The real estate sector has been a major contributor in the Indian economy. The sector continued to remain a booming industry in 2024 with residential sales and demand for industrial and warehousing spaces soaring to record highs.
The year saw the third consecutive period of record office leasing at 66.4 million square feet, climbing up 14 per cent on a year-on-year (YoY) basis across the top six cities in the country. With Finance Minister Nirmala Sitharaman set to table the Union Budget for the upcoming fiscal year on February 1, 2025, the real estate sector is also hoping for policies that help the industry grow further in the 2025-26 fiscal year.
Affordable Housing
Stakeholders and experts remain hopeful that the new budget will focus on the affordable housing segment in the real estate industry. Kaushal Agarwal, Co-founder and Director, The Guardians Real Estate Advisory noted that a tax holiday for the developers could help increase project development in the segment. “Reinstating the Credit-Linked Subsidy Scheme and raising the home loan interest deduction limit would further support housing affordability,” he suggested.
To achieve the vision of ‘Housing for All’, especially in emerging Tier-II cities, Agarwal said that the focus needs to be on infrastructure development, urban land reforms, providing incentives to lure domestic and foreign investors, and introducing a single-window clearance system. He argued that these initiatives could not only support urban transformation but also help in creating employment opportunities.
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Reduce GST Burden On Developers
Industry insiders noted that the developers are facing severe difficulties due to the Goods and Services Tax (GST) regime. John Thomas, MD, Assets Xperts noted that the upcoming Budget could help ease this burden for developers, especially in under-construction projects. “The real estate sector eyes on easing the GST burden on developers specially for under construction projects, reduction in interest on home loans, and increase in the tax exemption limit on the home loan interest to boost the housing sector and relaxation of FDI norms and reviving the Credit Linked Subsidy Scheme (CLSS) for the homebuyers can boost the housing sector,” he stated.
Colliers India pointed out that a reduction in the GST applicable on crucial construction raw materials such as steel, aluminium, and cement can help keep the project costs under control.
Sustainability
Colliers India argued that the real estate industry needs to particularly focus on a sustainable approach going forward. The company said that the authorities should provide incentives or tax breaks and concessions in GST for green buildings. This approach can help push real estate developers to cut down the carbon footprint across various segments including residential, hospitality, industrial, and commercial, among others.
Sunil Pareek, Executive Director, Assetz Property Group, noted, “The real estate sector is also playing a crucial role in supporting India’s commitment to Net Zero by 2070 by promoting sustainability. Policymakers should incentivize developers who are creating environmentally conscious projects, which will also increase the adoption of emerging technologies and innovative construction techniques.”
‘Industry’ Status
The real estate sector has been demanding for the ‘Industry’ status for a very long time. Colliers India noted that experts will be hopeful in this aspect and be on the lookout for major announcements in the upcoming Budget. Granting of industry status to real estate is yet another prolonged ask from the real estate stake holders, Thomas added.
Bhavesh Kothari, Founder and CEO, Property First, explained that if the real estate sector gets recognised as an industry, it will significantly be able to have a better access to funding. Further, this will help developers in managing their project costs more efficiently, in turn, reducing home prices for buyers.
Tax Incentives
Angad Bedi, Chairman & MD, BCD Group, pointed out that the new regime provides minimal tax benefits for the sector. “On the individual front, there were only marginal tax benefits under the new regime, and no enhancements to home loan deductions under Sections 24(b) or 80EEA. For Budget 2025, we anticipate focused attention on these unresolved issues,” he stated.
“Input tax credit on under construction project will reduce the cost of construction and in turn boost sales for both commercial and residential projects,” argued Thomas. Relaxation in development charges can also encourage developers and investors to pour their funds into the sector.
While the real estate sector has great potential in terms of economic development, employment generation, and urbanisation, it remains to be seen how the upcoming Budget will transform it.
