New Delhi, Jan 17: In a bid to further boost the Indian real estate sector, the Union budget can offer directional guidance for accelerated urbanisation to support sustainable growth, faster industrialisation to drive economic development, and better infrastructure to facilitate urban as well as rural expansion, a report showed on Friday.
Transformative measures in the form of and regulatory push to fuel infrastructure and economic development in tier 2 cities can help Indian real estate achieve the ambitious target of reaching $1 trillion by 2030.
The Union Budget 2025-2026 is expected to build cornerstones and drive the next phase of elevated growth in Indian real estate. Policy introduction to enhance India's competitiveness on the global stage is likely to be a focus area, according to a report by Colliers India.
The strong commitment in addressing both immediate and long-term challenges in a rapidly evolving economic landscape will continue to provide a growth blueprint for the next few years, it added.
2024 marked the third consecutive year of record office leasing at 66.4 million square feet across the six top cities, 14 per cent up year-on-year.
Residential sales as well as industrial and warehousing space take-up were also close to all-time high. Institutional investments in Indian real estate too touched a remarkable $6.5 billion inflows last year, marking a substantial 22 per cent increase from the previous year.
"Seamless integration and coordinated efforts from various government and regulatory bodies and private sector will be pivotal in the ongoing transformation of smaller cities and emerging growth centres into sizeable economic corridors of the future," said Badal Yagnik, Chief Executive Officer, Colliers India.
Targeted measures can buoy homebuyer sentiment, providing a demand-side boost and simultaneously alleviate pressing developer concerns, providing a supply-side boost. Expectations centre on affordability, policy support, and enhancing access to housing finance.
"Limit on tax deduction on interest paid can be increased from the current Rs 2 lakh to about Rs 4-5 lakh in case of let-out property," the report mentioned.
Reintroduction of tax holidays for affordable housing projects under Section 80IBA can help financially weaker homebuyers to a significant extent.
Moreover, standardisation and increasing affordable housing thresholds is long due, given that 2017 criteria are yet to be updated and reflect the overall rise in housing prices across major cities of the country, said the report.
GST reduction on key construction raw materials such as cement, steel and aluminium, and rationalisation of rates for under-construction properties will help in controlling project costs.
"Increased fund allocation for stressed projects through the SWAMIH fund can improve liquidity in stressed residential developments," the report mentioned.
The government is expected to maintain its strong focus on social, physical, and digital infrastructure creation. Investments in infrastructure and manufacturing capabilities will remain pivotal to sustained economic growth and dispersion of equitable growth centres across the country.
"Simplification of tax regimes across individuals and corporates will continue to bring in efficiencies, drive entrepreneurial capital and retail investment across sectors including real estate," said Vimal Nadar, Senior Director, Research, Colliers India.
