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The Indian real estate sector, a significant contributor to the nation's GDP and employment, is poised for continued growth, with projections indicating it could reach $1 trillion by 2030 and contribute 13% to GDP by 2025. As the country navigates rapid urbanization and evolving economic dynamics, industry bodies like CREDAI are presenting pre-budget expectations aimed at addressing critical market needs and unlocking further growth potential. The focus is on stimulating both demand and supply-side factors, particularly within the housing and rental segments.
The Rental Housing Imperative
CREDAI's primary demand centers on the establishment of a National Rental Housing Mission. This initiative is proposed to tackle the escalating demand for organized rental housing, especially in India's Tier-1 and Tier-2 cities, driven by increasing urbanization and migrant populations. The association argues that current rental supply is insufficient to meet this demand, contributing to informal settlements and hindering workforce mobility. By offering fiscal incentives to developers for constructing large-scale affordable rental accommodations and providing tax benefits to tenants, CREDAI aims to formalize the rental market. This aligns with broader trends where the rental segment is projected to grow at a notable CAGR of 10.99% through 2031.
Realigning Affordability Norms
A significant aspect of CREDAI's budget wishlist involves revisiting housing affordability. The association is pushing to raise the deduction limit on interest paid on home loans from the current ₹2 lakh to ₹5 lakh. This measure aims to make homeownership more accessible, especially as property prices and monthly interest outgo have increased. Furthermore, CREDAI highlighted that the definition of affordable housing, last updated in 2017, no longer aligns with contemporary market conditions. Current norms, which set carpet area limits at 60 sqm in metros and 90 sqm in non-metros with a ₹45 lakh price cap, are considered outdated due to escalating land and construction costs. CREDAI proposes increasing carpet area limits to 90 sqm in metros and 120 sqm in non-metros, while advocating for the complete removal of the value cap. This recalibration is seen as vital to reignite growth in the affordable housing segment, which has lagged compared to luxury and mid-income housing.
Broader Industry Calls
Beyond rental housing and affordability, other real estate stakeholders have voiced expectations for the upcoming budget. Manoj Gaur of Gaurs Group called for industry status for the real estate sector, underscoring its substantial contribution to India's GDP and its role as a major employment generator. Shivam Agarwal of Sattva Group suggested implementing single-window clearances for Global Capability Centres (GCCs) to streamline foreign investment and capitalize on their significant role in driving office space demand. Ashok Kapur of Krisumi Corporation advocated for policy support and tax incentives for green and sustainable buildings, a trend gaining momentum with an increasing demand for wellness and eco-friendly features. Kirthi Chilukuri of Stonecraft Group emphasized the need for stronger demand-side support for homebuyers to bolster overall housing market growth. The real estate sector is projected to continue its upward trajectory, with overall market size expected to reach $926.56 billion by 2031, growing at a CAGR of 9.63%.