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Realty to get real boost from pay panel

Once the Seventh Central Pay Commission’s recommendations come into force, real estate could soon bounce back as an important investment class.

  • The Seventh Central Pay Commission’s recommendation of a 23.6% rise in central government wages is likely to have a strong impact on consumption and demand as a larger government-sponsored windfall is likely to go hand in hand with gradually rising urban private sector wages.
  • According to experts, automobile, consumer durable, and real estate companies stand to gain the most from the pay raise.
  • Increased disposable income in sufficient magnitude will definitely improve the appetite for home purchase.
  • Once the objective of primary home ownership is achieved, buying second homes as investment is also a favoured route. Therefore, increased take-home salaries will definitely improve the overall appetite for home buying and even office space purchases in order to start businesses.
  • There will be a substantial increase in the HRA net amount through the pay panel report. This is mainly because the entire dearness allowances, around 125%, will be merged with basics, which are also up by 16% on average in the current pay panel report. HRA will be calculated on this increased basic.

Source: Times Property

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