segments are also requested, including increasing the deduction limit on home loan interest, tax reliefs on under-construction properties, and tax incentives for REIT investments.</p>.<p>There is also the Confederation of Real Estate Developers’ Associations of India (CREDAI) recommendation for extending the lower 15% corporate tax rate, currently available to manufacturing companies, to realtors engaged in affordable housing.</p>