The Union Budget 2025 sets the stage for continued economic growth, reinforcing India’s long-term vision with strategic measures. While direct policy changes for real estate were limited, the sector benefits from tax reforms, infrastructure expansion, affordable housing initiatives, and increased investor confidence.

Real estate contributes 7% to India’s GDP and has witnessed record sales, launches, and leasing activity in recent years. With India aiming for a $7 trillion economy, real estate will be crucial in this journey. Here are five key takeaways from Budget 2025 that will shape the sector’s future.

1. Tax Rationalization to Boost Homebuyer Sentiment

The government’s income tax rate cuts are expected to increase disposable income, encouraging real estate investment. A significant relief for the rental market is the increase in the annual TDS limit on rental income from ₹2.4 lahks to ₹6 lahks, reducing compliance burdens and promoting rental housing development in urban areas.

2. Affordable Housing Gets a ₹15,000 Crore Boost

The second Special Window for Affordable and Mid-Income Housing (SWAMIH) fund has been allocated ₹15,000 crore, targeting stalled housing projects. This move will infuse fresh capital, benefit homebuyers awaiting possession, and enhance investor confidence in the affordable housing segment.

3. Infrastructure Investments to Drive Real Estate Growth

A ₹15.5 lakh crore capital expenditure outlay will create a multiplier effect on real estate and construction. Additionally, the Urban Challenge Fund (₹1 lakh crore) will help cities raise funds via municipal bonds and public-private partnerships (PPPs). These initiatives will drive demand for commercial and residential real estate, especially in tier-2 and tier-3 cities.

4. Commercial Real Estate to Benefit from GCC Expansion

With India’s Global Capability Centers (GCCs) projected to grow from 1,700 to 2,100 by 2030, a new national framework has been proposed to enhance infrastructure and promote foreign investments. This will boost demand for Grade-A office spaces, particularly in IT hubs and metro cities.

5. Hospitality Sector Sees New Growth Opportunities

Budget 2025 has introduced e-visa improvements, more straightforward travel policies, and the development of 50 tourism destinations to drive hospitality-led real estate demand. Additionally, MUDRA homestay loans will support small businesses, while increased tourism investment will strengthen hotel and commercial real estate markets.

A Balanced Approach for Future Growth

“Overall, the budget has taken a balanced, forward-looking approach towards a future-ready economy. With the real estate sector witnessing strong growth in recent years, these policies will help maintain momentum and support India’s economic expansion,” said Neeraj Bansal, Partner and Head of India Global, KPMG in India.

With continued policy support, infrastructure development, and rising investor confidence, India’s real estate sector remains on track for significant expansion, pivotal in the country’s long-term economic vision.

By Neeraj Bansal, Partner and Head, India Global, KPMG in India