Indian Real Estate Industry

Government Initiatives

Government of India along with the governments of respective States has taken several initiatives to encourage development in the sector. The Smart City Project, with a plan to build 100 smart cities, is a prime opportunity for real estate companies. Below are some of the other major Government initiatives:

• The Union Budget 2026–27 emphasises infrastructure-led urban development, with public capital expenditure increased to Rs. 12.20 lakh crore (US$ 138.03 billion), aimed at strengthening urban infrastructure and creating new growth corridors for real estate.
• The Government of India revamped and launched PMAY-U 2.0 ‘Housing for All’ Mission effective September 01, 2024, to support one crore additional beneficiaries over the next five years. The scheme provides financial assistance (including interest subsidy under ISS) to eligible households for construction, purchase or rental housing.
• The Reserve Bank of India cut the repo rate by 50 basis points in June 2025, significantly reducing home loan EMIs and boosting real estate demand and buyer confidence.
• Maharashtra Housing Policy 2025 focuses on affordable housing with a target of constructing 35 lakh houses in five years, emphasizing EWS and low-income groups while mobilizing Rs. 70,000 crore (US$ 7.95 billion) investment. It supports redevelopment, slum transformation via PPP, and inclusive housing for vulnerable groups.
• India’s full land digitization, set for completion by December 2025, is expected to boost FDI by easing acquisitions, enhancing transparency, and reducing disputes. Institutional real estate investments touched US$ 3.3 billion in H1 2025, with a sharp Q2 surge led by foreign investors.
• Construction is one of the largest sector in terms of FDI inflow. FDI in the sector Construction Activities stood at Rs. 323,987 crore (US$ 36.85 billion) and Construction Development stood at Rs. 239,261 crore (US$ 27.21 billion) from April 2000-June 2025.
• The Registration Bill 2025 closely related to land and property transactions, seeks to digitize and centralize land and property records, enabling online, paperless registration with Aadhaar-based verification. It aims to boost transparency, curb fraud, and make remote real estate transactions easier for both NRIs and domestic buyers.
• The Budget proposes dedicated REITs for CPSE-owned assets to accelerate monetisation and unlock value from underutilised government real estate.
• Pooling CPSE land and properties into REITs will unlock large, prime assets in key cities, improving supply of high-quality commercial real estate.
• The initiative enables retail and institutional investors to access income-generating assets, offering stable rental yields, liquidity and long-term appreciation potential.
• REITs are positioned as a key mechanism for asset monetisation, helping the government accelerate its National Asset Monetisation Pipeline and improve balance sheet efficiency of CPSEs.
• The move is expected to deepen India’s real estate capital markets, increase institutional participation and shift towards market-linked asset management.
• India’s REIT market is set for rapid growth, with projections of 25-30% penetration in the office segment by 2030 and at least one new REIT expected to launch each year over the next 3-5 years.
• The Government continues to implement PMAY-U 2.0 (Housing for All), launched in September 2024, to support one crore additional urban households over five years. Under the Interest Subsidy Scheme (ISS), eligible beneficiaries can receive assistance of up to Rs. 1.80 lakh (US$ 0.02 million) towards home loans.
• The Budget emphasises urban infrastructure development and city transformation, focusing on Tier-2 and Tier-3 cities to enhance housing demand and improve liveability.
• Continued policy support for Affordable Rental Housing Complexes (ARHCs) aims to provide rental housing for urban migrants and workforce, expanding housing access beyond ownership models.
• Increased focus on digital land records and ease of property transactions is expected to improve transparency, reduce disputes and support faster housing development.
• Mumbai’s stamp duty collections in May 2025 rose 3% to Rs. 1,062 crore (US$ 121 million) from Rs. 1,034 crore (US$ 117 million) a year ago, supported by strong demand in properties above Rs. 5 crore (US$ 567,988). Year-to-date registrations grew 24% with stamp duty revenue up 17% at Rs. 5,696 crore (US$ 647 million).
• GST reforms help reduce tax burdens, especially for affordable housing under construction, with GST rates reduced to 1%, promoting affordable housing growth and easing costs for buyers.
• The new tax regime brings clarity and benefits for real estate owners, allowing a 30% standard deduction after municipal taxes, deduction of pre-construction interest on both self-occupied and rented properties, relaxed TDS limits on rental income, and the option to treat two self-occupied homes as tax-free.
• The Union Budget 2026 focuses on a predictable, rules-based tax regime, improving investor confidence and reducing risks for foreign capital. Long-term tax clarity for foreign cloud service providers, with non-taxation on eligible income until 2047, strengthens India’s digital infrastructure ecosystem.
• A 15% safe harbour margin for data centre entities enhances tax certainty and supports investment in hyperscale infrastructure. Compliance with cross-border property transactions has been eased, allowing TDS payments via PAN instead of TAN.
• No direct tax incentives were announced for residential real estate, including no change in the Rs. 2 lakh interest deduction cap or infrastructure status.
• Extension of tax incentives for data centres in SEZs is expected to attract global technology investments.
• The premium segment grew strongly, with homes priced above Rs. 1 crore (US$ 113,598) cornering about 62% of the market share in H1 2025, reflecting rising buyer affluence and demand for luxury living.
• Under-construction premium homes witnessed price increases up to 44% YoY in H1 2025, with Mumbai leading at 44%, followed by Bengaluru (35%) and Gurugram (33%).
• India has over 7,000 IGBC-certified projects covering 1,370 million square feet, making it the third-largest market for LEED globally. The green building sector is expected to reach US$ 39 billion by 2025, offering 30-50% energy savings, 20-30% water savings, and higher rental and market value premiums.
• India's real estate sector attracted Rs. 1.50 lakh crore (US$ 1.70 billion) in institutional investments during Q1 2026, a 37% YoY increase, driven by acquisitions of income-generating office and commercial assets.
• Private equity investments in India’s real estate sector stood at approximately Rs. 8.98 lakh crore (US$ 10.16 billion) during FY26 (April 2025–February 2026), reflecting strong institutional participation driven by large transactions in the second half of the year.
• Q2 2025 saw strong retail and infrastructure investments with Blackstone investing Rs. 3,239 crore (US$ 378 million) in South City Mall, Kolkata, the largest retail deal of the quarter, while Sumitomo and Brookfield invested Rs. 2,528 crore (US$ 295 million) and Rs. 1,294 crore (US$ 151 million) respectively in MMRDA assets.
• There are 368 notified SEZs in India, as of 28th February 2026. Exports from the operational SEZs totaled over 11.70 lakh crores in 2025-26 (till December 2025), a 32.02% increase from the corresponding period in 2024-25.
• The co-working and flex space segment is rapidly expanding, with operators leasing about 6.5 million sq ft of managed and flexible office space in top seven cities in H1 2025, marking a 48% YoY growth. This growth is driven by corporate demand for flexible, scalable, and cost-effective office solutions.
• The luxury real estate market in Delhi NCR surged in H1 2025, with branded residencies dominating and prices appreciating by around 9% YoY.
• In FY25, the Indian real estate sector delivered approximately 406,889 homes in the top nine major cities, marking a 33% increase from 306,600 units in FY24.
• In order to revive around 1,600 stalled housing projects across top cities in the country, the Union Cabinet approved the setting up of Rs. 25,000 crore (US$ 3.58 billion) alternative investment fund (AIF).
• Government created an Affordable Housing Fund (AHF) in the National Housing Bank (NHB) with an initial corpus of Rs. 10,000 crore (US$ 1.43 billion) using priority sector lending short fall of banks/financial institutions for micro financing of the HFCs.