Faster urbanisation to boost real estate sector

New Delhi

India’s real estate sector is poised for growth, driven by accelerated urbanisation, faster industrialisation, and improved infrastructure, according to a report on Friday. The upcoming Union Budget 2025-2026 is expected to provide policy direction to enhance competitiveness, expand housing access, and strengthen economic corridors.

Transformative policies targeting tier-2 cities could help the sector achieve its ambitious $1 trillion valuation by 2030. Measures supporting infrastructure development and regulatory reforms are seen as critical to sustaining growth.

The report noted a record-breaking year for office leasing in 2024, with 66.4 million square feet leased across six major cities, up 14% from the previous year. Residential sales, industrial space, and warehousing take-up also approached historic highs. Institutional investments in real estate surged to $6.5 billion, a 22% increase over the previous year.

Colliers India CEO Badal Yagnik emphasized the importance of coordinated government and private sector efforts in transforming smaller cities into economic hubs. Policy shifts to boost affordability, enhance housing finance access, and ease developer challenges are key expectations.

Recommendations include raising the tax deduction limit on home loan interest from Rs 2 lakh to Rs 4-5 lakh for rental properties and reintroducing tax holidays for affordable housing projects. Updating affordable housing criteria from 2017 standards to reflect rising prices is also overdue.

The report highlighted the need for GST reductions on construction materials like cement and steel to lower project costs. Increased funding for stressed residential projects through the SWAMIH fund could ease liquidity concerns.