Rapid Urban Growth and Industrial Progress to Propel Indian Real Estate
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Synopsis
On January 17, a report highlighted that the upcoming Union budget is poised to enhance India's real estate sector by promoting urban growth, industrialization, and infrastructure improvements, paving the way for significant economic development.
Key Takeaways
- Union budget to guide urban growth.
- Target of $1 trillion for real estate by 2030.
- Record office leasing of 66.4 million sq ft in 2024.
- $6.5 billion in institutional investments.
- Focus on affordability and housing finance.
New Delhi, Jan 17 (NationPress) To further enhance the Indian real estate market, the Union budget is expected to provide strategic direction for accelerated urbanisation that supports sustainable development, rapid industrialisation for economic advancement, and improved infrastructure to promote both urban and rural growth, as indicated by a report released on Friday.
Transformative initiatives, coupled with a regulatory boost aimed at enhancing infrastructure and economic growth in tier 2 cities, can enable the Indian real estate sector to achieve its ambitious goal of reaching $1 trillion by 2030.
The Union Budget for 2025-2026 is anticipated to lay the groundwork for the next phase of robust growth in Indian real estate. According to a report by Colliers India, policy measures to bolster India’s competitiveness globally are likely to be a priority.
The strong commitment to tackle both immediate and long-term challenges in a swiftly changing economic environment will continue to provide a growth blueprint for the forthcoming years, the report added.
2024 saw the third consecutive year of record office leasing, totaling 66.4 million square feet across six major cities, reflecting a 14% year-on-year increase.
Residential property sales and industrial as well as warehousing space take-up were also nearing all-time highs. Institutional investments in the Indian real estate sector reached a remarkable $6.5 billion last year, marking a significant 22% increase from the prior year.
“The seamless integration and coordinated efforts among various government and regulatory bodies and the private sector will be crucial for the ongoing transformation of smaller cities and emerging growth centers into substantial economic corridors of the future,” stated Badal Yagnik, Chief Executive Officer, Colliers India.
Targeted initiatives can elevate homebuyer confidence, providing a demand-side boost while simultaneously addressing developers' pressing concerns, thus enhancing supply. Expectations are centered on affordability, policy support, and improved access to housing finance.
“The limit on tax deductions for interest paid could be increased from the current Rs 2 lakh to approximately Rs 4-5 lakh for let-out properties,” the report suggested.
The reintroduction of tax holidays for affordable housing projects under Section 80IBA could significantly aid financially weaker homebuyers.
Additionally, the need for the standardisation and increase of affordable housing thresholds is long overdue, as the criteria from 2017 have yet to be updated to reflect the overall rise in housing prices across major cities in the country, according to the report.
A reduction in GST on essential construction materials like cement, steel, and aluminium, along with the rationalisation of rates for under-construction properties, will assist in managing project costs.
“An increase in fund allocation for stressed projects through the SWAMIH fund can enhance liquidity in distressed residential developments,” the report noted.
The government is expected to keep its strong emphasis on creating social, physical, and digital infrastructure. Investments in infrastructure and manufacturing capabilities will remain essential for sustainable economic growth and the distribution of equitable growth centers throughout the country.
“Streamlining tax regimes for individuals and corporations will continue to enhance efficiencies, stimulate entrepreneurial investment, and retail capital across sectors, including real estate,” remarked Vimal Nadar, Senior Director, Research, Colliers India.
