Unlocking the Treasury: Navigating Union Budget 2024 and its Impact on the Indian Real Estate Canvas

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Post By By Buniyad

01/24/2024

As anticipation builds for the unveiling of Union Budget 2024-25 on February 1, there’s a buzz in the air about what it might hold for the Indian economy and, more specifically, the real estate landscape. This budget marks an interim stage, slated between Lok Sabha elections, with the full fiscal plan for FY25 unfolding post the formation of a new government.

Significance of the budget for the Indian economy

The Union Budget isn’t just a collection of financial figures; it’s a mirror reflecting the government’s broad policy positions and a launchpad for financial reforms. Beyond the spreadsheets and numbers, it weaves a narrative aimed at achieving rapid and balanced economic growth intertwined with social justice and equality. From efficient resource allocation to tackling unemployment and poverty, reducing wealth gaps, to keeping a vigilant eye on prices and tax structures — the budget is a comprehensive roadmap.

Enshrined in Articles 112-117 of the Indian Constitution, the power of Parliament in budget enactment is a constitutional prerogative. Proposals for expenditure and demands for grants can only be made on the President’s recommendation. Article 112 designates the President with the responsibility of presenting the budget to the Lok Sabha, while Article 77(3) entrusts the Union Finance Minister, appointed by the President, with the task of crafting the annual financial statement and shepherding it through Parliament.

Indian Real Estate Market Analysis

Moving from the macrocosm of national finance to the vibrant microcosm of real estate, the numbers tell an exciting story. The Indian Real Estate Industry, estimated at USD 0.33 trillion in 2024, is projected to burgeon to USD 1.04 trillion by 2029, demonstrating a robust CAGR of 25.60% during 2024-2029.

Bearing testament to its significance, the real estate sector stands as the second-highest employment generator in India, rivalling the mighty agriculture sector. Forecasts predict a surge in non-resident Indian (NRI) investment, with Bengaluru leading as the preferred property destination for NRIs. Cities like Ahmedabad, Pune, Chennai, Goa, Delhi, and Dehradun also bask in the NRI investment limelight.

Diversification in the real estate sector extends to burgeoning demand for data centres, expected to spike by 15-18 million sq. ft. by 2025, as reported by Savills India. The sector’s resilience and growth are further underscored by a top 10 international ranking for price appreciation in housing markets.

What makes India’s real estate a compelling investment choice?

Beyond the numbers, the depth of capital in Asian markets, including India, is evolving, with real estate emerging as a coveted sector for increased allocations. The country’s status as one of the fastest-growing global economies, fuelled by private consumption and capital formation, cements its allure. Investors are navigating diverse opportunities in office spaces, logistics, private credit, residential properties, and data centres.

Esteemed by financial experts as a secure long-term investment, the future of India’s real estate sector seems poised for success. A Concorde report forecasts a robust CAGR of 9.2% from 2023 to 2028. The year 2024 is heralded as the next chapter in real estate evolution, marked by urbanization, rental market expansion, and steady property appreciation. The anticipated repo rate cut, ranging between 60-80 basis points, adds a promising note, projected to maintain home prices within an affordable range for buyers. As we decode Union Budget 2024, the real estate narrative unfolds with promise, painting a canvas of growth, opportunity, and resilience

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