As the Union Budget 2025 approaches, the real estate industry stands at a crossroads, eager for impactful reforms to navigate a complex economic landscape marked by rising borrowing costs and inflation. Industry leaders emphasize the critical need for interventions that foster growth, enhance affordability, and bolster investor confidence.
From affordable housing incentives to luxury residential demand and infrastructure advancements, the upcoming budget presents a vital opportunity to shape the real estate sector’s trajectory, ensuring it remains a key pillar of India’s economic development.
“The real estate sector anticipates interventions to foster growth, stabilise costs and revive investor and buyer confidence as it navigates a complex economic landscape characterised by increasing borrowing costs and inflation. Granting the long-desired ‘infrastructure’ status to the real estate sector can simplify regulatory frameworks, stimulate growth and enhance access to affordable financing. Additionally, measures that incentivise the sector’s focus on sustainability and green building initiatives would align with evolving market demands and promote long-term, eco-friendly developments,” says Arvind Nandan, Managing Director, Research & Consulting, Savills India.
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Furthermore, introducing tax benefits for REITs, particularly the exemption of double taxation on dividend income, would be a highly welcome move. This step would not only enhance liquidity but also drive participation from both retail and institutional investors, making REITs a more attractive asset class. Such reforms could also pave the way for increased foreign investments, fostering greater market dynamism.
S K Narvar, Group Chairman, Trident Realty, says, the appetite for high-end residences continues to be vigorous, fueled by changing lifestyles and an increasing preference for quality living environments. “We also foresee substantial investments in infrastructure development, particularly in Tier 2 cities, which will improve connectivity and enhance livability. This is essential for realizing the full potential of these emerging markets. A conducive budget can serve as a catalyst for this growth, creating an environment where luxury housing flourishes and infrastructure initiatives prosper. Collectively, these factors will not only elevate the real estate sector but also contribute significantly to the broader economic advancement of our nation,” he adds.
The real estate sector is keenly anticipating significant measures to foster growth and sustainability. Given the increasing demand for housing in various regions, it is essential to implement tax reliefs for homebuyers and incentives for the housing industry.
“Policies that encourage sustainable development and enhance infrastructure will not only contribute to economic growth but also stimulate housing demand. Furthermore, the extension of capital gains benefits and increased flexibility in reinvestment standards could further encourage investments in real estate, particularly in the housing sector. A progressive policy framework incorporating these elements will not only accelerate growth within the sector but also support infrastructure development and job creation, both of which are vital for the economic future of India,” says Manik Malik, CFO of BPTP.
Santosh Agarwal, CFO and Executive Director of Alphacorp, says the year 2024 has witnessed a significant shift towards luxury living, with real estate projects establishing new benchmarks for high-end residences. “This rising demand for luxury and ultra-luxury homes indicates a growing interest in properties that provide both lavishness and long-term investment potential. The forthcoming Union Budget is expected to play a crucial role in further stimulating this growth. We look forward to policy measures that will enhance affordability, offer tax incentives, and promote infrastructure development, thereby enabling us to fulfill the aspirations of high-net-worth individuals. These strategic initiatives are anticipated to not only bolster the luxury housing market but also enhance the overall growth and resilience of the real estate sector in the upcoming year.”
This budget also presents a pivotal moment for the industry to rejuvenate housing demand. For prospective homebuyers, particularly those purchasing for the first time, tax reliefs and a more streamlined tax system could prove beneficial.
“Among the key priorities for the upcoming budget are the enhancement of the income tax deduction limit for home loan interest under Section 24(B), incentives for sustainable building initiatives, and the rationalization of GST rates for properties under construction. It is essential to bolster the affordable housing sector through increased tax incentives and rental housing programs to tackle urban housing affordability challenges. Furthermore, a focus on infrastructure development, the establishment of digital land records, and incentives for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) can draw in greater investment. Additionally, relaxing foreign direct investment (FDI) regulations would encourage international investments. Through targeted measures, the budget has the potential not only to stimulate housing demand but also to reinforce its significance as a key driver of economic growth,” observes Viren Mehta, Director of ElitePro Infra.
So far as the commercial real estate sector is concerned, it looks forward to initiatives that will stimulate growth and innovation, with Grade A office spaces being pivotal in attracting international businesses, fostering economic development, and setting benchmarks for sustainability and design.
“Consequently, we urge the government to contemplate policies such as tax incentives for green-certified commercial projects, improved access to financing, and expedited regulatory approvals to hasten developments. Furthermore, enhancing infrastructure in vital business districts and providing incentives for hybrid workspace solutions can further stimulate demand. Additionally, the upcoming budget presents an opportunity to cater to the varied needs of luxury commercial real estate, ensuring that India remains an attractive destination for global corporations and high-value investments,” informs Ashish Sharma, AVP Operations, Brahma Group.