Pre-Budget Expectations 2025: Real Estate Sector Seeks Strategic Reforms And Growth Impetus

As India's real estate sector prepares for the upcoming Budget 2025, it is looking towards receiving changes that will help boost its development. A substantial transformation along with key issues that are prevalent in the sector needs to be addressed. India's real estate sector has seen considerable resilience as there has been an increased demand for office leasing. As office leasing grows, it is likely that policies will be introduced in hopes of creating a better environment for development.

Gurmit Singh Arora, National President of the Indian Plumbing Association argues that, "As per the expectations of the budget, 2025, the real estate sectors aim for the government to come up with strategies that will provide sustainable development. In the future, we expect to see increased tax reliefs on projects that include advanced water management systems installed with rainwater harvesting, water treatment plants, and complex plumbing systems. Large projects should incorporate water reuse in landscape and non-potable applications through advanced water reclamation systems as mandatory. There is a need for more focus on water and resource efficiency technologies as well as green building designs. Cutting GST slabs on green plumbing materials and water treatment equipment should encourage contractors to adopt water-saving measures. Investors who construct residences with approved efficient water use and recycling systems should be given tax returns."

Commercially, Global Capability Centers (GCCs) have displayed considerable growth as they continue to lead office leasing, which has worked positively for India's real estate sector. The increased amount of leasing, coupled with the stable hiring patterns across domestic sectors, has created considerable demand for commercial space. During this period, stakeholders are now enabling easier processes along with better tax benefits to promote this positive growth.

Gaurav Kansal, Director KBP Group highlights: "The spurt in the establishment of GCCs has changed the dynamics of the office space market in the region. This requires us to implement a single-window clearance mechanism for all commercial projects. Eventually, this would cut down the present timelines for approvals of about 18-24 months to about 6-8 months, which fast tracks the delivery of the projects as well as the responsiveness of the market."

The potential that the commercial real estate market has is extraordinary, with rental yields going above and beyond other options of investment. We are seeing a rising demand from both the local community and international investors. The budget should be geared towards implementing policies and tax breaks for REITs so that there is greater institutional investment in Grade A Office assets.

The industry also expects the government to come up with a stimulus for the liquidity crisis and also work on the approval process. Some of the other proposals include setting up a single-window clearance system, reviewing the GST structure for non-residential buildings under construction, and establishing dedicated funding structures for targeted large-scale commercial buildings.

According to Manoj Goyal, Director of Forteasia Realty Pvt. Ltd, how the workspace preferences have changed after the outbreak of the pandemic quotes, "There is an increasing market demand for hybrid workspaces and smart offices. The budget must provide special fiscal policies creating incentives for the construction of technology-driven commercial buildings and data-cum-storage centers within the country."

More commercial REITs (real estate investment trusts) are envisaged with other policies to enhance building green technologies with incentives for going higher in construction. There are also expectations from the industry policies to help develop an integrated business district smart office campus.

"The sector is optimistic that the forthcoming budget will tackle these issues while making the best out of the opportunities as well as the gains made in the sector recently. The commercial real estate market including leasing of office space in some bigger cities is likely to top the best record of 2024, despite global slowing economic growth. Strategic policy interventions will help sustain the exports while balancing the commercial spaces with cutting-edge technologies," added Manoj Goyal.

For investors, these transformations are urgent both for the real estate industry and for the overall economic context due to the fact that the sector accounts for a sizeable share of GDP and is a key sector for foreign investment inflows. The commercial property market has strong revenue-generating capabilities as the activity can be translated to other industries.

With its budgetary expectations, the development of the sector in proportion to altering market trends and employee preferences has begun to show signs of integration into the economy and has started to show a mixed picture as it continues to focus on both sides of the equation. The aim is to make the commercial property market in India more effective, transparent and stronger so that it better meets the needs of the rapidly developing service sector in India and helps meet India's desired goals.

Disclaimer: The views and recommendations expressed are solely those of the individual analysts or entities and do not reflect the views of GoodReturns.in or Greynium Information Technologies Private Limited (together referred as “we”). We do not guarantee, endorse or take responsibility for the accuracy, completeness or reliability of any content, nor do we provide any investment advice or solicit the purchase or sale of securities. All information is provided for informational and educational purposes only and should be independently verified from licensed financial advisors before making any investment decisions.