India Inc on Wednesday said the country's real estate sector is expected to receive a major boost due to the implementation of the 7th Pay Commission recommendations.
"The 7th Pay Commission implementation will be a positive move and raise the affordability of the government employees by increasing their home loan eligibility," said Ankur Dhawan, Chief Business Officer, PropTiger.
"The developers would come up with schemes to make it attractive for public sector employees to invest in realty sector after this approval."
According to Dhawan, cities like Pune and suburban areas like Navi Mumbai and Noida will attract a large chunk of public sector employees -- who are looking for affordable houses.
The Union Cabinet on Wednesday approved the 7th Pay Commission Report's recommendations for central government employees' pay, perks and pensions.
Finance Minister Arun Jaitley said that the government's decision to implement the recommendations of the 7th Pay Commission will benefit over one crore central government employees and pensioners.
The minister said the housing loan allowance has been hiked from Rs 7.5 lakh to Rs 25 lakh.
"The Pay Commission's decision to hike the salary of central government employees is likely to have a positive impact on the demand side of residential real estate, as it would boost sentiment for home ownership among a set of buyers who have traditionally been very conservative in matters pertaining to large financial commitments," said JLL India's CEO (Residential Services) Ashwinder Raj.
The increase in demand would be uniformly seen across India's more affordable cities. Pricier cities would not see much of an impact on this account, as this segment of potential home buyers will be looking primarily for budget homes, he said.
Leading industry body Associated Chambers of Commerce and Industry of India (Assocham) said that acceptance of the Pay Commission's recommendations and a normal monsoon should propel consumption in the realty sector.
"A boost of Rs 1 lakh crore to the economy at a time when the global head winds are blowing right in our face would surely be a confidence building measure," said D.S. Rawat, Secretary General of Assocham.
"If the monsoon plays out as per the forecast, the increase in both urban and rural consumption should be a great help to sectors like housing.
Vineet Relia, Managing Director, SARE Homes, said: "We as developers hail the government's decision and the intent of the Pay Commission that would also help us to synergize with the growth of real estate and economic prosperity of the nation, coupled with boosting the investors sentiment to new heights."
The positive effect was also seen on realty sector's stock on the equity markets. The BSE's realty index closed the day's trade with appreciable gains.
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