The Union budget 2025-26 comes at a significant time for the Indian real estate sector, a significant contribution to the country GDP (gross domestic product) and to produce jobs. In recent years, the sector in the middle of global economic uncertainties has proven, whereby institutional investments touched $ 6.5 billion in 2024, which is an increase of 22% compared to the previous year, according to Anarock Property Consultants.
However, there are challenges, such as escalating construction costs, urban housing and restricted access to affordable financing.
In order to achieve the planned real estate market of 1 trillion US dollar by 2030, as Colliers India found, the upcoming budget must tackle critical questions, including affordable living space, reforms for rental policy and sustainability.
The sector also expects courageous measures to improve liquidity, to rationalize taxes and incentives around green building practices. Since real estate directly affects 53% of India GDP (Credai), the government's approach will be decisive for the definition of the industry railway.
1. In the middle of the income residential buildings
This segment has long been overlooked, often caught between the extensive subsidies for affordable apartments and the market -oriented dynamics of luxury imports. However, residential construction with medium -sorts represents a significant part of urban demand, especially if an income of the middle class grows.
According to a report by the National Housing Bank (NHB), urban real estate prices rose by an average of 38%between 2018 and 2024, which challenged home ownership for this demographic challenge.
In order to close this gap, the government could revise tax incentives and increase the deduction limits for housing loans. For example, the current upper limit of 2 LAKH for housing loans according to § 24 (b) could be increased to £ 5, which facilitates the financial burden for buyers with medium income.
In addition, the expansion of the advantages of Credit Linked Subject Scheme (CLSS) to houses up to 75 LAKH in metros and 50 pound cities in the amount of 50 LAKH could meet significant demand. The contribution of the construction sector to employment is immensely and directly or indirectly employed via eight crore, as stated by Credai.
Combating housing gaps with medium income could stimulate consumption in the entire Allied industry that affect building materials and interiors. If the budget 2025 assigns targeted incentives for this segment, it could catalyze a multiplier effect and advance integrative growth and urbanization.
2. Land unlock land for urban apartments
One of the critical challenges for Indian real estate is the country shortage in urban areas. The Ministry of Housing and City Affairs (Mohua) reports that land costs make up to 70% of project costs in metros such as Mumbai and Delhi. In order to address this, public land banks, such as those of Indian railways, harbor roads and other government agencies, could be made available to provide land for affordable and cross -income apartments.
A public-private partnership model (PPP) could enable inexpensive land allocation and at the same time maintain transparency. The expansion of such initiatives to metropolises could further strengthen the supply of housing. In addition, the incentives for the incentives by reduced stamp tasks for land that were acquired through public banks and the provision of GST -Input -credits for housing projects could promote participation.
The contribution of real estate to urbanization must match the goals for sustainable development. The urban areas are expected to correspond to over 50% of the Indian population by 2047. The development of the public country for strategic residential development is crucial for combating this demand and the control of urban land prices.
3. Reinforcement of industrial and logistics centers
India's industrial and logistics sectors have experienced a significant expansion, which is due to the expansion of e-commerce and manufacturing as part of the PLI program (Production Linked Incentive). In 2024, the camp sector alone took over 35 million m². In all major cities, an increase of 20% rose compared to the previous year.
Real estate is of crucial importance for this growth and offer the infrastructure backbone for industrial centers and logistics parks. The union budget could continue to support this time by offering logistics centers for viable gaps and reducing the GST to building materials used in industrial plants.
Guidelines on incentives for private investments in the logistics infrastructure could accelerate the creation of multimodal logistics parks and regional warehouses, especially in animal II and animal III cities. In addition, the integration of real estate in India -producing ambitions, especially in car and electronics, can make considerable profits.
For example, dedicated real estate zones for electric vehicles (EV) and battery storage could be the aim of India to achieve NET-zero emissions by 2070 power plant, promote economic development and generate employment opportunities.
4. Building the future with sustainable practices
Sustainability in real estate is no longer optional. It is a necessity. According to a report by the World Green Building Council, the built environment contributes almost 39% of global CO2 emissions. In India, where urban construction will be forecast by 2047, the introduction of Green Building is of crucial importance for achieving climate goals.
The budget could offer developers tax incentives that use recycled materials, energy -efficient designs and water -saving technologies. A GST concession in green-certified buildings could encourage developers to use sustainable practices, while the government could finance large environmentally friendly projects supported by the government.
India's introduction of green buildings still costs, only 5% of the new constructions certified as sustainable (Leed 2024). By introducing guidelines to accelerate this transition, the government of real estate can position real estate as a manager in climate measures. Sustainable construction not only reduces the environmental impact, but also increases the property value, which makes it an effective business case for developers and investors.
5. Catalyzed digital transformation in property transactions
While India is moved in the direction of an economy of 10 trillion US dollars by 2035, the integration of technology into real estate transactions can significantly improve transparency and efficiency. Digital real estate registrations, blockchain-based title management and AI-controlled compliance platforms are no longer futuristic concepts. They are immediate necessities.
The real estate sector contributes significantly to the economic activity, whereby the transactions worth 5 LAKH crore per year have contributed annually to the National Real Estate Development Council (Naredco). However, manual processes and opaque systems often prevent investors. The budget 2025-26 could testify to the digitization of land recordings and to tighten real estate registration in the states.
In addition, offering tax deductions for companies that invest in Proptech innovations could promote digital transformation. Since the Indian Proptech market will be forecast to $ 1 billion by 2025, political support in this area could modernize the sector, improve simple business processing and attract both domestic and foreign institutional investments.
6. Extension of the rental industry
Rental apartments have long been a neglected area in Indian real estate, although it is concerned with the potential for combating urban housing. According to Anarock, only 4% of the urban population of India live in organized rental apartments. The budget must prioritize this segment to ensure balanced urban growth.
Political reforms could include tax incentives for developers that build rent -specific units, and revision of the rental laws to protect both landlords and tenants. The introduction of rental apartment vouchers for families with low income could become more affordable urban life and at the same time stimulate developers to concentrate on this market.
In addition, the rationalization of the taxation of rental income and the removal of the fictitious income tax on inventory as a stock-in-trade inventory could unlock considerable investments. Since the demand for urban apartments is expected to be tripled by 2047, a robust rental apartment policy is of essential importance.
7. Authorization of animal-II and animal III cities as economic growth nodes
India's economic future depends on the fair development of its smaller cities, which have an undeveloped potential for growth. Animal-II and animal III cities contributed approximately 25% to real estate demand in 2024 (Anarock), and this proportion is expected to increase significantly. Inadequate infrastructure and limited economic opportunities have prevented these cities prevented from exploiting their full potential.
The budget could prioritize targeted infrastructure investments, e.g. Guidelines that stimulate the participation of the private sector in the development of growth corridors could exhaust the potential of these cities, in particular by concentration on technologically led infrastructure and logistics functions.
In addition, real estate development in these cities could benefit from tax discounts for projects in sub -supplied areas, combined with optimized approval procedures to reduce delays. With animal-II and animal III cities, which are intended to absorb a significant population hike by 2047, the strengthening of these regions will not only make the strain on metros easier, but also self-supporting economic hubs that promote balanced growth and larger regional equity .
The author is a director, Eros Group.
Published – January 24, 2025 04:13 PM is