Beyond numbers and allocations, a budget serves as a roadmap for stability and progress. Union Budget 2025 signals continuity, reinforcing India’s long-term growth vision with strategic measures. While some sectors received direct policy support, others stand to gain from a broader economic push. Real estate is one of them.
Contributing 7 per cent to the nation’s GDP, the sector has witnessed strong growth across both residential and commercial segments.1 Record sales, launches and leasing activities in the last few years have boosted the overall economic strength. Going ahead, with India aiming to touch the USD7 trillion GDP mark, real estate is expected to play a crucial role in this journey.2 So, how does this year’s budget impact the sector? Let’s look at some key points.
While some key expectations (such as a revision of the affordable housing cap and an increase in home loan interest deduction limits) remained unaddressed, from a broader perspective, the budget introduced several measures that can further boost the sector’s performance. First, one of the notable measures was tax rationalisation. The government’s decision to cut income tax rates is a welcome move, as it could increase disposable income and boost consumption trends. With lower tax liabilities, more of India’s young population may now consider investing in real estate. Additionally, the increase in annual TDS limit on rental income from INR2.4 lakh to INR6 lakh will reduce compliance burdens, benefitting rental market players.3 This move is expected to encourage more rental housing development, supporting urban housing needs.
Second, the government continued its focus on reviving the affordable housing segment. The announcement of a second Special Window for Affordable and Mid-Income Housing (SWAMIH) fund, with an allocation of INR15,000 crore, aims to resolve project delays due to financial constraints.4 This move is expected to benefit homebuyers awaiting possession and also inject fresh capital into stalled projects, boosting market sentiments. By enhancing liquidity in the sector, this initiative is expected to attract more investments into this space.
Third, a strong infrastructure push continues to be a priority in this year’s budget. The estimated effective capital expenditure for FY26 is INR15.5 lakh crore, which is expected to have a multiplier effect on the real estate and construction sector.5 Moreover, infrastructure-related ministries will now develop a three-year PPP project pipeline, ensuring acceleration of developmental projects. Additionally, INR1.5 lakh crore has been proposed for 50-year interest free loans to states, further strengthening regional growth.6 Besides, to boost urban development—the newly introduced INR1 lakh crore Urban Challenge Fund—will incentivise cities to raise funds through municipal bonds and PPPs.7 With India’s urbanisation accelerating, these measures will impact real estate demand, especially in emerging tier-2 and tier-3 markets.
Fourth, another major highlight, was the government’s emphasis on GCCs. A new national framework has been proposed to strengthen infrastructure, implement strategic reforms and mechanisms to promote the sector. Currently, India has around 1,700 GCCS, with the number projected to increase to 2,100 centres by 2030.8 As more global companies establish their presence in India, the demand for grade-A office spaces will rise, benefitting the commercial real estate sector.
Fifth, the hospitality sector has also received a push, with initiatives aimed at streamlining e-visa facilities and improving ease of travel and connectivity. Strategic measures, such as MUDRA loans to enhance homestay businesses and the development of 50 tourism destinations is expected to drive tourism-led real estate demand.9 Last year, the hospitality sector saw a steady inflow of investments, with total transaction activity reaching USD340 million, reflecting steady investor confidence.10 With continued policy support, this sector is expected to attract fresh capital and expansion opportunities.
Overall, the budget has taken a balanced, forward-looking approach towards a future-ready economy. With the real estate sector witnessing strong growth years, the momentum is expected to keep growing at a good pace, which will help India achieve its desired levels of growth in the coming years.
A version of this article was carried by Times of India online. The same can be read here
