Budget 2025 Expectations: Real Estate Sector Calls for Industry Status, Affordable Housing Incentives, and Sustainable Development Sops

Team Opulnz Abode: 17-01-2025, 21:26: Read Time – 2.5mins

As Finance Minister Nirmala Sitharaman prepares to present the Union Budget 2025 on February 1, the real estate industry has high expectations. From long-standing demands like granting industry status to targeted incentives for affordable housing and sustainable development, stakeholders are hopeful for transformative measures to propel the sector toward its ambitious $1 trillion valuation by 2030.

According to a report by Realty Z Estate, 2025 could lay the foundation for India’s next phase of growth, driven by robust infrastructure development, enhanced housing policies, and increased focus on sustainability and urbanisation.

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1. Real Estate Momentum in 2024: A Strong Base

Key Highlights

Office Leasing: A record 66.4 million sq. ft. leased across the top six cities, marking a 14% YoY growth.
Residential Sales: Near all-time highs, reflecting robust end-user demand.
Institutional Investments: Touched $6.5 billion, a 22% YoY increase, underscoring investor confidence.
Warehousing and Industrial Space: Witnessed strong uptake, driven by e-commerce and manufacturing growth.

Realty Z Estate anticipates that targeted budgetary announcements will benefit all real estate asset classes, sustaining the sector’s growth momentum in 2025.

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2. Key Expectations for Budget 2025

2.1. Industry Status for Real Estate

The real estate sector has been advocating for industry status, which would:

Enable more straightforward access to credit.
Reduce borrowing costs for developers.
Attract institutional investments.

Badal Yagnik, CEO of Colliers India, said, “Granting industry status could pave the way for long-term growth, improving the sector’s competitiveness on the global stage.”

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2.2. Affordable Housing Incentives

Demand-Side Measures

Higher Deductions for Home Loans:
Increase the limit for principal repayment under Section 80C to ₹5 lakh (currently ₹1.5 lakh).
Raise the tax deduction on interest payments from ₹2 lakh to ₹4–5 lakh for let-out properties.

Revival of Credit Linked Subsidy Scheme (CLSS): Aimed at first-time homebuyers, CLSS could provide critical relief for financially weaker sections.
Affordable Housing Tax Holidays: Reintroduce tax holidays under Section 80IBA, boosting developer interest in this segment.
Rental Income Tax Exemptions: Offering tax exemptions on rental income could incentivise property investments, especially in tier-II and III cities.

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Supply-Side Measures

GST Reduction on Construction Materials: Rationalise GST on cement, steel, and aluminium to reduce project costs.
SWAMIH Fund Allocation: Boost funding for stressed projects to improve liquidity.
Senior Living & Co-Living: Introduce tax incentives and relax development charges to encourage institutional investment in these emerging segments.

2.3. Infrastructure Development

Budget 2025 is expected to prioritise:

National Highway Expansions and regional airports fostering connectivity.
Multi-Modal Logistics Parks: Enhancing supply chain efficiency.
Incentivising Manufacturing: Support through viability gap funding and private sector participation.

Such measures are crucial for transforming tier-II and III cities into economic growth corridors.

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2.4. Sustainability and Green Development

Real estate developers are calling for incentives that promote sustainability, including:

Tax Breaks for Green Buildings: Encourage developers to adopt sustainable practices, reducing the sector’s carbon footprint.
Support for EV Infrastructure: Establish EV manufacturing corridors and incentivise private investment in holistic EV ecosystems.
Green Bonds: Facilitate investments in renewable energy and green projects through incentives.

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3. Residential Real Estate: The Key Focus

Why Residential Real Estate Matters

Residential real estate is expected to dominate the market in 2025, driven by:

Favourable Policies: Enhanced affordability and housing finance access.
Urbanisation: Rapid migration to urban centres, fueling demand for homes.
Affluent Buyers: Increased interest from high-net-worth individuals (HNIs) and NRIs.

Targeted measures for homebuyers and developers could address demand-side and supply-side challenges, ensuring robust growth in this segment.

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4. Promoting Tier-II and III Cities

Smaller cities are emerging as key growth hubs, with investments needed in:

Infrastructure Modernisation: Highways, airports, and logistics parks.
Digitisation of MSMEs: Boosting competitiveness and integration into global supply chains.
Affordable Housing: Tailored policies to cater to the growing population in these cities.

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5. Streamlining Regulatory Frameworks

Experts suggest simplifying tax regimes and introducing a single-window clearance mechanism for:

Data Centers: Meeting the rising demand for digital infrastructure.
Senior Living: Addressing the needs of an ageing population.
Life Sciences and Co-Living: Supporting innovation and shared living trends.

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6. Real Estate Investments in 2025: A Promising Outlook

Institutional Investors’ Confidence

Investors are diversifying into emerging asset classes like:

Logistics & Warehousing: Driven by e-commerce growth.
Data Centers: Expanding India’s digital infrastructure.

A $1 Trillion Market by 2030

Budget 2025 can act as a catalyst, pushing real estate to reach its $1 trillion target. The Union Budget 2025 is a pivotal opportunity to address the real estate sector’s immediate challenges while setting the stage for long-term growth. With expectations ranging from industry status and affordable housing incentives to sustainability measures, the budget could provide a comprehensive roadmap for accelerated development.

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Realty Z Estate: Your Partner in Real Estate Insights

At Realty Z Estate, we are committed to helping you navigate India’s dynamic real estate market. Whether you’re an investor, homebuyer, or developer, our expert team provides tailored insights and solutions. Contact us today to explore the opportunities emerging from Budget 2025!